1. Maintaining Performance Chapter 12 Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.1

2. Chapter Overview Compensation Systems Types of Discrimination Goal Setting Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.2 Performance Appraisal Systems Managing for Improved Performance

3. Compensation Systems The financial reward structures organizations use to compensate individuals for the work they perform for the organization Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.3

4. Goals of Compensation Systems 1. To produce desired behavior in employees 2. To accomplish the first goal within the limitations faced by the organization Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.4

5. Types of Incentive Systems Incentive Systems Individual Incentives Salary Standard Hour Rate Piece-Rate Plan Skill-Based Pay Scanlon Plan Profit Sharing Gain- sharing ESOP Group Incentives Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.5

6. Employee Benefits Pension PlansVacation Time Holiday Pay Jury-duty Pay Health Insurance Employee Assistance Programs Flextime Social SecurityWorkers Compensation Unemployment Compensation Telecommuting Disability Insurance Lawrence Erlbaum Associates, Publisher, Copyright 2002 Travel Pay 12.6

7. Noneconomic Rewards Intrinsic Job Rewards (i.e. flextime) Extrinsic Job Rewards (i.e. annual banquets) Non-job Based Rewards (i.e. status) Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.7

8. Types of Discrimination Legal and fair Legal and unfair Illegal and fair Illegal and unfair Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.8

9. Goal Setting Specifying a direction for action and a specific quantity of work to be accomplished Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.9

10. Steps in Setting Performance Goals 1. Specify the general objective or task 2. Specify how performance will be measured 3. Specify the standard or target to be met 4. Specify a deadline for performance 5. Prioritize goals 6. Determine coordination requirements Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.10

11. Performance Appraisal Systems Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.11

12. Conflict and Problems in Performance Appraisals Responding honestly to shortcomings while being evaluated for salary increases or promotions Most supervisors are unable to convey negative feedback effectively Lack of incentives for supervisors to conduct high-quality performance appraisals Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.12 Supervisors often find themselves in no-win situations Employees often display discomfort during the process Universal dissatisfaction with the process

13. Improving Performance Appraisal Systems Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.13

14. Rating Scales Graphic Rating Scale - This instrument asks the rater to provide general evaluations of ratees’ performance in various areas of the job Behavior Observation Scale (BOS) - This instrument asks raters to report and describe the frequency of specific job-related behaviors Behaviorally Anchored Rating Scale (BARS) - This instrument consists of a set of rating scales, each of which is composed of brief examples of critical incidents of effective and ineffective job performance Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.14

15. 360-degree Feedback Feedback derived from: Supervisors Suppliers Customers Peers Workers themselves Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.15

16. Who should rate employees? Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.16 Employee (self rating) Supervisors Outsiders Subordinates Peers

17. Performance Appraisals: Advice for Managers Start by getting the big picture in mind Highlight the key issues you want to discuss Highlight the best evidence you have Give specific examples Use active listening Give employees time to prepare Start with your best performers Review the goals and objectives of each employee’s job Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.17

18. Managing for Improved Performance Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.18

19. Diagnosing the Poor Performer Internal Causes: Employee’s Skills Employee’s Abilities Employee’s Effort Employee’s Personality External Causes: Task Difficulty Resource Availability Interpersonal Demands Information Availability Supervisors and employees rarely agree on the causes of poor performance! Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.19

20. Questions to consider... 1. Has the individual performed at a higher level in the past? 2. Is the performance deficiency total, or is it confined to particular tasks? 3. How well do the individual’s capabilities match the job’s selection criteria? 4. Has the individual been properly trained in how to perform the tasks expected of him or her? Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.20

21. Recommendations for dealing with poor performers... 1. Recognize that even marginal performers are a source of gains in productivity for organizations 2. Recognize the need to implement positive turnaround strategies for dealing with marginal performers 3. Be ready to accept at least partial responsibility for the subordinate’s marginal performance Lawrence Erlbaum Associates, Publisher, Copyright 2002 12.21