Performance management & Rewards

Question 1

Define high-performance work systems, and identify the elements of such a system

Answer 1

• a high-performance work system is the right combination of
• • people
• • technology, and
• • organizational structure that makes full use of the organization’s resources and opportunities in achieving its goals
• the elements of a high-performance work system are:
• • organizational structure
• • task design
• • people
• • reward systems, and
• • information systems.
• > these elements must work together in a smoothly functioning whole.

Question 2

Summarize the outcomes of a high-performance work system

Answer 2

• a high-performance work system achieves the organization’s goals typically:
• • including growth
• • productivity
• • profitability, and
• • a strong reputation
• to achieve these overall goals, the high-performance work system meets intermediate goals, such as:
• • high quality
• • innovation
• • customer satisfaction
• • job satisfaction, and
• • reduced absenteeism and turnover

Question 3

Describe the conditions that create a high-performance work system

Answer 3

• giving employees skills
• incentives
• knowledge
• autonomy, and
• employee satisfaction
• teamwork and empowerment
• creating a learning organization
• ethical (organizations and employees)
• in a high-performance organization, employees experience job satisfaction or even “occupational intimacy”

Question 4

Explain how human resource management (job design, recruitment, selection, performance mgmt., compensation) can contribute to high performance

Answer 4

• jobs should be designed to foster teamwork and employee empowerment
• recruitment and selection should focus on obtaining employees who have the qualities necessary for teamwork, empowerment, and knowledge sharing -> when selecting for teamwork and decision-making skills, it may have to provide training in specific job tasks
• the performance management system should be related to the organization’s goals, with a focus on meeting internal and external customers’ needs
• compensation should include links to performance, and employees should be included in decisions about compensation

Merke: Research suggests that it is more effective to improve HRM practices as a whole than to focus on one or two isolated practices.

Question 5

Discuss the role of HRM technology in high-performance work systems

Answer 5

- technology can improve the efficiency of the human resource management functions and support knowledge sharing
HRM applications involve:
-- transaction processing
-- decision support system and
-- expert systems

• relational databases can improve the efficiency of routine tasks and the quality of decisions
• internet technology (cloud computing, e-HRM) allows all employees to help themselves to the HR information they need whenever they need it

Question 6

Summarize ways to measure the effectiveness of human resource management

Answer 6

• taking a customer-oriented approach, HRM can improve quality by defining the internal customers who use its services and determining whether it is meeting those customers’ needs by e.g: HRM audit (= a formal review of the outcomes of HRM functions)
• analyzing specific programs or activities to measure success in terms of whether a program met its objectives and whether it delivered value in an economic sense, such as by leading to productivity improvements
• organizational network analysis to measure who is communicating with whom and how often. Patterns of communication can indicate, for example, which roles need to collaborate on projects or who seems to be the center of communication within and between work groups

Question 7

Explain performance management and identify the three steps involved

Answer 7

• performance management is the process through which managers ensure that employees’ activities and outputs contribute to the organization’s goals
  1. ) the organization specifies which aspects of performance are relevant to the organization
  2. ) the organization measures the relevant aspects of performance through performance appraisal.
  3. ) in performance feedback sessions, managers provide employees with information about their per-formance so they can adjust their behavior to meet the organization’s goals -> feedback includes efforts to identify and solve problems

Question 8

Discuss the purposes of performance manage-ment systems

Answer 8

• organizations establish performance management systems to meet three broad purposes:

– the strategic purpose is aimed at meeting business objectives

– the administrative purpose of performance management is to provide information for day-to-day decisions about salary, benefits, recognition, and retention or termination

– the developmental purpose of performance management is using the system as a basis for developing employees’ knowledge and skills

Question 9

Define five criteria for measuring the effectiveness of a performance management system

Answer 9

• performance measures should:
  1. ) be strategic - fitting with the organization’s strategy by supporting its goals and culture

2. ) be valid, so they measure all the relevant aspects of performance and do not measure irrelevant aspects of performance
3. ) provide interrater and test-retest reliability, so that appraisals are consistent among raters and over time
4. ) be acceptable to the people who use them or receive feedback from them
5. ) be specific, telling employees what is expected of them and how they can meet those expectations.

Question 10

Explain performance measurements and compare the major methods for measuring performance

Answer 10

• performance measurement may use ranking systems such as:
• • simple ranking
• • forced distribution, or
• • paired comparisons to compare one individual’s performance with that of other employees
• > pro’s: counteracts some forms of bias and helps distinguish employees for administra-tive decisions
• > con’s: time consuming, could be seen as unfair if actual performance is not distributed in the same way as the ranking system requires
• rating employees’ attri-butes, behaviors, or outcomes: is relatively simple but not always valid, unless attributes are specifically defined
• rating behaviors: requires a great deal of informa-tion, but these methods can be very effective. They can link behaviors to goals, and ratings by trained raters may be highly reliable
• tating results (e.g.: productivity or achievement of objectives): tends to be less subjective than other kinds of rating, making this approach highly acceptable
• validity may be a problem because of factors out-side the employee’s control; it also tends not to provide much basis for determining how to improve
• focusing on quality can provide practical benefits, but is not as useful for administrative and develop-mental decisions

Question 11

Describe major sources of performance information in terms of their advantages and disadvantages

Answer 11

• performance information may come from an employee’s self-appraisal and from appraisals by the employee’s supervisor, employees, peers, and customers
• customers and peers (in a job where the supervisor does not often observe the employee) are excellent sources of performance information
• > using only one source makes the appraisal more subjective -> therefore organizations may combine many sources into a 360-degree performance appraisal
• subordinates often have the best chance to see how a manager treats employees -> however, employees may be reluctant to contribute honest opinions about a supervisor unless they can provide information anonymously
• self-appraisals or friendships/ rivalries might lead to bias in rating, however they provide a basis for discussion in feedback sessions, opening up fruitful comparisons and areas of disagreement

Question 12

Define types of rating errors and explain how to minimize them

Answer 12

! people observe behavior often without a practical way of knowing all the relevant circumstances and outcomes, so they necessarily interpret what they see

rating erros:

• giving higher evaluations to people we consider similar to ourselves
• using only part of the rating scale:
• • giving all employees ratings at the high end of the scale is called leniency error
• • rating everyone at the low end of the scale is called strictness error
• • rating all employees at or near the middle is called central tendency
• the halo error refers to rating employees positively in all areas because of strong performance observed in one area
• the horns error is rating employees negatively in all areas because of weak performance observed in one area.
• ways to reduce rater error are:
• • training raters to be aware of their tendencies to make rating errors and training them to be sensitive to the complex nature of employee performance
• • minimizing appraisal politics by establishing a fair appraisal system and bringing managers together to discuss ratings in calibration meetings

Question 13

Explain how to provide performance feedback effectively and the managers role in this regard

Answer 13

• performance feedback should be a regular, scheduled management activity so that employees can correct problems as soon as they occur
• in this regard Managers:
• • prepare by establishing a neutral location, emphasizing that the feedback session will be a chance for discussion, and asking the employee to prepare a self-assessment
• should strive for a problem-solving approach and encourage employees to voice their opinions and discuss perfor-mance goals.
• • should look for opportunities to praise and should limit criticism

Merke: The discussion should focus on behavior and results rather than on personalities.

Question 14

Summarize ways to produce improvement in unsatisfactory performance among different kinds of employees

Answer 14

• for an employee who is motivated but lacks ability, the manager should provide coaching and training, give detailed feedback about performance, and con-sider restructuring the job
• for an employee who has ability but lacks motiva-tion, the manager should investigate whether out-side problems are a distraction and, if so, refer the employee for help or try to deliver more praise and evaluate whether additional pay and other rewards are appropriate
• for an employee lacking both ability and motiva-tion, the manager should consider whether the employee is a good fit for the position. Specific feedback or withholding rewards may spur improvement, or the employee may have to be demoted or terminated
• solid employees who are high in ability and motiva-tion will continue so and may be able to contribute even more if the manager provides appropriate direct feedback, rewards, and opportunities for development

Question 15

Discuss legal and ethical issues that affect performance management

Answer 15

legal:

• lawsuits related to performance management usu-ally involve charges of discrimination or unjust dismissal
• > therefore managers must make sure that performance management systems and decisions treat employees equally, without regard to their race, sex, or other protected status
• > organizations can do this by establishing and using valid performance measures and by training raters to evaluate performance accurately

Merke: A system is more likely to be legally defensible if it is based on behaviors and results, rather than on traits, and if multiple raters evaluate each person’s performance -> it should include a process for coaching or training employees to help them improve, rather than simply dismissing poor performance

ethical:

• an ethical issue of performance management is the use of electronic monitoring. This type of performance measurement provides detailed, accurate information, but employees may find it demoralizing, degrading, and stressful
• > employees are more likely to accept electronic monitoring if the organization explains its purpose, links it to help in improving performance, and keeps the performance data private