rewarding individual performance (chapter 6)
DESCRIPTION
Human behavior in Organization's chapter 6 titled "Rewarding individual performance".TRANSCRIPT
CHAPTER 6:REWARDING INDIVIDUAL
PERFORMANCE
by: Jon Jovi R. Barreras (H-353)
Lyceum of the Philippines University (Manila)College of International Tourism and Hospitality
ManagementHuman Behavior in Organization (DHBN01H)
CHAPTER LEARNING OBJECTIVES
Describe goal setting and relate it to motivation.
Discuss performance management in organizations.
Identify the key elements in understanding individual rewards in organizations.
Describe the issues and processes involved in managing reward systems.
GOAL SETTING AND MOTIVATION
Purposes of Setting Goals in Organizations To provide a useful framework for managing
motivation to enhance employee performance To serve management as a control device for
monitoring of how well the organization is performing
Goal A desirable objective
Self-Efficacy The extent to which we believe we can
accomplish our goals even if we failed to do so in the past
GOAL SETTING AND MOTIVATION
Goal Setting Theory (Locke) Assumes that behavior is a result of conscious
goals and intentions, therefore goals influence behavior (performance)
Goal Characteristics Goal difficulty
The extent to which a goal is challenging, requires effort, and is attainable
Goal specificity The clarity and precision of a goal
EXPANDED GOAL SETTING THEORY (LOCK AND LATHAM)
The Goal-Setting ProcessGoal-directed effort is a function of
goal attributes:1. Goal difficulty
2. Goal specificity
3. Goal acceptance: the extent to which a person accepts a goal as his/her own
4. Goal commitment: the extent to which a person is interested in reaching a goal
BROADER PERSPECTIVES ON GOAL SETTING
Management by Objectives (MBO)A collaborative goal-setting process
through which organizational goals cascade down throughout the organization
Requires customizing to each organization
Can be effective for managing reward systems where the manager has individual interactions with each employee
GOAL SETTING: EVALUATION AND IMPLICATIONS
Research has shown that:Goal difficulty and specificity are closely
associated with performance.Goal-setting theory may focus too much on
short-run considerations.MBO has the potential to motivate because
it helps implement goal-setting theory on a systematic basis throughout the organization.
MBO has a tendency to overemphasize quantitative goals to enhance verifiability.
PERFORMANCE MANAGEMENT IN ORGANIZATIONS
The Nature of Performance Management Performance measurement (or appraisal)
process:1. Evaluating an employee’s work behaviors by
measurement and comparison with previously established standards
2. Documenting the results
3. Communicating the results to the employee
Performance Management System Comprises the processes and activities
involved in performance appraisals
PERFORMANCE MANAGEMENT BASICS
Who is to do the
appraisals?
Who is to do the
appraisals?
How often are the
appraisals to be done?
How often are the
appraisals to be done?
How is performanc
e to be measured?
How is performanc
e to be measured?
Issues in Performance Measurement
Issues in Performance Measurement
PERFORMANCE MANAGEMENT: THE PROCESS
The Appraiser: Alternatives The direct supervisor Multiple-rater systems (including self-evaluation) 360-degree feedback
A system in which people receive performance feedback from those on all sides of them in the organization (boss, colleagues, peers, subordinates)
Frequency of Appraisals Determined by convenience for administrative
purposes, cultural appropriateness, and relevance
PERFORMANCE MANAGEMENT: THE PROCESS
Measuring PerformanceConsiderations
Desired decisions to be made based on outcome
Instruments must be valid, reliable, and free of bias
Choices of measurement methodsGraphic rating scales, checklists,
essays/diaries, behaviorally anchored rating scales, forced-choice systems
Comparative methods such as ranking, forced distribution, paired comparisons, multiple raters
INDIVIDUAL REWARDS IN ORGANIZATIONS
Reward SystemConsists of all organizational
components involved in allocating compensation and benefits to employees in exchange for their contribution to the organization including:PeopleProcessesRulesProceduresDecision-making activities
REWARDS’ PURPOSES, ROLES, AND MEANINGS
Purposes To attract, retain, and motivate qualified
employees
Roles of compensation structures To be equitable and consistent To be a fair reward for the individual’s contribution To be competitive in the external labor market
Meanings of rewards Surface value: objective meaning or worth of
reward Symbolic value: subjective and personal meaning
or worth of reward
TYPES OF INDIVIDUAL REWARDS
Compensation Package The total array of money (wages, salary,
commission), incentives, benefits, perquisites, and awards provided by the organization
Base Pay Symbolizes an employee’s worth Can improve motivation and performance if part
of an effectively planned and managed pay system
Is a major cost of doing business Can reduce turnover and increase morale when
well-designed
TYPES OF INDIVIDUAL REWARDS
Incentive Pay Systems Plans in which employees can earn additional
compensation in return for certain types of performance
1. Piecework programs2. Gain-sharing programs
3. Bonus systems4. Long-term compensation
5. Merit pay plans6. Profit-sharing plans
7. Employee stock option plans
INDIVIDUAL REWARDS
Indirect Compensation (Employee Benefits)
1. Payment for time not worked
2. Social Security contributions
3. Unemployment compensation
4. Disability and workers’ compensation benefits
5. Life and health insurance programs
6. Pensions or retirement plans
INDIVIDUAL REWARDS
PerquisitesSpecial privileges awarded to selected
members of an organization, usually top managers
Add to the status of their recipients and thus may increase job satisfaction and reduce turnover
Other AwardsRewards for seniority, perfect attendance,
zero defects (quality work), cost reduction suggestions
MANAGING REWARD SYSTEMS
Linking Performance and Rewards Employee perception of link between pay and
performance results in symbolic value of pay Flexible Reward Systems
Allows employees to choose the combination of benefits that best suits their needs
Increases both employee satisfaction with benefits and administrative costs for the employer
Participative Pay Systems Employees are involved in the design and/or
administration of their compensation system
MANAGING REWARD SYSTEMS
Pay SecrecyEmployer makes no information available
to employees regarding other employees’ salaries, percentage raises, salary ranges and requires employees to not reveal their compensation
Expatriate CompensationCompensation packages of employees on
overseas assignments must be adjusted to account for differences in costs of living and working conditions in working aboard versus their home base
THE EXPATRIATE COMPENSATION BALANCE SHEET
THE END!Thank you