Final Review Sheet Monday December 10 2012 3 44 PM Chapter 10 Documentation A record of performance appraisal process outcomes Appraisal Process 1 Establish performance standards with employees 2 Communicate expectations 3 Measure actual performance 4 Compare actual performance with standards 5 Discuss the appraisal process with the employee 6 If necessary initiate corrective action Appraisal Methods o Absolute standards Measuring an employee s performance against established standards Critical incident appraisal a performance evaluation that focuses on key behaviors that differentiates between doing a job effectively or ineffectively Checklist appraisal a performance evaluation in which a rater checks off applicable employee attributes Graphic rating scale a performance appraisal method that lists traits and a range of performance for each Forced choice appraisal a performance evaluation in which the rater must choose between two specific statements about an employee s work behavior Behaviorally anchored rating scales BARS a performance appraisal technique that generates critical incidents and develops behavioral dimensions of performance The evaluator appraises behaviors rather than traits o Relative Standards Methods Relative standards evaluating an employee s performance by comparing the employee with another employee Individual ranking Ranking employee s performance from highest to lowest Paired comparison Ranking individuals performance by counting the times any one individual is the preferred member when compared with all other employees o Management by objectives MBO a performance appraisal method that includes mutual objective setting and evaluation based on the attainment of the specific objectives MBO s contain Errors that can occur in Appraisals Specific goals Participative decision making Specific time period Performance feedback o Leniency error performance appraisal distortion caused by evaluating employees against one s own value system o Halo error the tendency to let our assessment of an individual on one trait influence our evaluation of that person on other specific traits Similarity error evaluating employees based on the way an evaluator perceives himself or herself o o Central tendency the tendency of a rater to give average ratings o Attribution theory a theory of performance evaluation based on the perception of who is in control of an employee s performance How to create a better evaluation Provide ongoing feedback o Combine absolute and relative standards o o Use multiple raters o o Upward appraisal employees provide frank and constructive feedback to their supervisors Peer evaluation by coworkers o 360 degree appraisals performance evaluations in which supervisors peers employees customers and the like evaluate the individual o Rate selectively o Train appraisers Learning objectives 3 purposes of performance management systems feedback development and documentation 6 steps of appraising 1 Establish performance standards with employees 2 Communicate expectations 3 Measure actual performance 4 Compare actual performance with standards 5 Discuss the appraisal process with the employee 6 If necessary initiate corrective action 3 different methods to appraising o Absolute standards o Relative standards o MBO Describe why appraisals may be distorted Know Ideas to improve performance management What is 360 degree appraisal Criteria for Successful performance appraisal meeting preparation supportive environment clear purpose employee involvement focus on work behaviors specific work examples positive and negative feedback employee understanding and employee development plan Chapter 11 Intrinsic rewards satisfactions derived from the job itself such as pride in ones work a feeling of accomplishment or being part of a team Extrinsic rewards benefits provided by the employer usually money promotion or benefits Job enrichment enhancing jobs by giving employees more opportunity to plan and control their work Performance based rewards rewards exemplified by the use of commissions piecework pay plans incentive systems group bonuses or other forms of merit pay Compensation administration the process of managing a company s compensation program Government Influence on compensation administration o Fair Labor Standards Act FLSA Passed in 1938 this act established laws outlining minimum wage over time pay and maximum hour requirements for U S workers o Exempt employees employees in positions that are exempt from most employee protection outlined in FLSA especially overtime pay o Nonexempt employees Employees who are covered by the FLSA including over time pay and minimum wage provisions of the act o Equal Pay act of 1963 This act requires equal pay for work Job evaluation o Ordering method ranking job worth from highest to lowest o Classification method evaluating jobs based on predetermined job grades o Point method breaking down jobs based on identifiable criteria and the degree to which these criteria exist on the o Compensation surveys used to gather factual data on pay practices among firms and companies with Pay structure specific communities o Wage structure a pay scale showing ranges of pay within each grade o External factors of pay Geographical location Labor supply Competition Cost of living Collective bargaining Communicating with employees Incentive compensation plans motivate systems based on individual work performance o o Merit pay an increase in pay usually determined annually o Group incentive motivational plan provided to a group of employees based on their collective work o Organization wide incentive a motivation system that rewards all facility members based on how well o o the entire group performed Scanlon plan an organization wide incentive program focusing on cooperation between management and employees through sharing problems goals and ideas IMPROSHARE an incentive plan that uses a specific mathematical formula for determining employee bonuses Pay for performance rewarding employees based on performance o o Competency based compensation organizational pay system that rewards skills knowledge and behaviors o Broad banding paying employees at preset levels based on their level of competency o Team based compensation pay based on how well the team performed Executive compensation Programs o Perquisites attractive benefits over and above a regular salary granted to executives also known as perks o Golden parachute financial protection plan for