Evaluation, Feedback, and Rewards Chapter 7 Evaluation, Feedback, and Rewards

Introduction Organizations use a variety of rewards to attract and retain people and to motivate them to achieve their personal and organizational goals The manner and timing of distributing rewards are important issues for managers To distribute rewards equitably, it is necessary to evaluate employee performance

Purposes of Evaluation: Judgmental Provide a basis for reward allocation (e.g., raises, promotions, transfers, etc.) Identify high-potential employees Validate the effectiveness of employee selection procedures Evaluate previous training programs

Purposes of Evaluation: Developmental Stimulate performance improvement Develop ways of overcoming obstacles and performance barriers Identify training and development opportunities Establish supervisor-employee agreement on performance expectations

Focus of Evaluation Evaluations should focus on translating the position responsibilities into each employee’s day-to-day activities Performance evaluations should focus on job performance, not individuals Evaluations should have proper weighting of relevant behaviors

Relevancy of Evaluation Deficiency – occurs when the evaluation does not focus on all aspects of the job Contamination – occurs when activities not part of the job are included in the evaluation Distortion – occurs in the evaluation process when an improper emphasis is given to various job elements

Improving Evaluations (1 of 3) Higher levels of employee participation in the evaluation process lead to more satisfaction with the system Setting specific performance goals to be met results in greater performance improvement than discussions of more general goals

Improving Evaluations (2 of 3) Supervisors should receive training in how to evaluate employee performance They should be evaluated on how effectively they do this Systematic evaluation of performance does little good if the results are not communicated to employees

Improving Evaluations (3 of 3) Performance evaluation feedback should not focus solely on problem areas Good performance should be actively recognized and reinforced Effective performance evaluation is a continuous, ongoing process

Performance Evaluation Feedback The need for feedback among people on and off the job is significant People want to know: how they are doing how they are being perceived by others how they can make adjustments to perform better Delivering feedback to a poor performing employee is a difficult experience for a manager

Purpose of Evaluation Feedback Instructional Motivational

A Feedback Model Evaluated Person Individual Characteristics: Perceptual Process Values Needs Goals Self-Concept Self-Efficacy Behavioral Results Effort Self-motivation to Adjust Persistence Disregard or Non-acceptance Person Others Job Cognitive Evaluation: Creditive of Feedback Source Expectancies Personal Standards Form of Feedback (Objective or Subjective)

Multisource Feedback: A 360-Degree Approach 90 percent of Fortune 1000 firms use some form of multisource program The increasing use of multisource programs is the result of calls for more fairness clarity credibility Everyone in the person’s full domain could serve as an evaluator

Best Practices to Improve 360-Degree Feedback Programs (1 of 2) Use 360-degree feedback primarily for individual development Link the feedback process with the overall strategy and direction of the firm Exert administrative control over every aspect of the 360-degree process

Best Practices to Improve 360-Degree Feedback Programs (2 of 2) Use senior management as role models Use highly trained internal coaches to leverage the investment Evaluate the effectiveness or return on investment of the process

Reinforcement Theory Reinforcement is the most important principle of learning Desirable or reinforcing consequences will increase the strength of a behavior and increase the probability of being repeated Undesirable or punishment consequences will decrease the strength of a response and decrease its probability of being repeated

Rewards, Reinforcement, and Punishment Positive reinforcement (behavior increases) Punishment (behavior decreases) Negative reinforcement I II Applied III IV Withdrawn Desirable Undesirable 4

Reinforcement Theory: Operant Conditioning Operant conditioning – attempts to influence behavior through the use of rewards and punishments Operants – behaviors that can be controlled by altering the consequences that follow them Most workplace behaviors are operants

Operant Conditioning: Key Principles Reinforcement Punishment Extinction

Reinforcement Schedules Description Organizational Example Continuous Reinforcer follows every response Praise after every new sale and order Fixed interval Response after specific time period is reinforced Weekly, bimonthly, monthly paycheck Variable interval Response after varying period of time (an average) is reinforced Transfers, unexpected bonuses, promotions, recognition Fixed ratio A fixed number of responses must occur before reinforcement Piece rate, commission on units sold Variable ratio A varying number (average) of responses must occur before reinforcement Random checks for quality yield praise for doing good work

Individual Rewards The main objectives of reward programs are: to attract qualified people to join the organization to keep employees coming to work to motivate employees to achieve high levels of performance

The Reward Process Ability and skill Intrinsic rewards Performance results: Individual Motivation to exert effort Performance evaluation Satisfaction Extrinsic rewards Experience Feedback

Lawler’s Conclusions on Satisfaction and Rewards (1 of 2) Satisfaction with a reward is a function both of how much is received and of how much the individual feels should be received An individual’s feelings of satisfaction are influenced by comparisons with what happens to others Satisfaction is influenced by how satisfied employees are with both intrinsic and extrinsic rewards

Lawler’s Conclusions on Satisfaction and Rewards (2 of 2) People differ in the rewards they desire and in how important different rewards are to them Some extrinsic rewards are satisfying because they lead to other rewards

Management Considerations for Developing and Distributing Rewards The rewards available must be sufficient to satisfy basic human needs Individuals tend to compare their rewards with those of others The process by which rewards are distributed should be perceived as fair The managers distributing the rewards must recognize individual differences

Intrinsic and Extrinsic Rewards Extrinsic reward – initiated from outside the person Salary and wages Employee benefits Interpersonal rewards Promotions Intrinsic reward – one that is self-administered by the person Completion Achievement Autonomy Personal growth

Administering Rewards Positive Reinforcement Modeling and Social Imitation Expectancy Theory

Rewards Affect Organizational Concerns Rewards affect employee perceptions, attitudes, and behavior Key organizational concerns affected by rewards: Turnover Absenteeism Performance Commitment

Innovative Reward Systems Skill-based pay Broadbanding Team-based rewards Concierge services Banking time off Part-time Benefits Gainsharing Employee stock ownership plans

Line of Sight: The Key Issue (1 of 2) Line of sight – means that the employee perceives that there is a “real” linkage between his or her performance and the rewards received For extrinsic rewards, organizations need to have systems that clearly tie rewards to desired performance

Line of Sight: The Key Issue (2 of 2) Organizations can influence intrinsic rewards by: providing jobs that are challenging providing clear feedback on job performance