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Performance Management

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The process through which managers ensure that employees' activities and outputs contribute to the organization's goals

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Stages of the Performance Management Process

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1. Specify relevant aspects of performance 2. appraise performance 3. provide performance feedback 4. problem solving and rewards

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Strategic Purpose (performance management)

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Effective performance management helps the organization achieve its business objective

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Administrative Purpose (performance management)

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The ways in which organizations use the systems to provide information for day to day decisions about salary, benefits, and recognition programs

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If the performance management system created competition among team members, I would

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Make collaboration a criterion to be evaluated.

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Developmental Purpose (performance management)

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means that it serves as a basis for developing employees' knowledge and skills.

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Criteria for Effective Performance Management

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Fit with strategy, validity, reliability, acceptability, specific feedback

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Sarah is a computer programmer whose job mainly consists of independently coding software. Interpersonal and teamwork skills are included on performance appraisal. Measuring these skills most closely represents:

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Criterion contamination

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Rank of Performance Management Approaches

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(Low to high) comparative, attribute, behavioral, results, quality

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Simple Rank

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Requires managers to rank employees in their group from the highest performer to the lowest

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Forced Distribution

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Assigns a certain percentage of employees to each category in a set of categories

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Paired Comparison

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Compares each employee with each other employee to establish rank

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Graphic Rating Scale (Attribute)

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Lists traits and provides a rating scale for each trait. The employer uses the scale to indicate the extent to which an employee displays each trait.

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Mixed-Standard Scale (Attributes)

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Uses several statements describing each trait to produce a final score for that trait.

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Graphic Rating Scale Performance Dimensions

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Knowledge, communication, judgement, managerial skill, quality performance, teamwork, interpersonal skills, initiative, creativity, problem solving

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Critical-Incident Method

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Based on managers' records of specific examples of the employee acting in ways that are either effective or ineffective. Employees receive feedback about what they do well and what they do poorly and how they are helping the organization achieve its goals.

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Behaviorally Anchored Rating Scale (BARS)

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Rates behavior in terms of a scale showing specific statements of behavior that describe different levels of performance.

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Behavioral Observation Scale (BOS)

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A variation of a BARS which uses all behaviors necessary for effective performance to rate performance at a task. A BOS also asks the manager to rate the frequency with which the employee has exhibited the behavior during the rating period.

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Organizational Behavior Modification (OBM)

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A plan for managing the behavior of employees through a formal system of feedback and reinforcement.

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Management by Objectives (MBO):

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people at each level of the organization set goals in a process that flows from top to bottom, so that all levels are contributing to the organization's overall goals. These goals become the standards for evaluating each employee's performance.

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The performance management system at XYZ company currently is perceived as unfair and is time-consuming for managers. Which of the following systems is the most likely and least likely used, respectively.

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Paired comparisons; Results

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total quality management (TQM)

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performance measurement combines measurements of attributes and results. Subjective feedback Statistical quality control

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360-Degree Performance Appraisal

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performance measurement that combines information from the employees': Managers, Peers, Subordinates, Self, Customers

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Contrast errors

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the rater compares an individual, not against an objective standard, but against other employees.

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Distributional errors

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rater tends to use only one part of a rating scale. Leniency: the reviewer rates everyone near the top Strictness: the rater favors lower rankings Central tendency: the rater puts everyone near the middle of the scale

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Rater bias

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raters often let their opinion of one quality color their opinion of others. Halo error: when the bias is in a favorable direction. This can mistakenly tell employees they don't need to improve in any area. Horns error: when the bias involves negative ratings. This can cause employees to feel frustrated and defensive.

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Scheduling Performance Feedback

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Performance feedback should be a regular, expected management activity. Employees should receive feedback so often that they know what the manager will say during their annual performance review.

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Conducting Performance Feedback Approaches

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Tell-and-Sell" - managers tell employees their ratings and then justify those ratings. "Tell-and-Listen" - managers tell employees their ratings and then let the employees explain their side of the story. "Problem-Solving" - managers and employees work together to solve performance problems.

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legally defensible performance management system

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Based on valid job analyses, with requirements for job success clearly communicated to employees. Performance measurement should evaluate behaviors or results, rather than traits. Multiple raters (including self-appraisals) should be used. All performance ratings should be reviewed by upper-level managers. There should be an appeals mechanism for employees.

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performance feedback discussion

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focus on behavior and results rather than on personalities.

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Chapter 10

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Separating and Retaining Employees

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Involuntary Turnover

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Turnover initiated by an employer. Often with employees who would prefer to stay. Costs; recruiting, training, lost productivity, lawsuits, workplace violence

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Voluntary Turnover

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Turnover initiated by employees. Often when the organization would prefer to keep them. Costs; recruiting, training, lost productivity, loss of talent

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Protecting Employees' Privacy

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Ensure info is relevent, publicize information-gathering policies and consequences, request consent before gathering info, conduct searches discreetly, share info only with those who need it

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Workers' Adjustment, Retraining and Notification Act (WARN)

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plan broad-scale layoffs may be subject to. Employers covered by the law are required to give notice before any closing or layoff.

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Hot-Stove Rule

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Principle of discipline that says discipline should be like a hot stove, giving clear warning and following up with consistent, objective, and immediate consequences.

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Progressive Discipline

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A formal discipline process in which the consequences become more serious if the employee repeats the offense.

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Progressive Discipline Responses

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1. unofficial spoken warning 2. official written warning 3. 2nd written warning plus threat of temporary suspension 4. Temporary suspension plus written notice that this in a last chance to improve 5. termination

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Alternative dispute resolution (ADR)

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methods of solving a problem by bringing in an impartial outsider but not using the court system. 1. Open-door policy 2. peer review 3. mediation 4. arbitration

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Open-Door Policy

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An organization's policy of making managers available to hear complaints.

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Peer Review

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Process for resolving disputes by taking them to a panel composed of representatives from the organization at the same levels as the people in the dispute.

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Mediation

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Nonbinding process in which a neutral party from outside the organization hears the case and tries to help the people in a conflict arrive at a settlement.

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Arbitration

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Binding process in which a professional arbitrator from outside the organization (usually a lawyer or judge) hears the case and resolves it by making a decision.

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Employee assistance program (EAP)

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a referral service that employees can use to seek professional treatment for emotional problems or substance abuse. Many EAPs are fully integrated into employers' overall health benefits plans.

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Outplacement counseling

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a service in which professionals try to help dismissed employees manage the transition from one job to another, help the former employee address the psychological issues associated with losing a job while at the same time helping the person find a new job.

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Job Withdrawal

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a set of behaviors with which employees try to avoid the work situation physically, mentally, or emotionally. Job withdrawal results when circumstances such as the nature of the job, supervisors and coworkers, pay levels, or the employee's own disposition cause the employee to become dissatisfied with the job.

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Causes of Job Dissatisfaction

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Personal dispositions (negative affectivity and core self-evaluations), task and roles (role, role ambiguity, role conflict, role overload), supervisors and coworkers (negative behavior by managers, conflicts b/w employees), pay and benefits (pay is an indicator of status in the organization, pay and benefits contribute to self-worth)

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Job satisfaction

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pleasant feeling resulting from the perception that one's job fulfills or allows for the fulfillment of one's important job values. Values, perceptions, ideas of what is important.

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Role analysis technique

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process of formally identifying expectations associated with a role.

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Monitoring Job Satisfaction

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Measured with some kind of survey. A systematic, ongoing program of employee surveys should be part of the organization's human resource strategy. This allows the organization to monitor trends and prevent voluntary turnover.

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Exit interview

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meeting of a departing employee with the employee's supervisor and/or a human resource specialist to discuss the employee's reasons for leaving, can uncover reasons why employees leave.

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Chapter 12

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Recognizing Employee Contributions with Pay

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Incentive pay

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orms of pay linked to an employee's performance as an individual, group member, or organization member, linked to certain predefined behaviors or outcomes.

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Piecework Rate

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A wage based on the amount workers produce

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Straight Piecework Plan

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Incentive pay in which the employer pay the same rate per piece no matter how much the worker produces

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Differential Piece Rates

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Incentive pay in which the piece rate is higher when a greater amount is produced

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Standard Hour Plan

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An incentive plan that pays workers extra for work done in less than a preset "standard time."

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Merit Pay

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A system of linking pay increases to ratings on a performance scale. The system gives the lowest paid best performers the biggest pay increases.

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Performance Bonuses

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Performance bonuses are not rolled into base pay, must re-earn them during each performance period. may also be linked to objective performance measures, rather than subjective ratings.

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Commissions

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incentive pay calculated as a percentage of sales.

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Gainsharing

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group incentive program that measures improvements in productivity and effectiveness and distributes a portion of each to employees.

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Scanlon Plan

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a gainsharing program in which employees receive a bonus if the ratio of labor costs to the sales value of production is below a set standard.

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Group Bonuses

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tend to be for smaller work groups. These bonuses reward the members of a group for attaining a specific goal, usually measured in terms of physical output.

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Team Awards

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Similar to group bonuses, but are more likely to use a broad range of performance measures:Cost savings, Successful completion of a project, Meeting deadlines

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Profit sharing

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incentive pay in which payments are a percentage of the organization's profits and do not become part of the employees' base salary, may encourage employees to think like owners.

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Stock Options

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Rights to buy a certain number of shares of stock at a specified price.

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Employee Stock Ownership Plan (ESOP)

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an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust. This is the most common form of employee ownership.

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Balanced scorecard

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a combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive pay. financial, customer, internal, learning and growth

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Short-Term Incentives

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Bonuses based on the year's profits, return on investment, or other measures related to the organization's goals.

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Long-Term Incentives

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Include stock options and stock purchase plans.

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CHAPTER 15

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Managing Human Resources Globally

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Parent-country national

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employee who was born and works in the country in which an organization's headquarters is located.

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Host-country national

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employee who is a citizen of the country (other than parent country) in which an organization operates a facility.

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Third-country national

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employee who is a citizen of a country that is neither the parent country nor the host country of the employer.

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Expatriates

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employees assigned to work in another country.

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International organization

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an organization that sets up one or a few facilities in one or a few foreign countries.

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Multinational company

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an organization that builds facilities in a number of different countries in an effort to minimize production and distribution costs.

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Global organization

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an organization that chooses to locate a facility based on the ability to effectively, efficiently, and flexibly produce a product or service using cultural differences as an advantage.

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Transnational HRM system:

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makes decisions from a global perspective, includes managers from many countries, based on ideas contributed by people representing a variety of cultures

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Factors Affecting HRM in International Markets

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education, economic systems, culture, political-legal systems

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Culture

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a community's set of shared assumptions about how the world works and what ideals are worth striving for, can greatly affect a country's laws, influences what people value, so it affects people's economic systems and efforts to invest in education, determines the effectiveness of various HRM practices

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Hofstede's Five Dimensions of Culture

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1. Individualism/Collectivism 2. Power Distance 3. Uncertainty Avoidance 4. Masculinity/Femininity 5. Long-term/Short-term Orientation

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Individualism/Collectivism

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Describes the strength of the relation between an individual and other individuals in the society.

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Power Distance

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Concerns the way the culture deals with unequal distribution of power and defines the amount of inequality that is normal.

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Uncertainty Avoidance

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Describes how cultures handle the fact that the future is unpredictable.

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Masculinity/Femininity

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The emphasis a culture places on practices or qualities that have traditionally been considered masculine or feminine.

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Long-term/Short-term Orientation

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Suggests whether the focus of cultural values is on the future (long term) or the past and present (short term).

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Emotional Cycle Associated with a Foreign Assignment

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Honeymoon, culture shock, recovery, adjustment

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Cross-Cultural Preparation

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The training covers all three phases of an international assignment: Preparation for departure The assignment itself Preparation for the return home

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Balance sheet approach

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this approach adjusts the manager's compensation so that it gives the manager the same standard of living as in the home country plus extra pay for the inconvenience of locating overseas.

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Compensating Expatriates

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components of the total pay package: Base salary Tax equalization allowance Benefits Allowances

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Repatriation

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Communication: the expatriate receives information and recognizes changes at home while abroad Validation: giving the expatriate recognition for the overseas service when this person returns home.

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CHAPTER 16

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Creating and Maintaining High-Performance Organizations

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High-performance work system

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the right combination of people, technology, and organizational structure that makes full use of the organization's resources and opportunities in achieving its goals.

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Organizational structure (High-performance work system)

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the way the organization groups its people into useful divisions, departments, and reporting relationships.

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Task design (High-performance work system)

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determines how the details of the organization's necessary activities will be grouped, whether into jobs or team responsibilities.

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People (High-performance work system)

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well suited and well prepared for their jobs.

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Reward systems (High-performance work system)

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contribute to high performance by encouraging people to strive for objectives that support the organization's overall goals.

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Information systems (High-performance work system)

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modern information systems have enabled organizations to share information widely.

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Learning organization

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an organization that supports lifelong learning by enabling all employees to acquire and share knowledge.

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Continuous learning

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each employee's and each group's ongoing efforts to gather information and apply the information to their decisions.

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Knowledge is shared

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one challenge is to shift the focus of training away from teaching skills and toward a broader focus on generating and sharing knowledge.

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Critical, systematic thinking

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is widespread and occurs when employees are encouraged to see relationships among ideas and think in new ways.

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Learning culture

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a culture in which learning is rewarded, promoted, and supported by managers and organizational objectives.

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Employees are valued

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the organization recognizes that employees are the source of its knowledge. It therefore focuses on ensuring the development and well-being of each employee.

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New technologies

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applications of knowledge, procedures, and equipment that have not previously been used.

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Transaction Processing

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Computations and calculations used to review and document HRM decisions and practices. These include documenting employee relocation, payroll expenses, and training course enrollments.

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Decision Support Systems

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These are systems designed to help managers solve problems. They usually include a "what if" feature.

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Expert Systems

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Arecomputer systems incorporating the decision rules of people deemed to have expertise in a certain area.

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Relational Databases

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Store data in separate files that can be linked by common elements.

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E-HRM

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let all the organzation's employees help themselves to the HR information they need whenever they need it.

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HRM audit

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a formal review of the outcomes of HRM functions, based on identifying key HRM functions and measures of business performance.

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Greater efficiency

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means the HR department uses fewer and less-costly resources to perform its functions.

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Greater effectiveness

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means that what the HR department does has a more beneficial effect on employees and the organization's performance.

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