Chapter 6 Performance Management

Chapter Six: Performance Management Learning Outcome: What is Performance Management? Learning Outcome: Step 1: Define Performance A set of processes and managerial behaviors that involve defining, monitoring, measuring, evaluating, and providing consequences for performance expectations. Four Steps for Performance Management: Job Analysis A systematical procedure for collecting and recording information about jobs within an organization Job Satisfaction A listing of the job's duties; it's working conditions; and the tools, materials, and equipment used to perform the job Job Specification A listing of the knowledge, skills, abilities, and other credentials the incumbent jobholder will need to do the job Step 1: Define Performance Set goals and communicate performance expectations. Step 4: Provide Consequences Step 2: Monitor & Evaluate Performance Administer valued rewards and appropriate punishment. Measure and evaluate progress and outcomes. Step 3: Review Performance Deliver feedback and coaching. Contingent Selection: Applicants that pass the substantive selection process are ready to be hired, dependent upon final checks. Learning Outcome: Most frequently used selection method? interviews Are they a strong predictor of job success? Poor predictor due to bias & inconsistency Under the Americans with Disabilities Act, firms may not require employees to pass a medical exam before a job offer is made. Effective interviews: structured and panel Step 2: Monitor and Evaluate Performance Learning Outcome Three major types of behavior that constitute performance? Performance Description Task Performance job effectiveness and efficiency Citizenship Counter Productivity actions that contribute to the psychological environment of the organization (e.g. helping other treating co-workers with respect) actions that actively damage the organization Learning Outcome: Step 3: Review Performance Three purposes of performance evaluations? 1. Make HR decisions 2. Identify training and development needs 3. Provide feedback to employees (e.g. stealing, tardiness, aggressiveness) Learning Outcome: Managers are often uncomfortable discussing weaknesses with employees. Solution: train managers to conduct constructive feedback sessions 360-Degree Evaluations: The Marshall Plan - Performance Feedback Case A process in which managers are evaluated by everyone around them. No right or wrong answer The goal is more accurate perspectives on employee performance. Chapter Six: Performance Management Feedback Do's and Don'ts Learning Outcome: Step 4: Provide Consequences Pay is not the only motivation. DON'TS DOS Don't use feedback to punish, embarrass, or put someone down. Keep feedback relevant by relating it to existing goals. Types of Rewards Don't provide feedback that is irrelevant to the person's work. Deliver feedback as close as possible to the time the behavior was performed. Extrinsic-financial and nonfinancial Intrinsic-Meaningfulness and achievement Don't provide feedback too late to do any good. Provide specific and descriptive feedback. Don't provide feedback about something beyond the individual's control. Focus the feedback on things employees can control. Don't provide feedback that is overly complex or difficult to understand. Be honest, developmental, and constructive. Desired Outcomes Attract Motivate Retain Distribution Criteria Results Behaviors and actions Nonperformance factors Develop Engage Recognize individual differences. Spend the time necessary to understand what's important to each employee. Design jobs to align with individual needs and maximize their motivation potential. Use goals and feedback. You should give employees firm, specific goals, and they should get feedback on how well they are faring in pursuit of those goals. Allow employees to participate in decisions that affect them. Employees can contribute to setting work goals. choosing their own benefits packages, and solving productivity and quality problems. Link rewards to performance. Rewards should be contingent on performance, and employees must perceive the link between the two. Check the system for equity. Employees should perceive that experience, skills, abilities, effort, and other obvious inputs explain differences in performance and hence in pay, job assignments, and other obvious rewards. Activity: Pay Raises Everyday Learning Objective: Demonstrate how the different types of variable-pay programs can increase employee motivation Learning Objective: Describe the major theories of motivation and relate them to organizational performance How do you feel when you get a raise? Happy? Rewarded? Motivated to work harder for that next raise? The hope of an increase in pay, followed by a raise, can increase employee motivation. However, the effect may not last. In fact, the "warm fuzzies" from a raise last less than a month, according to a recent study. If raises are distributed annually, performance motivation can dip for many months in between evaluations. Some organizations have tried to keep the motivation going by increasing the frequency of raises. Currently, only about 5 percent of organizations give raises more than annually, but some larger employers like discount website retailer Zulily, Inc., assess pay quarterly. Zulily CEO Darrell Cavens would like to do so even more frequently. "If it wasn't a big burden, you'd almost want to work on it on a weekly basis," he said. That's because raises increase employee focus, happiness, engagement, and retention. CEO Jeffrey Housenbold of online photo publisher Shutterfly, Inc., also advocates frequent pay assessments, but for a different reason. The company gives bonuses four times a year to supplement its biannual raise structure as part of a review of employee concerns. "You can resolve problems early versus letting them fester," he said. Another reason is to increase feedback. Phone app designer Solstice Mobile gives promotions and salary increases six times a year; with this structure, Kelly O'Reagan climbed from $10/hour to $47.50/hour in 4 years. The company's CEO, John Schwan, said that young workers are especially motivated by the near-constant feedback. O' Reagan said, "Seeing that increase was like, 'Wow, this is quite different than what I had ever dreamed of.' You might be wondering how organizations can keep the dollar increases to employees flowing. Organizations are wondering, too. One tactic is to start employees at a low pay rate. Ensilon, a marketing services company, has coupled low starting salaries with twice-yearly salary reviews. Initial job candidates are skeptical, but most of the new hires earn at least 20 percent more after 2 years than they would with a typical annual raise structure. No one is saying frequent pay raises are cheap, or easy to administrate. Pay itself is a complex issue, and maintaining pay equity adds another level of difficulty. Frequent pay reviews are motivating, but only for the people receiving them--for the others, it's a struggle to stay engaged. If a person has a track record of raises and then pay levels off, it can feel like a loss of identity as a strong performer rather than a natural consequence of achieving a higher level of pay. The frustration can lead to lower performance and increased turnover for high performers. CEO Schwan acknowledged, "it's definitely a risk." Do you think frequent, small raises versus annual, larger raises is more motivating? Why or why not? Frequent, small raises are more motivating because then you always have something to work towards and forward to; avoids "slumps" Annual pay raises in the United States are expected to be around 3 percent in the next few years. Do you think this percentage is motivating to employees? Why or why not? It depends on how much you are already getting paid and what they're value of what you do is What are some other examples of creative pay programs or creative reward programs? End of the year rewards