Ob Mod 4 Org Control And Reward

Front 1

Why organizations need to assess performance? (6)

Back 1

1. Employees need to understand the behavior requirements of the job.
2. Employee’s work is evaluated for its contribution to company goals.
3. Employees receive feedback on their contribution to company goals.
4. Employees’ motivation is increased by the performance appraisal system.
5. Employees’ performance levels should be used to make decisions about salaries, promotions, bonuses, training needs, etc.
6. Employees get clear feedback on the level of performance expectations from the company

Front 2

Define Validity

Back 2

the quality of the measuring components of the performance appraisal system (do they measure what they should?).

Front 3

Define Consistency

Back 3

two or more ways to gather performance data producing results which agree

Front 4

Define stability

Back 4

the property of dependability of results over time

Front 5

PA errors

Back 5

Personal bias, halo, recency, central tendency, strictness/leniency, similarity, forcing to match.

Front 6

• Personal bias

Back 6

: a stereotype or bias which influences a supervisor’s rating upward of downward.

Front 7

• Halo effect

Back 7

rating an employee on one performance dimension based on the evaluation in other performance dimensions

Front 8

• Recency Error

Back 8

the emphasis on recent performance examples in making performance assessments

Front 9

• Central tendency error:

Back 9

Assigning average ratings to all employees resulting in little variation

Front 10

• Strictness or leniency errors

Back 10

Supervisor’s ratings based on the belief the employees do not measure up or that all employees measure up

Front 11

• Similarity error

Back 11

the supervisor has a performance quality in himself that she is looking for in the employees

Front 12

• Forcing the rating to match other criteria:

Back 12

Deciding on an overall rating first and then going back to individual dimensions to adjust ratings to match overall assessment

Front 13

5 forms of validity (CECCD)

Back 13

Content, Empirical, Construct, Convergent, discriminant

Front 14

• Content validity

Back 14

measures and their administration are logically related to the performance measured; evaluator and employees agree on the dimensions of performance measured and relationship to actual job behaviors.

Front 15

• Empirical validity

Back 15

measures are statistically related to work outcomes. Scores on the performance dimensions are related to quantitative measures of work output

Front 16

• Construct validity

Back 16

performance appraisal system logically derives from a model or theory of performance behavior and motivation.

Front 17

• Convergent validity

Back 17

Multiple measures of the same performance dimension result in equivalent scores. Observation methods correlate highly with paper and pencil measures of performance.

Front 18

• Disciminant validity

Back 18

Measures of performance using the same method produce different scores for different performance

Front 19

How to overcome errors in performance appraisal systems (4 ways):

Back 19

1. Use multiple criteria
2. Emphasize behavior rather than traits
3. Use several raters (e.g. 360 degree reviews)
4. Train the raters

Front 20

PA Methods

Back 20

Absolute Standards, Graphic Scales Rating System, Behavior Anchored Rating Scale (BARS)

Front 21

• Absolute Standards

Back 21

Each employee is judged against a fixed and inflexible set of performance criteria. Often results in upward biased ratings due to leniency error and validity error due to the simple ‘meets/does not meet’ nature of the assessment on the standards.

Front 22

• Graphic Scales Rating System

Back 22

List of performance criteria are evaluated on a numerical scale. The ratings highlight differences in the performance of subordinates as it encourages the tendency to spread out employee’s assessment across each scale. Inaccuracies due to strictness, leniency or similarity are still possible. Forced distribution across the full scale might lead to (perceived) unfair evaluations.

Front 23

• Behavior Anchored Rating Scale (BARS):

Back 23

BARS emphasizes work behavior and how the work gets done rather than characteristics of an employee. Through a participatory analysis a meaningful and agreed upon set of behavioral anchors described in the language of the job under evaluation are developed. The clarity of the behaviors improves employees’ understanding of the job and performance expectations. The strong behavioral focus of the BARS system:
• might help to avoid the evaluation of irrelevant employee’s personality traits
• might increase the quality of the feedback compared to other systems
• might enhance the significance of the feedback in the employee’s minds through reduced defensiveness
• might require a long time to develop as different roles will require different BARS
• might be difficult to develop for jobs requiring creativity, curiosity, and complex problem-solving.

Front 24

Goals are defined as

Back 24

as those end states that reduce the intensity of needs and motives

Front 25

What do Goal setting systems accomplish?

Back 25

• Increase motivation and performance
• Reduce the stress of conflicting or confusing expectations
• Improve accuracy and validity of performance evaluations

Hint 25

Front 26

Organisations must
evaluate employee performance to ensure that employees: (5)

Back 26

1. understand their job requirements.
2. contributions to company goals are evaluated.
3. know where they stand in relation to company performance standards.
4. continue to work hard because they think the system is fair and objective.
5. agree that their performance fairly and objectively determines their pay rises
and bonuses: what is called merit-based pay.

Hint 26

Front 27

Define Intrinsic rewards

Back 27

are defined as those rewards that the employee associates with the job itself.

Front 28

Extrinsic rewards

Back 28

are given to the employee by the company and they do not occur as the work unfolds. Extrinsic rewards can be classified as direct compensation, indirect compensation, and non-financial rewards.

Front 29

On what basis do companies distribute direct compensation? (5)

Back 29

1. Performance
2. Effort (in the hope that effort will eventually lead to performance)
3. Seniority
4. Equality (common in partnerships for managing partners)
5. Power and Influence

Front 30

What determines the value of a job to the company?

Back 30

1. Skill requirements
2. Mental requirement
3. Physical requirement
4. Responsibility
5. Working Conditions

Front 31

Basic components of Executive Compensation:

Back 31

• Base salary
• Benefits
• Long-term incentives
• Annual bonus

Hint 31

Front 32

Current trends in executive compensation: (6)

Back 32

• Strengthening the link between executive compensation and the market value of firms
• Executive compensation rises faster than employee wages
• CEO pay rises much faster that the pay of the second in command
• Pay gaps between American and British executives narrow
• More emphasis on the company’s net income
• Preventing ISO plans from diluting stock value

Hint 32

Front 33

Any pay or incentive plan should pass the following five tests:

Back 33

1. Does the plan capture the attention of the employees?
2. Do employees understand the elements of the plan?
3. Does the plan improve communication?
4. Does the plan make payments to the employees when it should?
5. Is the company performing better as a result of the plan?

Hint 33

Front 34

Cafeteria style fringe benefits

Back 34

Creates balance between family needs and benefits package

Installation cost and administration are increasingly outsourced

Front 35

Lump-sum payments

Back 35

Nice to earn a large bonus but might not be clear what he/she did to earn it.
Likely to be abandoned during downturns, can upset shareholders

Front 36

Skill-based compensation

Back 36

Good incentive for learning new skills
Works if skills are measurable, documented and verified. Should not be tied to external educational or management training program achievements

Front 37

Accumulating time-off

Back 37

Helps family, work, child, and elder care demands on employees Strengthens commitment and loyalty. Harder to implement in self-directed teams.

Front 38

The all-salaried team

Back 38

Workable if team performance is fairly measured and teams are empowered Easier to implement if union influence is declining. Validity of team appraisal system must be high.

Front 39

Open salary information

Back 39

Greater perceived pay equity and job satisfaction with work and supervision Computer based and outsourced control systems make implementation easy. Requires stable pay brackets and market based, fair starting salaries.

Front 40

Gain-sharing plans (also called Scanlon Plans)

Back 40

Group based reward system - links bonuses to work units/ team labour cost savings. For implementation 1. Dependable labour costs. 2. Limited seasonal demand. 3. Market Able to absorb extra output. 4. History labour-management relationship. 5. Number people critical. 6. Only if supports business strategy.

Hint 40

Front 41

A well designed team based rewards system can strengthen an organization in the following ways: (6)

Back 41

1. Attraction of new skilled employees and retention of existing ones
2. Timely and attractive incentives increase employee’s motivation and performance
3. If rewards are tied to cross-training and skill-building, the team members will acquire the necessary skills and make the workforce of the company more flexible and gain a competitive advantage.
4. Linking incentives to corporate values creates an organizational culture that competitors will have a hard time copying.
5. Reinforcement and definition of structure. E.g. usage of stock option incentives for every employee in a de-layered organization.
6. Since cost is to a large extend driven by incentives, the structure of incentives needs to be driven by the company’s strategic advantages.

Hint 41

Front 42

In a Rucker Plan the measurement of productivity used for incentives is called

Back 42

value added.

Front 43

Value added

Back 43

is the difference between sales income from goods produced and the cost of the materials, supplies, and outside services consumed in the production and delivery of that output

Hint 43

Front 44

If a firm has downsized, the following conditions should be met before a gain-sharing or Rucker plan is introduced:

Back 44

• The firm has returned to profitability and no further wage freezes are planned
• The management tem is stable.
• Self-directed teams are working and members have completed training in TQM, process control, and team building.
• The company is not being positioned for a sale or a spin-off.
• Outsourcing of non-essential functions has been completed
• The firm is using service-driven and market-based measures of customer satisfaction

Hint 44

Front 45

Actual and measured performance

Back 45

Front 46

Job Analysis does?

Back 46

Improves content and empirical validity of PA system. - Creates job descriptions, employee understands requirements - line of sight. Comms for new employees, hiring and training. Also highlights interdependencies of areas.

Front 47

Goal Setting Process

Back 47