MANA 3320 1st Edition Exam 3 Study Guide Lectures 13 18 Lectures 13 18 Tuesday March 24 Thursday April 9 CH 8 Performance Management and the Employee Appraisal Process Performance Appraisal Programs o o Administrative Compensation Job evaluation EEO AA support Developmental Individual evaluation Training Career planning o 4 purposes of appraisals o Mainly used for salary decisions o Determines who should be promoted or given a pay raise o About half of companies use performance appraisals Major cases o o Brito vs Zia Ruled that performance appraisals were subject to the same validity criteria as selection procedures Directly job related Albemarle paper company vs Moody Found that employees had been ranked against a vague standard open to each supervisor s own interpretation Alternative sources of appraisal o Superior o Peers Appraisal by equal peers same job level and grade level o Suppliers o Customers o Subordinates o Self o Vendors o Team members 360 degree appraisal o Most commonly used Higher level appraisal peer appraisal and subordinate appraisal all combined into one 7 Common rater related errors or biases o 1 Error of central tendency o o o o 2 Leniency error The supervisor is too lenient and easy Scores people too high on the scale 3 Strictness error Supervisor is too strict and has extremely high standards Scores people too low on the scale 4 Similar to me errors Men rate men higher in general women rate women higher whites rate whites higher etc Rate people who are more like us higher than others 5 Recency errors o Tendency to avoid extremes of a scale The most recent encounter we have had with an individual will be most dominant in our minds 6 Contrast errors o 7 Halo errors A person who is extremely excellent in one category is rated higher and it spills over into the other categories Rated good all over Horn effect If the person is terrible at one category then it spills over to the other categories Rated bad all over 4 Trait Methods of Performance Appraisal Methods o o 1 Graphic rating scale method pg 365 A trait approach to performance appraisal whereby each employee is rated according to a scale of individual characteristics Most used 2 Mixed standard scale method pg 366 o o An approach to performance appraisal similar to scale method but based on comparison with better than equal to or worse than a standard 3 Forced choice method When we contrast an employee with other employees instead of the performance measuring appraisal Requires the rater to choose from statements designed to distinguish between successful and unsuccessful performance Ex works hard works quickly Shows initiative is responsive to customer Produces poor quality lacks good work habits 4 Essay method Requires the rater to compose a statement describing employee behavior Oldest method and rarely used Has least validity 4 Behavioral Methods of Performance Appraisal Methods o 1 Critical incident o Critical incident an unusual event that denotes superior or inferior employee performance in some part of the job The manager keeps a log or diary for each employee throughout the appraisal period and notes specific critical incidents related to how well they perform 2 Behavioral checklist pg 368 o o The rater checks statements on a list that the rater believes are characteristic of the employee s performance or behavior 3 Behaviorally anchored rating scale BARS Consists of a series of vertical scales one for each dimension of job performance Typically developed by a committee that includes both subordinates and managers Negatives are that it s very time consuming and expensive also designed for individual jobs Positive is that it has strong validity 4 Behavior observation scale BOS A performance appraisal that measures the frequency of observed behavior critical incidents Preferred over BARS for maintaining objectivity distinguishing good performers from poor performers providing feedback and identifying training needs 3 results methods o 1 Productivity measures o o Appraisals based on quantitative measures e g sales volume that directly link what employees accomplish to results beneficial to the organization Criterion contamination Focus on short term results First and oldest method 2 Management by objectives MBO A philosophy of management that rates performance on the basis of employee achievement of goals set by mutual agreement of employee and manager Choose the objectives and then are appraised by those objectives 3 The balanced scorecard The appraisal focuses on four related categories Financial customer processes and learning Ensuring the method s success Translate strategy into a scorecard of clear objectives Attach measures to each objective Cascade scorecards to the front line Provide performance feedback based on measures Empower employees to make performance improvements Reassess strategy Embraced by corporate America CH 9 Managing Compensation Wages vs Salary o o Wages Nonexempt worker can have overtime Paid hourly Salary Exempt cannot have overtime Monthly or annually Total compensation o o Direct real dollars cents Wages salaries Commissions Bonuses Gainsharing Indirect benefits Time not worked Vacations Breaks Insurance plans o Employee services Educational assistance Recreational programs Non financial compensation Psychological benefits Ex employee recognition programs certificates gift cards etc job satisfaction nice work environment 1 Wage leader o o Pays above average wages for pretty much all jobs in company 2 Wage meeter Most companies in the real world Wants to meet or match the market rate for that job title 3 Wage follower Pensions 3 compensation philosophies o Medical dental life Security plans Holidays Pays below market rate for job titles Strategic compensation o Links the compensation of employees to the mission objectives philosophies and culture of the organization o Serves to mesh the monetary payments made to employees with specific functions of the HR program in establishing a pay for performance standard o Seeks to motivate employees through compensation 7 Common strategic compensation goals o 1 To reward employees past performance o 2 To remain competitive in the labor market o 3 To maintain salary equity among employees o 4 To mesh employees future performance with organizational goals o 5 To control the compensation budget o 6 To attract new employees o 7 To reduce unnecessary turnover Motivating employees through compensation o Pay secrecy An organizational