MASTERS IN HUMAN
RESOURCE
MANAGEMENT/LABOUR
RELATIONS
MBA5012
FACILITATOR:
MYRTLE WEIR
NOVEMBER 2021
SPECIFIC OBJECTIVES
By the end of this unit, students should be able to:
i. Diferentate between Performance Management and Performance Appraisal
ii. Illustrate the performance management process
iii. Defne the three purposes or Performance Management
iv. Identfy the fve criteria for efectve performance management systems
v. Explain the diferent approaches to performance management
vi. Identfy rater errors in Performance management and how to reduce these errors
vii. Recognize the importance of performance feedback
RETENTION
HOW WOULD YOU DEFINE
PERFORMANCE MANAGEMENT?
WHAT IS PERFORMANCE?
….the acton or process of performing a task or functon.
Consideratons include
• What to do?
• Why?
• When to do….. ?
• How to do …including standards, resources and reactons required ?
• Where to do…?
5
DEFINITION - AGUINIS
• Performance Management is a contnuous process of
identfying, measuring, and developing the performance of
individuals and teams and aligning performance with the
strategic goals of the organizaton.
(Aguinis, 2009)
What do you understand from this defniion in reraion to
performance management?
DEFINITION OF PERFORMANCE
MANAGEMENT CONT’D
In a nutshell employee performance management includes:
understanding the strategic goals
pranning work and setng expectatons
contnually monitoring performance against set deliverables/standards
deveroping the competencies to perform
periodically raing performance as required by the organizaton (using
evidence of performance that is documented)
rewarding good performance.
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Aguinis, 2009
Prerequisites
Performance
Planning
Performance Management Process
(6 steps)
Performance
Renewal and
Recontracting
Performance
Review
Performance
Execution
Performance
Assessment
9
planning-word-cloud-business-concept-pictures_csp25968080.webp
10
PERFORMANCE PLANNING
The supervisor and the appraise meet to discuss and agree upon:
1. what needs to be done (aligned to strategic imperatves –
results, behaviour and development)
2. How the “performance” should be done.
3. Involves a discussion re the consideratons for results,
behaviours and a development plan for EACH appraise.
11
DISCUSSION - HOW IS PERFORMANCE
MEASURED?
• Behaviours (Competencies/core values) – what an
employee does (traits, attitudes, personality) –
what are these for JCF and your area of work? • Results (Objectives) – the outcomes of the
employee’s behaviour
BEHAVIOURS DELIVER THE RESULTS
A PERFORMANCE OBJECTIVE/RESULT...
… is a specifc end resurt that contributes to
the success of the unit or the organizaton,
and that an employee is expected to
accomplish or produce.
BEHAVIOURS
RESULTS
MEASURING PERFORMANCE
Resurts
(Outcomes/Objecives)
Behaviours
Varues
Quarity
METHOD
Traits/Atributes
(Personarity)
Quanity
Cost
Time
Performance Execuion and
Monitoring
15
PERFORMANCE EXECUTION
The employee strives to produce
the results and display the
behaviours agreed upon earlier
as well as work on development
needs.
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WHY WE MUST DOCUMENT OUR OBSERVATIONS/WORK DONE
• Provides
“evidence” for decisions made
• Minimizes cognitve load helps us to remember
• Creates trust
• Reduces confict and tensions
• Plans for the future
• Provides legal protecton
HOW TO APPLY THE PROCESS
• Keep diary of events (log notes which become the evidence of
performance) to support assessments.
• Throughout the year (a minimum of two tmes during the review
period – not including inital and fnal meetng), appraisers meet with
those they supervise (appraises) to monitor their progress.
• Provide necessary support including constructve feedback on
supervisee’s performance
• Ensure compliance with tmelines and other required deliverables.
19
HOW TO APPLY THE PROCESS • Draf, discuss and communicate operatonal plans
• At this meetng identfy, discuss and fnalize individual plans (re
objectves, behaviours and development plans) and facilitate
agreement (and signing if required at this stage)
• Establish S.M.A.R.T objectves and reinforce required behaviours.
These must be understood and agreed on.
• Ensure availability of adequate support (e.g. resources) in order for
the appraisees to accomplish and meet objectves and tasks set.
20
Performance Appraisar
(NOT performance Management
but a part of the Performance
Management System/Process
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METHODS USED TO MEASURE
Comparatve Methods
• Simple Ranking
• Alternaton Ranking
• Paired Comparisons
• Forced Distributon
In your groups for crass next week – two groups wirr be
assigned to do one of each method and arr groups wirr
do Management by Objecives to start crass next week
Absolute Methods
• Narratve Essay
• Behavioural Checklist
• Critcal Incidents
• Graphic Ratng Scales
• Behaviourally Anchored Ratng Scale
(BARS)
• Management by Objectves
PERFORMANCE APPRAISAL/ASSESSMENT:
MEANING & DEFINITION
“PERFORMANCE APPRAISAL IS A SYSTEMATIC EVALUATION OF
INDIVIDUAL WITH RESPECT TO HIS/HER PERFORMANCE ON THE
JOB AND HIS/HER POTENTIAL FOR DEVELOPMENT.”
HELPS TO IDENTIFY THE STRENGTHS AND WEAKNESSES OF
THE EMPLOYEE
24
PERFORMANCE APPRAISAL
Performance measurements are used to
compare observed (actual) levels of performance
to the pre- established targets agreed and set.
To be efectve, performance measurement must
be aligned with the organizaton’s mission.
25
SOURCES OF PERFORMANCE
INFORMATION
360-Degree Performance Appraisal: performance measurement that
combines information from the employees:
Managers
Peers
Subordinates
Self
Customers
PERFORMANCE REVIEW
Performance review is an
actvity which refers to a
meetng between supervisor
and appraisee to evaruate
performance during the review
period.
27
HOW TO APPLY THE PROCESS
PERFORMANCE REVIEW
• Towards the end of the appraisal year (e.g. beginning of
March), meet with your direct reports, discuss the year
in review and discuss new objectves for the upcoming
year.
• At this meetng discuss and fnalize individual
performance appraisal document (PMAS document)
with ratngs, comments and evidence, and facilitate
signing of the appraisal document(s).
• Draf, discuss and communicate new operatonal/work
plans for the upcoming review period/year.
28
When giving performance
feedback, do it in an
appropriate meetng place.
Meet in a setng that is
neutral and free of
distractons.
GIVING PERFORMANCE FEEDBACK
Scheduling Performance Feedback
 Performance feedback should be a regular,
expected management actvity.
 Annual feedback is not enough.
 Employees should receive feedback so ofen
that they know what the manager will say
during their annual performance review.
Preparing for a Feedback Session
 Managers should be prepared for each formal
feedback session.
FEEDBACK IN PERFORMANCE
MANAGEMENT
FEEDBACK CONSIDERATION IN
PERFORMANCE MANAGEMENT
6 WAYS TO STRUCTURE COMMUNICATION
Listen as werr
as tark.
Be honest.
Focus on
goars.
Prevent surprises.
Use specifc,
concrete exampres.
Treat emproyees with
respect.
PERFORMANCE MANAGEMENT:
A process which ensures that emproyees at arr revers:
*Know what the overall strategy and goals of the organizaton are.
*Know and understand the objectves of their own unit/department and how
they link to the overall picture.
*Know and understand their individual objectves and how they support the
others i.e. team, department and organizaton.
*Are clear as to exactly what must be done, and how , to ensure their objectves
are met.
*Receive clear and measurable targets/objectves
2G53rMjMU3jKM-u-ezNX0Q.webp
PURPOSES OF PM SYSTEMS
STRATEGIC – aligned to strategy
ADMINISTRATIVE – decision-making e.g. promoton, retenton, terminaton
INFORMATIONAL – communicaton device
DEVELOPMENTAL- identfcaton of strengths and weaknesses
ORGANIZATIONAL MAINTENANCE – informaton to assist workforce planning
DOCUMENTATION – validate selecton instruments; meet legal obligatons; test
development
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
1-36
CRITERIA FOR EFFECTIVE PERFORMANCE
MANAGEMENT
Fit with strategy
Validity
Reliability
Acceptability
Specifc feedback
GIVING PERFORMANCE FEEDBACK
Conducting the Feedback Session
During feedback sessions, managers can take
any of three approaches:
1.“Tell-and-Sell” – managers tell
employees their ratings and then justify
those ratings.
2.“Tell-and-Listen” – managers tell
employees their ratings and then let
employees explain view.
3.“Problem-Solving” – managers and
employees work together to solve
performance problems.
LEGAL AND ETHICAL ISSUES IN
PERFORMANCE MANAGEMENT
Legal
 Performance management processes are
ofen scrutnized in cases of
discriminaton or dismissal.
Ethical
 Employee monitoring via electronic
devices and computers may raise
concerns over employee privacy.
LEGAL REQUIREMENTS FOR
PERFORMANCE MANAGEMENT
Lawsuits related to performance
management usually involve charges of:
 Discriminaton
 Unjust dismissal
To protect against both kinds of lawsuits, it
is important to have a legally defensible
performance management system.
LEGAL REQUIREMENTS FOR
PERFORMANCE MANAGEMENT
A legally defensible performance management system:





Based on valid job analyses, with requirements for job success clearly communicated to
employees.
Evaluates behaviors or results, rather than traits.
Multple raters (including self-appraisals) used.
All performance ratngs reviewed by upper-level managers.
Appeals mechanism for employees.
ACTIVITY
• You are required to present a fve minute argument to
the Board of Directors of your Company to support
the implementaton of a performance management
system that is aligned to Aguinis’ Performance
Management Process .
• What factors to be considered to answer this
queston? i.e. how would you answer this queston?
COMPENSATION – PAY STRUCTURE DECISIONS
AND RECOGNIZING EMPLOYEE CONTRIBUTIONS
WITH PAY
Specifc Objectves By the end of this unit, students should be able to:
1. Appreciate the consideraton of equity theory and fairness to compensaton
2. Explain how pay levels are developed
3. Explain the reasons for the controversy over executve pay
4. Describe three theories that explain the efect of compensaton on individuals
5. Discuss incentve pay plans 6. List the advantages and disadvantages of incentve based
pay
COMPENSATION
“all forms of pay or rewards going to employees
and arising from their employment.”
(Gary Dessler, 2000)
Compensation may include direct financial
(monetary) payments and indirect payments
(benefits).
WHAT IS COMPENSATION?
• Total Compensaton

•
Sum total of quantfable rewards
•
Received for an employee’s labor
Pay Mix—proporton of each of:



Base pay
Pay incentives
Indirect compensation (benefts)
o Perquisites— “perks”
10-46
Copyright ©2010 Pearson
Education, Inc. publishing
as Prentice Hall
ALIGNING TOTAL REWARDS WITH
STRATEGY
Arigned Reward Strategy - is creatng a
compensaton package that produces the
employee behaviors the frm needs to
achieve its compettve strategy.
COMPENSATION
Compensaton is a powerful tool for meetng the organizaton’s
goals and a major cost.
Compensaton has a large impact on employee attudes and
behaviors.
Compensaton infuences the kinds of people who are atracted to
(or remain with) the organizaton.
Employees atach great importance to Compensaton decisions
when they evaluate their relatonship with their employer.
Factors That Infuence Compensaion and Benefts
EQUITY AND ITS IMPACT ON PAY
RATES
• Equity Theory of Moivaion - is once a
person perceives an inequity a tension or
drive will develop that motvates him or
her to reduce the tension and perceived
inequity.
TYPES OF EQUITY AND FAIRNESS
CONSIDERATIONS
• EQUITY -perceived fairness of the design




Internal—pay structure within a frm
External—what other employers are paying
Individual—of individual pay decisions
Procedural – process for determinaton
• FAIRNESS
• Distributve - decisions
• Interpersonal/interactonal - treatment
• Procedural - process
HOW HR CAN ENSURE EQUITABLE PAY
STRUCTURES
External Equity-Salary Surveys
Methods to
Address Equity
Issues
Internal Equity - Job Analysis and
Job Evaluation
Individual Equity - Performance Appraisal
and Incentive Pay
Procedural Equity - Communications, Grievance
Mechanisms, and Employees’ Participation
DECISIONS ABOUT PAY
Job
Structure
• Relatve pay
for diferent
jobs within
the
organizaton
Pay Lever
• Average
amount the
organizaton
pays for a
partcular
job.
Pay
Structure
• Pay policy
resultng
from job
structure
and paylevel
decisions.
JOB STRUCTURE: RELATIVE VALUE OF JOBS
Job Evaluaton
Administrative procedure
for measuring relative
internal worth of the
organization’s jobs.
Compensable Factors
5 characteristcs of a job that the organizaton values
and chooses to pay for:
1. Experience
2. Educaton
3. Complexity
4. Working conditons
5. Responsibility
JOB EVALUATION OF THREE JOBS WITH
THREE COMPENSABLE FACTORS
PAY LEVEL: DECIDING WHAT TO PAY
Pay at rate set by market
Pay at a rate above market
Pay at a rate below market
PAY RATES
Organizaton obtains pay survey data for its key jobs.
Pay policy line is established.
Pay rates for non-key jobs are then determined.
PAY POLICY LINES
Pay policy line –
graphed line
showing the
mathematcal
relatonship
between job
evaluaton points
and pay rate.
ALTERNATIVES TO JOB-BASED PAY
Delayering – Broad Bands
• Reducing number of levels in
organizaton’s job structure.
• More assignments are combined
into a single layer called broad
bands.
• More emphasis on acquiring
experience, rather than
promotons.
Skill-Based Pay Systems
•
•
Pay structures that set pay
according to employees’ levels of
skill or knowledge and what they
are capable of doing.
Appropriate where changing
technology requires employees
to contnually widen and deepen
their knowledge.
• DISCUSSION
• Executve pay has drawn public scrutny
because top executve pay is much
higher than average workers’ pay.
• Employees’ opinions about equity of
executve pay can have a large efect on
the organizaton’s performance.
INCENTIVE PAY
Forms of pay linked to an employee’s performance as an
individual, group member, or organizaton member.
• Incentve pay is infuental because the amount paid is linked
to certain pre-defned behaviors or outcomes.
• For incentve pay to motvate employees to contribute to the
organizaton’s success, pay plans must be well designed.
EFFECTIVE INCENTIVE PAY PLANS MEET THE
FOLLOWING REQUIREMENTS:
1.
2.
3.
4.
5.
6.
Performance measures are linked to the organizaton’s goals.
Employees believe they can meet performance standards.
Organizaton gives employees the resources they need to meet
their goals.
Employees value the rewards given.
Employees believe the reward system is fair.
Pay plan takes into account that employees may ignore any
goals that are not rewarded.
INDIVIDUAL EMPLOYEE INCENTIVE AND
RECOGNITION PROGRAMS
• Piecework plans
• Straight piecework
• Standard hour plans
• Pros and Cons
• Merit Pay
INCENTIVE PAY TERMINOLOGY
• Pay-for Performance
• Variable Pay
• Proft Sharing
TYPES OF SALES INCENTIVE PLANS
1. Salary plan
2. Commission plan
3. Combinaton plan
MOTIVATION AND INCENTIVES
ACTIVITY – RESEARCH THE THEORY AND PRESENT IMPLICATIONS FOR COMPENSATION
(EACH PERSON WILL BE ASSIGNED ONE THEORY)
Theories that have rerevance to designing incentve plans
• Two Factor Theory - Fredrick Herzberg
• Expectancy Theory - Victory Vroom
• Reinforcement Theory- B.F. Skinner
LIST OF RECOGNITION
FIGURE 12-1 Sociar Recogniion and Rerated Posiive Reinforcement Managers Can Use
•
•
•
•
•
Challenging work assignments
Freedom to choose own work actvity
Having fun built into work
More of preferred task
Role as boss’s stand-in when he or she is
away
• Role in presentatons to top management
• Job rotaton
• Encouragement of learning and contnuous
improvement
•
•
•
•
•
•
•
•
•
Being provided with ample encouragement
Being allowed to set own goals
Compliments
Expression of appreciaton in front of
others
Note of thanks
Employee-of-the-month award
Special commendaton
Bigger desk
Bigger ofce or cubicle
Source: Based on Bob Nelson, 1001 Ways to Reward Employees (New York: Workman Pub, 1994), p. 19; Sunny
C. L. Fong and Margaret A. Shafer, "The Dimensionality and Determinants of Pay Satsfacton: A Cross-Cultural
Investgaton of a Group Incentve Plan," Internatonal Journal of Human Resource Management 14, no. 4 (June
2003), p. 559 (22).
INCENTIVES FOR MANAGERS AND
EXECUTIVES
• Short-term Incentves
• Long-term incentves
ORGANIZATIONAL – WIDE PLANS
• Proft-sharing plans
• Gainsharing Plans
• At-Risk Pay Plans
• Employee Stock Ownership Plans
INCENTIVE PAY FOR EXECUTIVES:
ETHICAL ISSUES
• Incentve pay for executves lays the groundwork for signifcant
ethical issues.
• When an organizaton links pay to its stock performance,
executves need the courage to be honest about their
company’s performance even when dishonesty or clever
shading of the truth ofers the temptng potental for large
earnings.
ROLE OF EMPLOYEE BENEFITS
• Benefts contribute to atractng, retaining, and motvatng
employees.
• A variety of possible benefts helps employers tailor their
compensaton to kinds of employees they need.
• Employees have come to expect that benefts will help them
maintain economic security.
• Benefts impose signifcant costs.
LEGAL BENEFITS…EXAMPLES
Maternity Leave
Vacaion Leave
Sick Leave
Horiday with Pay
DISCRETIONARY BENEFITS PROGRAMS
Medicar
Insurance
Reirement
Prans
Life Insurance
“FamiryFriendry”
Benefts
Educaion
DISCRETIONARY BENEFITS PROGRAMS
Lunch Arrowance
Transportaion
Uniform Arrowance
Severance
Pay
OPTIONAL BENEFITS PROGRAMS:
“FAMILY-FRIENDLY” BENEFITS
Family Leave
Child Care Benefts
Elder Care
OPTIONAL BENEFITS PROGRAMS:
OTHER QUALITY OF WORK-LIFE BENEFITS
•Tuiton reimbursement
Subsidized cafeterias
On-site health care services
•On-site ftness center
•On-site dry cleaning services
Moving and relocaton expenses
•Dues for professional
organizatons
Employee discounts on products
•Of-site company recreaton
area
•Pet services
SELECTING EMPLOYEE BENEFITS
Decisions about which benefts to ofer should take into account:
▪ Organizaton’s goals, objectves and budget
▪ Expectatons of the organizaton’s current employees
and potental future recruits.
An organizaton that does not ofer expected benefts will have
difculty atractng and keeping employees.
EMPLOYEE EXPECTATIONS AND VALUES
Organizatons can address
diferences in employees’ needs
and empower their employees by
ofering fexible benefts plans in
place of a single benefts package
for all employees.
•Cafeteria-style plan: a benefts
plan that ofers employees a set of
alternatves from which they can
choose the types and amounts of
benefts they want.
LEGAL REQUIREMENTS FOR EMPLOYEE
BENEFITS
Benefts required by law
Tax treatment of benefts
Ant-discriminaton laws
Accountng requirements
EXECUTIVE PERQUISITES (PERKS)
• Company planes
• Loans / Stock optons
• Financial Counseling
• Relocaton
FLEXIBLE WORK SCHEDULES
• Flextme
• Telecommutng
• Compressed
Workweek
• Job Share