Performance Management 2 nd Edition. Performance Management and Reward Systems in Context.
Performance Management. Performance Management and Reward Systems in Context.
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Transcript of Performance Management. Performance Management and Reward Systems in Context.
Performance Performance ManagementManagement
Performance Management Performance Management and Reward Systemsand Reward Systemsin Contextin Context
OverviewOverview
Definition of Performance Management (PM)
The Performance Management Contribution
Disadvantages/Dangers of Poorly Implemented PM Systems
Definition of Reward SystemsAims and Role of PM SystemsCharacteristics of an Ideal PM System Integration with Other Human Resources
and Development Activities
Definition of Definition of Performance Performance Management Management (PM)(PM)
Definition of PMDefinition of PM
1. Continuous Process of Identifying Measuring Developing
The performance of individuals and teams
Definition of PM (continued)Definition of PM (continued)
and
2. Aligning performance
with
Strategic Goals of the organization
Performance Performance Management Management is NOT is NOT performance performance appraisalappraisal
PM is NOT performance PM is NOT performance appraisalappraisal
Performance Management◦Strategic business considerations◦Driven by HR & line manager◦Ongoing feedbackSo employee can improve performance
PM is NOT performance PM is NOT performance appraisalappraisal
Performance Appraisal◦Assesses employeeStrengths & Weaknesses
◦Once on regular intervals◦Lacks ongoing feedback
Contributions of Contributions of Performance Performance ManagementManagement
Contributions of Performance Contributions of Performance ManagementManagement For EmployeesFor EmployeesClarify definitions of
jobsuccess criteria
Increase motivation to perform Increase self-esteemEnhance self-insight and development
Contributions of Performance Contributions of Performance Management Management
For ManagersFor ManagersCommunicate supervisors’ views of
performance more clearlyManagers gain insight about subordinatesBetter and more timely differentiation
between good and poor performersEmployees become more competent
Contributions of Performance Contributions of Performance ManagementManagement For Organization/HR FunctionFor Organization/HR Function
Clarify organizational goals Facilitate organizational changeFairer, more appropriate administrative
actionsBetter protection from lawsuits
Disadvantages/Dangers Disadvantages/Dangers of of Poorly-implemented Poorly-implemented PM SystemsPM Systems
Disadvantages/Dangers of Poorly-Disadvantages/Dangers of Poorly-implemented implemented PM SystemsPM Systems
For EmployeesFor Employees
Lowered self-esteemEmployee burnout and job dissatisfactionDamaged relationshipsUse of false or misleading information
Disadvantages/Dangers of Poorly-Disadvantages/Dangers of Poorly-implemented implemented PM SystemsPM Systems
For ManagersFor ManagersIncreased turnoverDecreased motivation to performUnjustified demands on managers’
resourcesVarying and unfair standards and
ratings
Disadvantages/Dangers of Poorly-Disadvantages/Dangers of Poorly-implemented implemented PM SystemsPM Systems
For OrganizationFor OrganizationWasted time and moneyUnclear ratings systemEmerging biasesIncreased risk of litigation
Reward SystemsReward Systems
Reward SystemsReward Systems
DefinitionDefinitionSet of mechanisms for distributingTangible returns
and Intangible or relational returns
As part of an employment relationship
Reward SystemsReward Systems Tangible returnsTangible returns
Cash compensationBase payCost-of-Living & Contingent PayIncentives (short- and long-term)
Reward Systems Reward Systems
Tangible returns Tangible returns ((continuedcontinued))Benefits, such as
Income ProtectionAllowancesWork/life focus
Reward SystemsReward Systems Intangible returnsIntangible returnsRelational returns, such as
Recognition and statusEmployment securityChallenging workLearning opportunities
Returns and Returns and Their Degrees of DependencyTheir Degrees of Dependencyon the on the Performance Management Performance Management SystemSystem
Returns with Low DependencyReturns with Low Dependencyon the on the Performance Management SystemPerformance Management System
Cost of Living Adjustment Income Protection
Returns with Moderate DependencyReturns with Moderate Dependencyon the on the Performance Management SystemPerformance Management System
Work/Life Focus Allowances Relational Returns Base Pay
Returns with High DependencyReturns with High Dependencyon the on the Performance Management SystemPerformance Management System
Contingent Pay Short-term Incentives Long-term Incentives
Purposes of PM SystemsPurposes of PM Systems
Purposes of PM Systems: Purposes of PM Systems:
OverviewOverview
StrategicAdministrative InformationalDevelopmentalOrganizational maintenanceDocumentational
Strategic PurposeStrategic Purpose
Link individual goals with organization’s goals
Communicate most crucial business strategic initiatives
Administrative PurposeAdministrative Purpose
Provide information for making decisions re:Salary adjustmentsPromotionsRetention or terminationRecognition of individual performanceLayoffs
Informational PurposeInformational Purpose
Communicate to Employees:ExpectationsWhat is importantHow they are doingHow to improve
Developmental PurposeDevelopmental Purpose
Performance feedback/coaching Identification of individual strengths
and weaknessesCauses of performance deficienciesTailor development of individual
career path
Organizational Maintenance Organizational Maintenance PurposePurpose
Plan effective workforceAssess future training needsEvaluate performance at organizational
levelEvaluate effectiveness of HR interventions
Documentational PurposeDocumentational Purpose
Validate selection instrumentsDocument administrative decisionsHelp meet legal requirements
An Ideal PM System: An Ideal PM System: 14 Characteristics14 Characteristics
1. Congruent with organizational strategy
2. Thorough3. Practical4. Meaningful5. Specific6. Identifies effective/ ineffective
performance7. Reliable
An Ideal PM System: An Ideal PM System: 14 Characteristics 14 Characteristics (continued)(continued)
8. Valid9. Acceptable and Fair10. Inclusive11. Open (No Secrets)12. Correctable13. Standardized14. Ethical
Congruent with organizational Congruent with organizational strategystrategy
Consistent with organization’s strategyAligned with unit and organizational
goals
ThoroughThorough
All employees are evaluatedAll major job responsibilities are
evaluatedEvaluations cover performance for
entire review periodFeedback is given on both positive and
negative performance
PracticalPractical
AvailableEasy to useAcceptable to decision makersBenefits outweigh costs
MeaningfulMeaningful
Standards are important and relevantSystem measures ONLY what employee
can controlResults have consequences Evaluations occur regularly and at
appropriate timesSystem provides for continuing skill
development of evaluators
SpecificSpecific
Concrete and detailed guidance to employees •What’s expected •How to meet the expectations
Identifies Identifies effective and ineffective effective and ineffective performanceperformance
Distinguish between effective and ineffective◦Behaviors◦Results
Provide ability to identify employees with various levels of performance
ReliableReliable
ConsistentFree of errorInter-rater reliability
ValidValid
Relevant (measures what is important)Not deficient (doesn’t measure
unimportant facets of job)Not contaminated (only measures what
the employee can control)
Acceptable and FairAcceptable and Fair
Perception of Distributive Justice◦Work performed Evaluation received
Reward
Perception of Procedural Justice◦Fairness of procedures used to:Determine ratingsLink ratings to rewards
InclusiveInclusiveRepresents concerns of all involved◦When system is created, employees should help with decidingWhat should be measuredHow it should be measured
◦Employee should provide input on performance prior to evaluation meeting
Open (Open (NoNo Secrets) Secrets)
Frequent, ongoing evaluations and feedback
2-way communications in appraisal meeting
Clear standards, ongoing communication
Communications are factual, open, honest
CorrectableCorrectable
Recognizes that human judgment is fallible
Appeals process provided
StandardizedStandardized
Ongoing training of managers to provide
Consistent evaluations across◦People◦Time
EthicalEthical
Supervisor suppresses self-interestSupervisor rates only where she has
sufficient information about the performance dimension
Supervisor respects employee privacy
Integration with other Integration with other Human Resources Human Resources and and Development ActivitiesDevelopment Activities
PM provides information for:◦Development of training to meet organizational needs
◦Workforce planning◦Recruitment and hiring decisions◦Development of compensation systems
Quick ReviewQuick Review
Definition of Performance Management (PM)The Performance Management Contribution Disadvantages/Dangers of Poorly Implemented PM
SystemsDefinition of Reward SystemsAims and Role of PM SystemsCharacteristics of an Ideal PM SystemIntegration with Other Human Resources and Development
Activities