Chapter 14
Managing and Enhancing
Performance
Chapter 14 Objectives
1. Describe the relationships among performance measured at
different levels within an organization and discuss how training,
development, and job redesign can help improve performance
2. Discuss the role of alternate work arrangements in motivating and
enhancing performance
3. Describe the role of incentive pay and identify different programs
for individual-based and team-based incentive plans
Enhancing Performance at Different Levels
•
The goal of productivity improvement programs is to
improve productivity by increasing employee motivation.
•
•
Extrinsic rewards: given by the employer to employees.
Intrinsic rewards: those that come from within a person.
•
Successful productivity improvement programs are able
to establish a clear connection between employee
efforts and rewards.
•
Many theories attempt to explain the motivational
process.
Enhancing Performance at Different Levels
Expectancy Theory Model
Enhancing Performance at Different Levels
• Firm-Level Performance
– Is an indication of the
likelihood of long-term
survival of the firm.
– Generates profits for
potential profit sharing
and determines the firm’s
stock price.
Enhancing Performance at Different Levels –
Training and Development
Training and development contributes to
performance enhancement by:
• Enhancing recruitment
• Increasing worker competence (new and
current)
• Reducing the likelihood of unwanted
turnover.
Enhancing Performance at Different Levels –
Training and Development
• Enhancing Recruitment:
– Attract best candidates
Enhancing Performance at Different Levels –
Training and Development
• Increasing the competence of
new employees:
– Technical training: Provide technical
knowledge and skills needed to
perform a job.
– Orientation training: Learn about the
job, the company, and its policies and
procedures.
– Literacy training: Improve basic skills
in such areas as writing, basic
arithmetic, listening/following oral
instructions, speaking, and
understanding manuals, graphs, and
schedules.
Enhancing Performance at Different Levels –
Training and Development
• Increasing the competence of
current workers:
– Remedial training: Implemented
when workers are deficient in some
skills.
– Change-related training: Used to
keep up-to-date with various
changes including technology, laws
or procedures, or the organization’s
strategic plan.
– Developmental programs: Provide
employees with the appropriate
skills needed for higher level
positions.
Enhancing Performance at Different Levels –
Training and Development
• Reducing the likelihood of unwanted
turnover:
– Training can prevent unnecessary
terminations by:
• Building employee job skills, improving job
performance.
• Improving supervisors' capabilities for
managing “underperforming” workers.
• Reeducating people whose skills have
become obsolete, allowing the organization
to assign them to new job responsibilities.
– Effective training programs can reduce
turnover by strengthening employee
loyalty.
Enhancing Performance at Different
Levels – Training and Development
Training
• The process of providing employees
with specific skills or helping them
correct deficiencies in their
performance.
•
•
•
•
•
Current Job
Individual Employees
Immediate
Fix current skill deficit
May be seen as negative
Development
• An effort to provide employees with the
abilities the organization will need in the
future.
• Current and future job
• Work group and
organization
• Long term
• Prepare for future work
demands
Enhancing Performance at Different
Levels – Training and Development
Challenges of Training
• Is training the solution to the problem?
• Are the goals of training clear and realistic?
• Is training a good investment?
• Will the training work?
Enhancing Performance at Different
Levels – Training and Development
Managing the Training Process
Enhancing Performance at Different
Levels – Training and Development
Managing the Training Process – Needs Assessment
• Identifying the problems or needs that
training must address and providing the
information required to design the training
Phase 1 - Needs
program
Assessment
Organization
Levels of needs assessment:
Person
Task
Enhancing Performance at Different
Levels – Training and Development
Managing the Training Process – Needs Assessment
First Step to Conducting a Needs Assessment:
•Perform a "Gap" Analysis:
• Current situation vs. Desired or necessary
situation
• The difference or the "gap" between
the current and the necessary will
identify our needs, purposes, and
objectives:
•Problems or deficits
•Impending change
•Opportunities
•Strengths
•New directions
•Mandated training
Enhancing Performance at Different
Levels – Training and Development
Managing the Training Process – Development and Conduct of Training
Phase 2 –
Development and
Conduct of
Training Phase
• The training program that results from the
needs assessment should be a direct
response to an organizational problem or
need
Location
Approaches vary by:
Presentation
Type
Enhancing Performance at Different
Levels – Training and Development
Development and Conduct of Training Phase:
• Location Options – On the Job (OJT):
• Job rotation
• Apprenticeships
• Internships
• Advantages:
• Relevant to job
• Can be inexpensive to implement
• Immediate feedback
• Disadvantages:
• Can be costly in customer satisfaction
• Wide variation in quality and content of
teaching
Enhancing Performance at Different
Levels – Training and Development
Development and Conduct of Training Phase:
• Location Options – Off- the-Job Training:
• Advantages:
• Gives employees uninterrupted time
• More conducive to learning/less
distractions
• Disadvantages:
• Learning may not transfer back to job
• Employees may view training as an
opportunity to enjoy time away from
work
Enhancing Performance at Different
Levels – Training and Development
Development and Conduct of Training Phase:
• Presentation Options:
• Slides and Videotapes
• Teletraining
• Computers
• Simulations
• Replicate job demands at off-site
facility
• Virtual Reality (VR):
• The use of a number of
technologies to replicate the entire
real-life working environment in real
time
• Classroom Instruction and Role-plays
Enhancing Performance at Different
Levels – Training and Development
Development and Conduct of Training Phase:
• Types of Training Options:
• Skills Training:
•Job aids:
• External sources of information that provide job related
information
• Retraining
• Cross-functional Training
• Team Training
Enhancing Performance at Different
Levels – Training and Development
Development and Conduct of Training Phase:
• Types of Training (cont.):
• Creativity Training – brainstorming
• Literacy Training
• Diversity Training
• Crisis Training
• Customer Service Training
• Ethics Training
Enhancing Performance at Different
Levels – Training and Development
Phase 3 – The Evaluation Phase
• Return on Investment (ROI)
Isolating the
effects of training
Comparing the
value of the
effects to the
incurred cost
Converting these
effects (benefits)
into monetary
value
Calculating costs
of the training
Enhancing Performance at Different
Levels – Job Redesign
Job Redesign:
• Job Rotation
• Job Enlargement
• Job Enrichment
Enhancing Performance at Different
Levels – Job Redesign
• Job Characteristics Model
• Aims to redesign jobs to be more intrinsically rewarding.
• Characteristics that make a job intrinsically rewarding are skill
variety, task identity, task significance, autonomy, and job
feedback.
• Some specific techniques for enriching a job:
•
•
•
•
Combine tasks
Establish client relationships
Reduce direct supervision
Increase identification with product/service
Job Characteristics Model
Enhancing Performance at Different
Levels – Job Redesign
Job Enrichment
• Strengths
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Makes jobs less
automated, and more
interesting and rewarding.
Enrichment leads to
improvements in
productivity, quality,
absenteeism rates, and
retention.
• Weaknesses
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
Production may become
less efficient.
Employees preferring
highly automated jobs may
oppose job enrichment
efforts.
Enhancing Performance at Different
Levels – Job Redesign
• Self-managed work teams
– Consist of 6 to 18 employees from different
departments who work together to produce a
well-defined segment of finished work.
– Team members are given the authority to plan,
organize, and coordinate, and take corrective
actions.
– To prepare team-members for selfmanagement, the organization must provide
training in three areas:
• Technical skills
• Interpersonal skills
• Administrative skills
Alternative Work Arrangements
Alternative Work Arrangements:
• Flexible work hour plans
• Compressed workweeks
• Telecommuting
• Job sharing
• Part-time employment
Incentives and Performance-Based
Rewards
• Merit pay plans
• Grant employees annual pay raises
based on their levels of job
performance.
• The merit pay guidechart shows the
size of a merit pay raise associated
with each level of job performance.
• Merit pay plan—strengths
• Established effort-performance and
performance–reward link.
• Publicized merit pay guidecharts to
strengthen the performance–reward
link.
Incentives and Performance-Based
Rewards
• Merit pay plan—weaknesses
• Fail to establish a clear performance-reward link.
• Fails when employees do not value the rewards offered
by the company.
• Hinder performance-reward link when supervisors fail to
distinguish between employees within the team
• Time lag exists between behavior and reward.
• Is not very cost-efficient.
• Productivity hindered if these plans fail to reward
behaviors that contribute to organizational goals.
Incentives and Performance-Based
Rewards – Individual Incentive Plans
• Piece rate plans
• Base an individual’s wages on the
number of “pieces” or product units
he or she produces.
• Piece rate plans vary.
• Straight piecework: pays workers a set
amount for each unit produced.
• Different piece rates: depends on
whether the worker has met the
standard.
Incentives and Performance-Based
Rewards – Individual Incentive Plans
• Piece rate plans
• Strengths
•
•
•
•
Cost efficient.
Employees know what to do
to earn reward.
Performance standards are
objective.
Rewards are tied directly to
performance.
• Weaknesses
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•
•
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Pressure placed on employees
to produce.
Workers may resist
management’s attempts to
introduce new technology or
systems.
Workers are not rewarded for
suggesting new ideas.
Employees may neglect aspects
not covered in the performance
goals.
Encourage competition rather
than teamwork.
Incentives and Performance-Based
Rewards – Team and Group Plans
• Gainsharing plans offer employees a cash award for
meeting or exceeding goals based on the collaborative
performance of a team of employees.
• Most gainsharing plans feature the following:
• The organization has productivity goals that can be achieved
through effective teamwork.
• Employees receive cash bonuses if goals are met.
• Productivity is measured by an explicit formula with objective
measures.
• Employees are encouraged to submit suggestions for cutting
production costs or increasing productivity.
Incentives and Performance-Based
Rewards – Team and Group Plans
• The Scanlon Plan
• Is a gainsharing plan.
• Aims to cut production costs, relative to output.
• For implementing a Scanlon Plan:
• Calculate the ratio of production cost/sales value of
production that would be expected in a typical year.
• Decide how production costs are to be cut.
• Allocates bonuses in the following manner: 75 percent is
paid out and 25 percent is held in reserve for lean periods
in which there are no bonuses.
Incentives and Performance-Based
Rewards – Team and Group Plans
• Gainsharing plans
• Strengths
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Effort-performance and
performance-reward links
are strong.
Link performance with the
organization’s mission.
Promote teamwork.
Are cost-effective.
• Weaknesses
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Employees may perceive
rewards as being unfairly
distributed.
Employee suggestions for
improving efficiency may
dwindle over time.
May suffer if payout
formulas are inflexible.
Incentives and Performance-Based
Rewards – Team and Group Plans
• Profit-sharing plans
• Reward group, rather than individual,
performance.
• The payout is based on profits rather than
gains.
• A portion of the company’s profits is
contributed to individual employee
accounts.
Incentives and Performance-Based
Rewards – Team and Group Plans
• Three types of profit-sharing plans:
• Deferred plans: An individual’s profit-sharing
earnings are distributed at retirement.
• Distribution plans: The company fully distributes
each period’s earnings as soon as the profitsharing pool is calculated.
• Combination plans: Employees receive a portion of
each period’s earnings immediately; the remainder
awaits future distribution.
Incentives and Performance-Based
Rewards – Team and Group Plans
• Profit-sharing plans
• Strengths
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
Improves productivity by
making employees’
interests compatible with
employers’ goals.
Employees may gain a
greater sense of
ownership.
• Weaknesses
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Only marginally address
effort-performancerewards links.
Not always cost efficient.
Rewards are not timely.