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Chapter 9: Performance Management

Chapter 9: Performance Management. Creating Effective Organizations. Why Performance Appraisals?. To recognize and reward good performance To make decisions regarding promotions and hiring To provide individuals with feedback to help in their development

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Chapter 9: Performance Management

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  1. Chapter 9: Performance Management Creating Effective Organizations

  2. Why Performance Appraisals? • To recognize and reward good performance • To make decisions regarding promotions and hiring • To provide individuals with feedback to help in their development • To identify training and other needs for individuals and the organization • To obtain data for human resource planning

  3. Problems with Appraisals • Evaluation and feedback are poor (see exhibit in text) • The atmosphere in the interview is highly defensive and not constructive • The rating system used is not linked to the desired behaviors • The behaviors that are being measured and rewarded are not linked to the organization’s mission and goals

  4. Who Might Do Appraisals • Superiors • Subordinates • Peers • Self • Clients Note: Data gathered from a variety of sources will likely give a better picture of the performance of an individual. However, gathering such data can be time-consuming and costly.

  5. Objectives of Compensation Compensation must be… • Legal • Adequate • Motivating • Equitable • Secure • Cost-effective

  6. Key Wage Legislation • Fair Labor Standards Act • Record Keeping • Minimum Wage • Child Labor • Overtime • Equal Pay Act • Social Security Act • Employee Retirement Income Security Act (ERISA) • Consolidated Omnibus Budget Reconciliation Act (COBRA) • Worker Compensation

  7. Key Decisions in Compensation • Wage Level: Where should our compensation be in relation to other companies? • Wage Structure: How do we value different jobs in our organization? Which jobs are worth more than others? • Individual Wages: How should we reward people who are performing similar work?

  8. Pay Schedule of a Large Restaurant Designed Using a Skill-Based Approach

  9. Pay Schedule of a Large Restaurant Designed Using a Job-Based Approach

  10. Individual Incentives: Salary Merit Pay Bonuses/Stock Piece-Rate Commission Skill-Based Pay Knowledge-Based Pay Group Incentives: Merit Pay Bonuses Piece-Rate Commissions Company-Wide Incentives: Profit Sharing Gain Sharing Scanlon Plans Bonuses/Stock or Stock Options Types of Compensation

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