Reward & Appraisals

8/9/2019 Reward & Appraisals

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PERFORMANCE APPRAISALSAND REWARD SYSTEMS


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Goals of Per form anc e Appr aisalTo encourage high levels of worker motivationand performance by letting workers know: The extent to which they are contributing the

appropriate level of inputs to their jobs and to theorganization.

The extent to which they are focusing their inputs in theright direction on the right set of tasks.

To provide accurate information to be used in

managerial decision making. Examples: Distributing outcomes like pay and promotions. Assigning tasks to individuals. Redesigning jobs.

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Insert Figure 8.2 here


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Ch oosing Wh a t F ac tor s to Ev alua te:Tr ai ts

When traits are used to assess performance, personal characteristics that are deemed relevant

to job performance are evaluated.Disadvantages to this approach: Traits alone are often poor predictors of performance. Trait-based appraisal systems may be considered

discriminatory. The use of traits does little to motivate workers because

it focuses on characteristics that cannot be changed inthe short term, if at all.

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Choosing

Wha

t Fac

to

rs

to

Evalua

te:Beh avior s

When beh aviors are used to assess performance, the focus is on the actual behaviors or actions a worker displays onthe job.The main disadvantage of this approach is

that sometimes the same

level of performance can be achieved throughd iff e r en t behaviors.

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Ch oosing Wh a t F ac tor s to Ev alua te:Re sul ts

When r e sults are used to assess performance,the focus is not on what workers do on the

job but on the effects of their behaviors or their actual output.The main disadvantages of this approach: Sometimes results are not under a workers

control. Workers may become so results oriented that

they engage in unethical behaviors or fail toengage in OCBs.

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Ch oosing theMeth od of Appr aisalObjective measuresObjective measures are basedon facts and are used

primarily when results are thefocus of performanceappraisal.

Subjective measures Subjective measures are

based on individuals perceptions and can be usedfor appraisals based on traits,

behaviors, and results.

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Type s of Subj ect ive Me asu re sG raphic rating scales assess the performance of a worker along one or more continua with clearly specified intervals. Disadvantage: Different raters may disagree about the meaning

of the scale points. Behaviorally anchored rating scales (BARS) attempt toovercome the disadvantages of graphic scales by providingcareful definitions of what each scale point means. Disadvantage: Sometimes workers exhibit behaviors

corresponding to more than one point on the scale. Behavioral observation scales overcome the problem withBARS by describing specific behaviors and asking raters toindicate the frequency with which a worker performs the

behaviors. Disadvantage: Even more time-consuming than BARS to

complete.

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Wh o Appr ais es Per form anc eI n most organizational settings, supervisors areresponsible for performance appraisal because They are the most familiar with their subordinates

behavior.

They are responsible for motivating subordinates to perform at acceptable levels.

Other possible sources for performance appraisal: Self-appraisal

Peer appraisal Subordinate appraisal Customer/client appraisal 360-degree appraisal

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Bias es in Per form anc e Appr aisal(Table 8.1)

Pr imac yE ff ects

The initial pieces of informationthat people have about a personhave an inordinately large effect onhow that person is perceived.

A subordinate who made a good first impressionon his supervisor receives a better performanceappraisal than he deserves.

C on tr as tE ff ect

Peoples perceptions of a person areinfluenced by their perception of others in an organization.

A subordinates average level of performance isappraised more harshly than it should be by her supervisor because all the subordinatescoworkers are top performers.

Stere otype sA type of schema built around somedistinguishing, often highly visiblecharacteristic such as race, gender,or age.

A 35-year-old supervisor gives a 60-year-oldengineer a negative performance appraisal thatindicates that the engineer is slow and unwillingto learn new techniques although this is nottrue.

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HaloE ff ect

Peoples general impressions of a person influence their perceptionson specific dimensions.

A subordinate who has made a good overallimpression on a supervisor is appraised as

performing high-quality work and alwaysmeeting deadlines although this is not true.

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Simila r-t o-me E ff ect

People perceive others who aresimilar to themselves more

positively than they perceive thosewho are dissimilar.

A supervisor gives a subordinate who is similar to her a more positive performance appraisalthan the subordinate deserves.

Ha r shness,Le ni enc y, and

Aver ag eTe nd enc y

When rating their subordinates performance, some supervisorstend to be overly harsh, some overly

lenient. Others tend to rate everyoneas about average.

An exceptionally high-performing secretaryreceives a mediocre performance appraisal

because his supervisor is overly harsh in rating

everyone.

K nowl edg eof Pre dic torBias

Perceptions of a person areinfluenced by knowing the personsstanding on a predictor of

performance.

A programmer who scored highly on cognitiveand numerical ability tests receives a more

positive performance appraisal than shedeserves.


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Simila r-t o-me E ff ect

People perceive others who aresimilar to themselves more

positively than they perceive thosewho are dissimilar.

Supervisors rate subordinates who are similar to them more positively than they deserve.

Ha r shness,Le ni enc y, andAver ag eTe nd enc y

Some perceivers tend to be overlyharsh in their perceptions, someoverly lenient. Others view mosttargets as being about average.

When rating subordinates performances, somesupervisors give almost everyone a poor rating,some give almost everyone a good rating, andothers rate almost everyone as being aboutaverage.

K nowl edg eof Pre dic tor

Knowing how a target stands on a predictor of performance influences perceptions of the target.

A professor perceives a student more positivelythan she deserves because the professor knowsthe student had a high score on the SAT.

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Advice t o M anag er sUse frequent, informal performance appraisals and periodic formalones to help motivate your subordinates and to make decisions abouthow to distribute outcomes, whom to promote, and how to assigntasks. I nformal appraisals can be used to motivate and give feedback on a day-to-day basis.

Performance appraisals should focus on the assessment of behaviors or results. Performance appraisals should not focus on the assessment of traits, for traits can be difficult to assess objectively and may not berelated to actual job behaviors or performance.Be aware that one or more perception problems may influence your appraisal of a persons performance. Carefully and honestly examine

your evaluations to be sure that personal biases have not affected your judgments.Develop and use performance measures that accurately assess

behaviors or results. Only accurate performance appraisals result inhigh levels of motivation and performance and in good decisions.

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Pay as a M ot iva t ion T oolOper an t C ondi tioning suggests that to encourage thelearning of desired organizational behaviors, positivereinforcers or rewards should be distributed to workerscontingent on performance.

Nee d The ory suggests that when pay is contingent on performance, workers are motivated to perform to helpsatisfy their needs.E xpe ctanc y The ory takes into account the fact that pay isan outcome that has high valence for most workers andthat instrumentality must be high for motivation to be high.Eq ui ty The ory indicates that outcomes should bedistributed in proportion to inputs.Pr ocedu r al J us tice The ory suggests that the methods toevaluate performance and distribute pay need to be fair.

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Mer it P ay P lansMer it P ay P lan : A plan that bases payentirely on an individuals performance. Tend to be used most heavily at the upper

levels in organizations.Merit pay issues: Should merit pay be based on individual, group,

or organizational performance? Should merit pay be in the form of a salary

increase or a bonus?

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Mer it P ay I ssu e #1:When individual performance can be accuratelyassessed, the maximum motivational impact isobtained from basing pay on individual

performance.When workers are highly interdependent andindividual performance levels cannot be accuratelyassessed, a group or organization-level pay-for-

performance plan is preferable.

When organizational effectiveness depends onindividuals working together, group or organization-based pay-for-performance plans may

be more appropriate than individual-based plans.

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Mer it P ay I ssu e #2:Bonus plans tend to have a greater impact onmotivation than salary plans, for three reasons.

An individuals salary level is based largely on factorsnot related to current performance.Current salary increases may be only partially based on

performance, whereas bonuses can be tied directly andexclusively to performance.Organizations rarely cut salaries, so salary levels across

workers tend to vary less than performance levels.Bonuses can vary considerably from time period to time

period and worker to worker, depending on performancelevels.

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E xa mp les of Mer it P ay P lansPiece-rate planCommission pay plan Full commission plan Partial commission plan

Gain-sharing plan Scanlon plan Profit sharing plan

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Advice t o M anag er sTo have high levels of motivation, pay should

be based on performance whenever possible.When individual performance can be appraisedaccurately and cooperation across workers isadequate, pay should be based on individuallevels of performance to maximize motivation.When individual performance cannot beappraised or when a higher level of cooperationacross workers is necessary, pay should be

based on group or organizational performance.

Reward & Appraisals

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