1. Managing Employee Performance and Reward
Concepts, Practices, Strategies
2nd edition

2. Human resource processes and practices
STAFFING
Planning
Job analysis and design
Recruitment
Selection
DEVELOPMENT
Job knowledge and technical skills
Attitudes and abilities
REWARDS
Intrinsic
Developmental
Base pay
Performance pay
PERFORMANCE MANAGEMENT
Evaluation
Feedback
Enhancement

3. processes and practices
Human resource
processes and practices
Context:
Competitive strategy, organisational structure and management culture
Markets
Regulation/industrial relations

4. What is performance? (Multi-stakeholder model)
Environment
Community
Government
Suppliers
Customers/clients
Employees
Line managers
Executives
Shareholders/owners
Main performance criteria
Stakeholder group

5. What is performance? (Cybernetic model)
Individual performance
Work group performance
Organisational performance
Personal results
e.g. quantity, quality
Personal behaviour
e.g. effort, citizenship
Personal competencies
e.g. knowledge, skills, abilities, attitudes
Group results
e.g. productivity, quality
Work group behaviour
e.g. team-working
Work group competencies
e.g. collective know-how
Organisational results
e.g. profitability, customer satisfaction, market share
Organisational behaviour
e.g. customer-focus, cooperation, creativity
Organisational competencies
e.g. core competencies and people capabilities
Outcomes
(Results)
Processes
(Behaviours)
Inputs
(Competencies)

6. performance management system do?
What should a
performance management system do?
Communicate desired competencies, behaviours and results in order to achieve its strategic objectives
Build relationships between internal stakeholders
Monitor and measure individual and group performance by valid, reliable and felt-fair means
Provide timely feedback on recent performance, including strengths, weaknesses and areas for improvement
Develop individual and group performance capabilities
Evaluate individuals for purposes of selection and promotion, and evaluate individuals and groups for the purpose of reward allocation

7. The performance management cycle
MONITORING
FORMAL REVIEW MEETING
FORMAL ASSESSMENT
LEARNING AND DEVELOPMENT
ACTION PLANNING
INFORMAL FEEDBACK
COMPETENCIES
BEHAVIOURS
RESULTS

8. Key requirements for an effective performance management system
1. Validity (Are the right things being measured?)
The ‘goodness’ of the performance criteria and measures used
‘Is this one of the things we should measure?’ (= construct validity)
‘Are we measuring enough of the right things?’ (= content validity)
‘Are we really measuring what we say we are trying to measure?’ (= criterion-related validity)
2. Reliability (Are valid measures being applied accurately?)
Accuracy
Consistency
No measurement error or bias
3. Cost-effectiveness
4. Felt-fairness/procedural justice (Are the decision-making processes seen as fair?)

9. Key requirements for an effective performance management system
Explain performance standards in advance
Early and ongoing notice of areas of underperformance
Opportunity (time and resources) to improve
Adequate notice
Have employees provide input to assessment process, e.g. self-assessment
Opportunity to explain
Right to refute and appeal
Fair hearing (or ‘voice’)
Correct standards
Standards applied consistently
Judgement based on evidence related to standards
Validity and reliability

10. What are ‘rewards’? A reward can be anything that:
an organisation provides to its employees either intentionally or unintentionally in exchange for the employee’s potential or actual work contribution, AND
to which employees as individuals attach a positive ‘valence’ as a ‘need’ satisfier.

11. Components of ‘total reward’
Financial rewards/remuneration:
Base pay
Direct benefits
Performance-related pay
Social rewards:
Organisational climate/management culture
Performance support
Work group affinity
Work–life balance; well-being
Developmental rewards:
Learning, training and development
Succession planning
Career progression
Extrinsic
rewards
Intrinsic rewards:
Job challenge
Responsibility/involvement
Autonomy
Task variety

12. Performance-related reward plans
Share bonus plans
Share purchase plans
Share option plans
Share appreciation and other rights plans
Organisation-wide long-term incentives (LTIs)
Discretionary bonuses
Individual non-cash recognition awards
Piece rates
Sales commissions
Goal-based bonuses
Merit raises/increments
Merit bonuses
Individual
How much? (=results)
How? (=behaviour)
Who (=performance entity/unit) and when (=time frame for payout)?
Profit-sharing
Gainsharing
Goal-sharing
Large group short-term incentives (STIs)
Team incentives
Team non-cash recognition awards
Small group short -term incentives (STIs)

13. What should a good reward system do?
Primary organisational aims:
Attract the right people at the right time for the right jobs, tasks or roles
Retain the best people by recognising their contribution
Motivate employees to deliver to the best of their capability
Develop employees’ performance capabilities by encouraging and rewarding them for demonstrated improvement in capability

14. What should a good reward system do?
Associated aims:
Satisfy needs (i.e. be of value to employees in satisfying their needs)
Be fair (i.e. be commensurate with contribution and comparable to rewards received by other employees)
Be legal (i.e. comply with relevant legal requirements and mandated minimum standards)
Be affordable (i.e. be within the financial means of the organisation and cost-effective)
Be strategically aligned (i.e. support the organisation’s business strategy and structure)