LAST CLASS:

OPEN DISCUSSION

EMBA 60616 September 28, 2012

1 Performance Evaluation (8:00AM – 8:30AM)

Variable Pay (8:30AM – 9:00AM)

Generational Values Differences (9:00AM – 9:30AM)

Managing Derailing Employees (9:45AM – 10:15AM)

Essential Management Skills (if time allows)

Team-Based Leadership (if time allows)

Performance Evaluation

What are the advantages and disadvantages of

forced ranking performance evaluation systems?

What does the research literature say?

Who in the class has experience with forced ranking

systems?

What are the benefits of forced ranking systems?

Why are they used in your company or others‘ companies?

What are the costs of forced ranking systems?

Why aren‘t they used in your company or others‘ companies?

2

See Stewart, Gruys, and Storm (2010) review, posted on website

Performance Evaluation 3

Not removing that bottom 10% early in their careers is not only a

management failure, but false kindness as well—a form of cruelty—

because inevitably a new leader will come into a business and take out

that bottom 10% right away, leaving them—sometimes midway through

a career—stranded and having to start over somewhere else.

Removing marginal performers early in their careers is doing the right

thing for them; leaving them in place to settle into a career that will

inevitably be terminated is not. GE leaders must not only understand

the necessity to encourage, inspire and reward that top 20% and be

sure that the high-performance 70% is always energized to improve

and move upward; they must develop the determination to change out,

always humanely, that bottom 10% and do it every year. That is how

real meritocracies are created and thrive.

– Jack Welch

Performance Evaluation 4

A quarter of Fortune 500 companies use some type of forced ranking system

Little study of forced ranking (―rank and yank‖) systems

Advantages

Eliminates rater errors/biases (severity/leniency)

Before Ford implemented its system, 98% of managers were rated ‗fully meeting expectations‘

Process for eliminating ―sick cats‖ – thus productivity

Helps identify (and thus reward) peak performers

Performance Evaluation 5

Advantages (continued)

Fosters more candidate communication

How an employee‘s performance compares to others doing similar work; thus provides impetus for change

Short-term motivational benefits

Disadvantages

Ignores objective performance differences (GPA-SAT)

Difficult to sustain (10% Y1; 10% Y2; 10% Y3…)

Undermines teamwork (Survivor mentality)

Disliked by employees

Lawsuits (Microsoft, Ford, Goodyear, Conoco sued)

Performance Evaluation

What are the advantages and disadvantages of

forced ranking performance evaluation systems?

What does the research literature say?

Who in the class has experience with forced ranking

systems?

What are the benefits of forced ranking systems?

Why are they used in your company or others‘ companies?

What are the costs of forced ranking systems?

Why aren‘t they used in your company or others‘ companies?

6

See Stewart, Gruys, and Storm (2010) review, posted on website

Variable Pay 7

How well do variable pay (bonus) systems work?

What does the research literature say?

Who in the class has experience with bonus plans?

What are the benefits of variable pay?

Why are they used in your company or others‘ companies?

What are the costs of variable pay?

Why aren‘t they used in your company or others‘ companies?

How does variable pay encourage/discourage risk-

taking?

Variable Pay 8

Unions generally oppose variable (performance-based) pay

Literature: Variable pay plans are effective

Merit pay is most common variable pay plan

BUT, is merit pay the most effective method VP plan?

Bonus

Gainsharing

Profit-sharing

Stock (executive compensation is a different issue)

Do these work equally well?

Variable Pay 9

0%

5%

10%

15%

20%

25%

30%

MonetaryIncentives

Goal Setting JobEnrichment

Participation

30%

16%

9% 0.50%

Perc

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ease

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ance

Variable Pay 10

0%

10%

20%

30%

40%

50%

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Survey studies(n=8)

Case studies(n=22)

Experimentalfield studies

(n=4)

All studies

48

.80

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40

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43

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Increases in Productivity Following Incentive Implementation

Variable Pay 11

What is the problem with merit pay?

Given accrual over time, dollar increases may reflect

seniority as much as recent performance

Bonus plans are underutilized and effective

Literature on gainsharing is mixed

Literature on profit-sharing and stock options is not

particularly positive

Any of these plans are better than no variable pay

plan and each has merits

Variable Pay 12

How well do variable pay (bonus) systems work?

What does the research literature say?

Who in the class has experience with bonus plans?

What are the benefits of variable pay?

Why are they used in your company or others‘ companies?

What are the costs of variable pay?

Why aren‘t they used in your company or others‘ companies?

How does variable pay encourage/discourage risk-

taking?

Generational Values Differences 13

Do values really differ across generations?

What does your experience suggest?

What does the research literature say?

What are the implications for managing?

Are there other age-based differences that are

important to managing and leading?

Generational Values Differences 14

Boomers: 1943-1961

Gen X: 1961-1981

Gen Y: 1982-1999 (Millennials)

The data analyzed here suggest that the popular

view of Millennials as more caring, community

oriented, and politically engaged than previous

generations is largely incorrect

There are increases in individualistic traits and

declines in civic engagement over time

Generational Values Differences 15

2.50

3.00

3.50

4.00

4.50

5.00

Extrinsic Intrinsic Status Altruism Social Freedom

Boomers

Gen X

Gen Y

Extrinsic job security, salary Altruism making a contribution to society

Intrinsic intellectual simulation, challenge Social good relationships with others

Status influence, recognition, advancement Freedom work-life balance, working hours

Source: Cennamo & Gardner (2008)

Generational Values Differences 16

0.00 0.20 0.40 0.60 0.80 1.00

Finding purpose and meaning in my life

Being a leader in my community

Being able to find steady work

Having strong friendships

Having a good marriage and family life

Having lots of money

Working to correct social/economic inequalities

Discovering new ways to experience things

Being successful in my line of work

Gen Y Gen X Boomers

Source: Twenge et al. (2012)

Note: Individuals were

surveyed when

in high school

Generational Values Differences 17 Source: Jin & Rounds (2011)

Change for Work Values across Ages Change for Work Values across Generations

Although work values evidenced small changes in rank-order stability, showing that

individuals generally maintained their positions within a group across the life span,

the results of mean-level change showed that for the whole population, the levels of

importance attached to different work values underwent fairly dramatic increases or

decreases at different age periods.

Generational Values Differences 18

Do values really differ across generations?

What does your experience suggest?

What does the research literature say?

What are the implications for managing?

Are there other age-based differences that are

important to managing and leading?

Managing Derailing Employees 19

What does the term derailed/derailing mean?

What percentage of your employees are

derailed/derailing?

How do you manage these employees?

In your experience, can it be fixed? How?

What else is there to be done?

What does the research literature say about

performance management for derailing employees?

Managing Derailing Employees 20

One of biggest problems with derailing employees

is distorted self-perceptions

Managing Derailing Employees 21

-0.5 -0.25 0 0.25 0.5 0.75 1

Clarification of Goals and Objectives

Upward Communication

Orderly Work Planning

Organizational Expertise

Facilitating the Work of Others

Performance Feedback

Time Emphasis

Control of Details

Goal Pressure

Delegation/Permissiveness

Recognition for Good Performance

High potential managers Derailing managers

Source: Shipper & Dillard (2000)

Notes: Sample=1,035 middle managers

Rating scale: 1=extremely low extent; 7=extremely high extent

Managing Derailing Employees 22

What does the term derailed/derailing mean?

What percent of your employees are

derailed/derailing?

How do you manage these employees?

In your experience, can it be fixed? How?

What else is there to be done?

What does the research literature say about

performance management for derailing employees?

Essential Management Skills 23

What management skills matter most?

AKA: Management competencies, social skills, interpersonal skills

What does the research literature say about performance management for derailing employees?

Surprisingly little data on this issue!

However, several themes: FHIP

Feedback

High standards/goals

Ideas/insights

Planning

24

0.00

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Performance

Potential

Predictors of current job performance and

designation of high potential of 1,100

managers in 21 countries

Source: Spreitzer, McCall, & Mahoney

Essential Management Skills 25

2.5 3 3.5 4 4.5 5

Clarification of Goals and Objectives

Upward Communication

Orderly Work Planning

Organizational Expertise

Facilitating the Work of Others

Performance Feedback

Time Emphasis

Control of Details

Goal Pressure

Delegation/Permissiveness

Recognition for Good Performance

High potential managers Derailing managers

Source: Shipper & Dillard (2000)

Notes: Sample=1,035 middle managers

Rating scale: 1=extremely low extent; 7=extremely high extent

Essential Management Skills 26

0 0.25 0.5 0.75 1

Clarification of Goals and Objectives

Upward Communication

Orderly Work Planning

Organizational Expertise

Facilitating the Work of Others

Performance Feedback

Time Emphasis

Control of Details

Goal Pressure

Delegation/Permissiveness

Recognition for Good Performance

Difference Between High Potential and Derailing Managers

Source: Shipper & Dillard (2000)

Performance feedback Ability to provide immediate guidance on the accomplishment of goals

Orderly Work Planning Ability to organize work flow

Clarification of Goals/Objectives Ability to communicate what needs to be accomplished and why

Essential Management Skills 27

What management skills matter most?

AKA: Management competencies, social skills, interpersonal skills

What does the research literature say about performance management for derailing employees?

Surprisingly little data on this issue!

However, several themes: FHIP

Feedback

High standards/goals

Ideas/insights

Planning

Team-Based Leadership 28

How team-based is the work in your organization?

_____ Total (nearly everything is done in teams)

_____ Extensive (most work products are produced by teams)

_____ Occasional (some work in teams, some independent)

_____ Little (most independent ‗free agents‘)

Does effective leadership vary based on your answer to above question? Why or why not?

What does the research literature say?

Just how pervasive is teamwork in organizations?

Do models of effective leadership differ for team contexts?

IT‘S BEEN A PLEASURE

AND AN HONOR:

KEEP IN TOUCH!

EMBA 60616 September 28, 2012

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