Exam 3 - Bernadette Racicot PDF

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https://quizlet.com/_8dnwf9?x=1qqt&i=1nb8u Chapter 10 ● Performance Management

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Series of activities designed to ensure that organization gets performance it needs from its employees Performance appraisal

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Process of determining how well employees do their jobs relative to a standard and communicating that information to them

Effective performance management system

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Make clear what organization expects Provide performance information to employees Identify areas of success and needed development Document performance for records ■

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Components of a performance focused culture

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Can see progress/improvement, holds them accountable

Clear expectations, goals and deadlines Detailed appraisal of employee performance Clear feedback on performance Manager and employee training as needed Consequences for performance

Identifying and measuring employee performance

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Criteria for appraisals: ■ presence/attendance, quality/quantity of output, timeliness, efficiency/effectiveness of work

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Job duties: important elements in a given job as identified from job descriptions (established through job analysis) ■ What an organization pays an employee to do

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Weights: used to show relative importance of different duties in a job

Types of performance information:

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Trait-based: competencies identified during job

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analysis process and documented on job descriptions Performance standards: define expected levels of employee performance

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Should be realistic, measurable and clearly understood ■

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Benefit both organizations and employees

Ensure everyone involved knows levels of accomplishment expected Can be both numerical and non-numerical -- Assessing non numerical standards can be difficult

Performance appraisals

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Asses employee’s performance, provide platform for feedback, help administering wages and salaries, identifying strengths and weaknesses, provide answers to work related questions, help improve job performance Use for performance appraisals:

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Administrative actions: ■

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dismissal from work, disciplinary procedures, compensation adjustments, promotions/demotions, transfers

Development actions: ■

Career progression, training opportunities, coaching, mentoring, identifying strengths/weaknesses

Decisions about performance appraisal process ●

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Designing Appraisal Systems

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Appraisal Responsibilities – who conducts the appraisal ■ Evaluators need to have the opportunity to observe behavior and/or obtain input from critical “constituents”

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Informal vs. Systematic Processes ■ Informal – day to day feedback; very useful, but should be used in conjunction with a formal process

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Timing of Appraisals – usually conducted annually, but problem performance should be addressed immediately – no surprises at appraisal time

Typical division of HR responsibilities:

Who conducts appraisals ● Supervisors rating their employees ● Direct reports rating their managers ● Team members (peer ratings) rating each other ● Employees rating themselves (often used in conjunction with supervisor ratings) ● Outside sources rating employees --e.g., customers (internal and external) ● Multisource or 360° feedback – potential problems; probably better used for development purposes than for administrative purposes ●

Multisource Appraisal: manager, coworkers/peers, subordinates, self, customers

Potential problems with 360 degree feedback ● ● ● ●

Disagreement among raters Bias -- different perspectives/different opportunities to observe behavior/lack of accountability for customers, peers, and direct reports for their ratings Rating inflation – particularly when used to make compensation/reward decisions Potential confidentiality and anonymity issues

Category Scaling Methods: ●

Graphic rating scale: ○ Allows rater to mark an employee’s performance on a continuum indicating low to high levels of a particular characteristic ○ Aspects of Performance Measured ■ Descriptive Categories – e.g., quantity of work; attendance; dependability ■ Job Duties – based on requirements from the job description ■ Behavioral Dimensions – e.g., communication; delegation; decision making ○ Concerns with graphic rating scale: ■ Form might not accurately reflect the importance of certain job characteristics ■ Factors may need to be added or removed depending on employee (even people with the same job title may have different duties and responsibilities/critical competencies ■ Focus should be on job duties/responsibilities ■ Standards must be well-defined ■ Grouped traits can be rated differently by different supervisors – each question should be specific, well defined, and measure a single dimension. What exactly does “dependability mean?” ● Descriptive words have different interpretations

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Behaviorally anchored rating scale (BARS): Describes specific examples of job behavior which are then “anchored” or measured against a scale of performance levels Creating a BARS system ● Identify important job dimensions ● Write short statements of job behaviors (anchors)

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Assign anchors to job dimensions Set scales for anchors

Comparative Methods ●

Ranking: Listing of employees from highest to lowest in performance levels and relative contributions ● Drawbacks: ● Does not indicate size of differences in performance between employees ● Implies that lowest-ranked employees are unsatisfactory performers ● Becomes an unwieldy process if the group to be ranked is large

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Forced distribution: Ratings of employees’ performance levels are distributed along a bell-shaped curve ● Advantages: ● Helps deal with “rater inflation” ● Makes managers identify high, average, and low performers ● Ensures that compensation increases reflect performance differences among individuals ● Disadvantages: ● Managers resist placing people in the lowest or highest groups ● Explanation for placement can be difficult ● Performance may not follow normal distribution ● Managers may make false distinctions between employees

Narrative Methods: ●

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Critical incident: Manager keeps a written record of highly favorable and unfavorable employee actions ● Susceptible to selective attention bias ● Time-consuming ● Requires extensive opportunity to observe behavior ● Manager reviews record at annual evaluation Essay: Manager writes a short essay describing an employee’s performance ● Drawback - Depends on the supervisors’ writing skills and their ability to express themselves ● Often used in conjunction with a rating system

Management by objectives (MBO): Performance appraisal method that highlights the performance goals that an individual and manager identify together MBO Stages: ○ 1. Job review and agreement ○ 2. Development of performance standards ○ 3. Setting of objectives ○ 4. Continuing performance discussions

Combination of methods ● ● ●

No single appraisal method is best for all situations Performance measurement system that uses a combination of methods may be sensible Managers can choose and mix methods to accomplish what they want a performance appraisal system

Training Managers in Performance Appraisals: ●

Performance Appraisals Training Topics ● Appraisal process and timing ● Performance criteria and job standards ● Positive and negative feedback ● Training and development goals ● Compensation reviews ● Common rating errors

Types of Rater errors ● ● ● ● ● ● ● ●

Varying Standards within and between raters Recency and Primacy Effects Central Tendency, Leniency, and Strictness Rater Bias (stereotyping; selective attention) Halo and Horns Effects Contrast Error Similar-to-Me/Different-from-Me Errors Sampling Error – inadequate opportunity to observe

Appraisal Feedback: ●

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Appraisal Interview ● Communicate employee’s positive contributions ● Discuss to enable employee to identify their own deficiencies and develop improvement plans Reactions of Managers and Employees ● Typically negative perceptions of appraisals ● Avoidance of negative issues or biased ratings due to fear of having to confront or defend ● Well-done appraisals often viewed as constructive

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Effective Performance Management ● Can be beneficial as a development tool but if used for both development and administration, can be open to bias ● Useful as an administrative tool ● Legal and job related ● Effective in documenting employee performance ● Clear about who are high, average, and low performers ● Viewed as fair by employees

Chap 11 Nature of Total rewards and compensation ● ●

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Total rewards: Monetary and nonmonetary rewards provided by companies to attract, motivate, and retain employees Strategic decisions can guide the design of compensation practices ● Compliance with all applicable laws and regulations ● Cost-effectiveness for the organization ● Internal and external equity for employees Optimal mix of compensation components Performance enhancement for the organization Performance recognition and talent management for employees Enhanced recruitment, involvement, and retention of employees

Elements of Total Rewards

Legal Constraints on Pay Systems ●

Fair Labor Standards Act (FLSA) - Primary federal law affecting compensation which is enforced by the Wage and Hour Division of the U.S. Department of Labor ● Provisions focus on the areas covering: ● Minimum wage ● Limits on the use of child labor (unlimited hours – must be 16 years old; limited hours 14-15 years old) ● Overtime provisions (exempt and nonexempt status) ● Non-exempt employees must be paid 1.5 X regular pay when working over 40 hours

Special Pay/Overtime Issues - Nonexempt Employees ● ● ● ● ● ●

Compensatory Time Off – public sector only; prohibited in private sector Incentives for Nonexempt Employees – overtime pay must include total pay including incentives Training Time – counts toward time worked for Security Inspection Time – counts toward time worked After-Hours Email Time – consider adopting a “curfew” Travel Time -- counts toward time worked Donning and Doffing Time – complex issue – ask DOL

Acts & Legislation Affecting Compensation ●

Compensation and the Law ○ Paycheck Fairness Act – proposed to require employers to justify pay diffs between men and women are due to business necessity ○ Equal Pay Act of 1963 – illegal to use diff wages for men and women performing

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substantially the same jobs Lilly Ledbetter Fair Pay Act – passed in response to statue of limitations allowed under the Equal Pay Act; each paycheck is a new act of discrimination Independent Contractor Regulations

Strategic Compensation Decisions ●

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Organizational Climate: Create a climate that reduces dissatisfaction with compensation ● Entitlement philosophy: Assumes that individuals who have worked another year with the company are entitled to pay increases with little regard for performance differences ● Pay-for-performance philosophy: Assumes that compensation decisions reflect performance differences Communicating Pay Philosophy ● Helps employees recognize: ■ Value of the total reward package ■ How their work performance, tenure, and raises can affect their compensation ■ Work attitudes can improve Compensation Responsibilities ● HR specialists and managers administer the organizational compensation programs ■ HR develops and administers the compensation system ■ HR ensures pay practices comply with all legal requirements ■ Line managers evaluate employee performance and participate in pay decisions

Continuum of Compensation Philosophies

Motivation Theories and Compensation Philosophies Expectancy theory: Employee’s motivation is based on the probability that his or her efforts will lead to an expected level of performance that is linked to a valued reward ● Effort-performance link ● Performance-reward link ● Reward-personal goals link Rewards that are not appreciated by the employee have little value to motivate Equity theory: Individuals judge fairness (equity) in compensation by comparing their inputs and outcomes against the inputs and outcomes of referent others ●

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Referent others: Workers that the individual uses as a reference point to make these comparisons

Compensation Fairness and Equity ● ● ●

External Equity – am I paid fairly based on what others in the marketplace are paid? Internal Equity ● Procedural Justice ● Distributive Justice Pay Secrecy vs. Openness ● Sharing pay grades and pay decision rules can enhance perceptions of fairness (informational justice/procedural justice)

Market Competitive Compensation: ●

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Lag-the-Market Strategy ● Used when the employer is experiencing financial difficulties and when an abundance of workers is available Lead-the-Market Strategy ● Aggressive approach that enables a company to attract and retain sufficient workers with the required capabilities and be more selective when hiring Match-the-Market Strategy ● Attempts to balance employer cost pressures and the need to attract and retain employees by providing compensation levels that meet the market for the company’s jobs

Competency-Based Pay ● ● ●

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Performance-based pay: Reward employees for how well they carry out tasks, duties, & responsibilities Competency-based pay: Rewards individuals for the capabilities they demonstrate and acquire In knowledge-based pay (KBP) or skill-based pay (SBP) systems employees: ● Start at a base level of pay ● Receive increases as they learn to do other jobs ● Gain additional skills and knowledge ● Become more valuable to the employer ● Greater workforce flexibility and productivity Job Evaluation Methods (most commonly used) ● Point Factor Method: points assigned to each compensable factor by an expert and then the points are totaled for a total score for each job ● Factors commonly reflect skill, effort, social interaction, and working conditions ● Ranking Method: simple ranking of each job based on value to the organization; best used in small organizations ● Classification Method: often used in public sector where each job is placed in a grade based on the job description ● Factor-Comparison Method: combines ranking and point factor method; very

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complicated and rarely used Job evaluation: Formal, systematic means to determine the relative worth of jobs within an organization Compensable factor: Job dimension commonly present throughout a group of jobs within an organization that can be rated for each job ● Derived from job analysis ● Reflect the nature of different types of work performed in the organization

Market pricing: Uses market pay data to identify the relative value of jobs based on what other employers pay for similar jobs Identifying relevant market pay data for jobs that are good matches with the employer’s: ● Jobs ● Geographic considerations ● Company strategies and philosophies about desired market competitiveness levels Advantages: ● Ties organizational pay levels to the external job market, without internal job evaluation distortion ● Communicates to employees that the compensation system is market linked Disadvantages: ● Pay survey data may be limited or unsound ● Compensation methods may differ from matching jobs in the market ● Tying pay levels to market data can lead to wide fluctuations

Pay survey: Collection of data on compensation rates for workers performing similar jobs in other organizations Benchmark jobs: Jobs that are found in many organizations that can be used for the purposes of comparison Internet-based pay information is prevalent Pay grades: Groupings of individual jobs that have approximately the same value to the organization; 11-17 grades are generally used in small to medium-sized companies Market line: Used to create pay grades using both market and job evaluation data: ○ Job value as determined by job evaluation points ○ Job value as determined pay survey rates Market banding: Grouping jobs into pay grades based on similar market survey amounts ○ Minimums, midpoints, and maximums are used to allow for pay increases

Pay Ranges ●

Broadbanding: Commonly used practice of using fewer pay grades with much broader ranges than in traditional compensation systems ● More consistent with flattening of organizational structures ● Major disadvantage is that promotions within the band do not result in movement to a higher pay grade; employees may perceive fewer promotional opportunities

Performance-Based Increases

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Targeting high performers - Focuses on providing the top-performing employees with higher pay raises Pay adjustment matrix - Reflects an employee’s upward movement in a firm (don’t worry about the math!) ● Factors considered: ● Employee’s level of performance as rated in an appraisal ● Employee’s position in the pay range ● Purpose: to ensure that good performers are rewarded and don’t fall behind the midpoint of the pay range which can happen when new employees are hired at higher salaries

Standardized Pay Adjustments ●

Standardized Pay Increases ● Seniority – unions prefer that salary increases be seniority-based ● Cost-of-Living Adjustments (COLA) ● Across-the-Board Increases – no or negative effect on motivation; this is NOT merit pay ● Lump-Sum Increases (LSI) – larger sums strengthen the relationship between pay and performance; also reduces the problems associated with maxing out of the pay grade

Chapter 14 ●

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Risk Management: Involves the responsibility to consider physical, human, and financial factors to protect organizational and individual interests ○ Concerns: ■ Preventing accidents and health problems at work ■ Planning for terrorism attack ■ Protecting against workplace violence ■ Ensuring HR data are secure ■ Anticipating global disease outbreaks ■ Preparing for natural disasters Health: General state of physical, mental, and emotional well-being Safety: Condition in which people’s physical well-being is protected Security: Protection of employees and organizational facilities from forces that may harm them

Global Safety, Health and Security Issues ● ●

Risk management must be considered for employees around the world International assignments must consider: ○ Protection from assault, theft, disasters, disease, and poor health care ○ Tax and immigration risks ○ Dangerous working conditions

Occupational Safety and Health Act ● ●

Enacted to ensure that the health and safety of workers is protected Occupational Safety and Health Administration (OSHA) administers provisions of the law

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National Institute for Occupational Safety and Health (NIOSH) develops safety standards Occupational Safety and Health Review Commission (OSHRC) reviews OSHA actions

OSHA Enforcement Actions and Results ● ● ●

OSHA enforces safety regulations Since 2003, incidences have declined Employers must adhere to: ○ General duty of employers is to provide ...