Chapter 8 - Performance Appraisal and Rewards Flashcards
What are performance appraisals
self-development indicators for employees about their performance on the job (quality and quantity)
form the basis of organizational rewards such as pay increases and bonuses and make personnel decisions for promotions
what is perception?
an individual’s ability to screen, select, group, and interpret stimuli in a way that makes meaning
think perception selectiveness, response salience, social perception, etc.
organizations use performance appraisals for several reasons (5)
- provide feedback to employees
- to allow for employee self-development
- to allocate rewards
- to gather information for personnel decisions
- to guide them in developing training and development efforts
graphic rating scales
rater rates employee on various evaluation dimensions by assigning a number or rating on each
what is the most popular method of performance appraisal?
graphic rating scales
critical incident
records incidents or examples of each subordinates behaviour that led to either extraordinary success or failure
recorded daily or weekly under predesignated categories
final performance rating consists of descriptive paragraphs of employees performance
behaviourally anchored rating scales (BARS)
begins by selecting a job that can be described by observable behaviour
- managers and personnel specialists then identify these behaviours as they relate to superior or inferior performance
lots of effort
behavioural observation scales
like BARS in that it focuses on identifying observable behaviours as they relate to performance
less demanding on evaluator thought and rates employees on a scale
management by objectives (MBO)
closely related to goal-setting theory of motivation
employees work with their supervisor to establish goals and objectives that they’ll be responsible for that year
goals are stated in straightforward language and relate to tasks within the employee’s domain
assessment centers
focus more on evaluating an employee’s long range potential to an organization rather than on their performance over the past year
used almost exclusively among managerial personnel
do specific exercises for judging
problems with appraisal techniques
most deal with the issues of validity and reliability
what are several common sources of error for appraisal techniques?
- central tendency error (rater sorts everyone averagely)
- strictness or leniency error (overly strict/ lenient)
- halo effect (supervisor assigns the same rating to each factor being evaluated for an individual - based on perception)
- regency error (evaluators focus on an employee’s most recent behaviour in the process)
- personal biases
what do managers have to be careful about regarding feedback to employees?
if one or more aspects of feedback seem negative to an employee, the credibility of the feedback in its entirety is dismissed, and the employee may increase their resistance to task effort
if accepted, it reinforces employee’s direction, effort on task, and persistence
what are 5 functions of reward systems in organizations?
- job effort and performance
- attendance and retention
- employee commitment
- job satisfaction
- occupational and organizational choice
what are 4 bases for reward distribution?
- power (more power, more)
- equality (everyone with same job title gets same)
- need (greater need greater pay)
- distributive justice (employees receive their rewards as a function of their contribution to company)
what kind of functions does money serve in the work setting?
goal or incentive
source of satisfaction
instrument for gaining other desired outcomes
standard of comparison for determining relative standing or worth
conditional reinforcer
what is Lawler’s take on money?
suggests that certain conditions must be present in order for pay to act as a strong motivator
- trust levels between management and employer
- individual performance is accurately measured
- substantial pay difference between low and high performers
- few, if any, negative consequences for good performance must be perceived
what are the pros and cons of pay secrecy?
people have tendency to overestimate the pay of coworkers and those above them in the hierarchy (motivation potential of a differential rewards system is lost –> as they still think that higher positions are making way more money)
pay secrecy eliminates feedback –> money represents one of the most meaningful forms of feedback for managers
when salary is open, employees generally provided with more recognition for good performance and are more motivated to perform
openness can also cause jealousy :(
what is a disadvantage of individual incentive programs?
competition among employees, quantity over quality mentality (in certain contexts)
what is an alternative to individual incentive programs?
group incentives
what are 5 types of group pay practises?
- gain sharing
- skills-based incentives
- lump-sump increase
- participative pay decisions
- flexible benefits
pros and cons of gain sharing
= employee groups get rewarded for increased productivity
pros
- ties pay to performance and encourages group cooperation
cons
- plans that focus exclusively on productivity may lead employees to ignore other important objectives, like quality
pros and cons of skills-based incentives
= employees paid according to their skills level, regardless of the actual tasks they perform
pros
- more flexible and skilled workforce
- increased satisfaction
cons
- higher training and salary costs
lump-sum increase pros and cons
= compensation received as a one-time payment in recognition
pros
- greater visibility of pay increases
- increased pay satisfaction
cons
- cost of administration
participative pay decisions pros and cons
employees get a say in what they get paid
pros
- increased trust in a satisfaction with pay decisions
- better pay decisions
cons
- time-consuming
flexible benefits pros and cons
employees can tailor their health and life insurance to fit their needs
pros
- increased satisfaction with pay and benefits
cons
- cost of administration
what are components of a good reward system
- closely tied to performance
- allows for individual differences
- reflects the type of work that is being done
- consistent with corporate culture
- carefully monitored over time
6 employees understand the plan and it improves communication
