Compensation and Performance Management (BBAZ16304) Lecture Notes PDF

Compensation and Performance Management (BBAZ16304) Spring Semester 2025 Wen Xu O907 [email protected]  Lecture 2 Performance Management Process  Overview Prerequisites Performance Planning Performance Execution Performance A...

Compensation and Performance Management (BBAZ16304) Spring Semester 2025 Wen Xu O907 [email protected]  Lecture 2 Performance Management Process  Overview Prerequisites Performance Planning Performance Execution Performance Assessment Performance Review Copyright © 2019 Chicago Business Press Performance Management Process Copyright © 2019 Chicago Business Press Prerequisites  Prerequisites A. Strategic Planning ◦ Knowledge of the organization’s mission and strategic goals B. Work (Job) Analysis ◦ Knowledge of the job in question Copyright © 2019 Chicago Business Press  Strategic Planning Knowledge of Mission and Strategic Goals ◦ Purpose or reason for the organization’s existence ◦ Where the organization is going ◦ Organizational goals ◦ Strategies for attaining goals Copyright © 2019 Chicago Business Press  Mission and Goals ▪Cascade effect throughout organization ◦ Organization →Unit →Employee Copyright © 2019 Chicago Business Press  Knowledge of the Vision ◦ https://www.youtube.com/watch?v=yLwietqZ0F0 ◦ Why was a compelling vision important to Ford’s turnaround? ◦ Is having a vision in and of itself sufficient? Why or why not? Copyright © 2019 Chicago Business Press  Work (Job) Analysis Knowledge of the Job in question ◦ Activities ◦ Tasks ◦ Products ◦ Services ◦ Processes Copyright © 2019 Chicago Business Press Knowledge of the Job (Continued) KSAs required to do the job ◦ Knowledge ◦ Having the information needed to perform the work, but not necessarily having done it. ◦ Skills ◦ Required attributes that are usually acquired by having done the work in the past. ◦ Abilities ◦ Having the physical, emotional, intellectual, and psychological aptitude to perform the work, but neither having done the job nor having been trained to do the work is required. Copyright © 2019 Chicago Business Press  Job Description Job duties Needed KSAs Working conditions Copyright © 2019 Chicago Business Press  Work (Job) Analysis Use a variety of tools ◦ Observation ◦ Job analysts watching incumbents do the job, or even trying to do the work themselves, and then producing a description of what they have observed. ◦ Questionnaires (available on the Internet) ◦ Distributing questionnaires, including a common list of tasks or KSAs, and asking individuals to fill them out, indicating the extent to which each task or KSA is required for a particular job in question. ◦ Interviews ◦ Job analyst asks the interviewee to describe what he or she does during a typical day at the job from start to finish. Copyright © 2019 Chicago Business Press  Work (Job) Analysis Data collected from ◦ Job incumbents ◦ Supervisors ◦ Individuals responsible for creating a new job Copyright © 2019 Chicago Business Press  Work (Job) Analysis All incumbents should ◦ Review information. ◦ Provide feedback. ◦ Rate tasks and KSAs in terms of Frequency. Criticality. Overall multiplicative scores for all tasks can be ranked from highest to lowest to obtain a final list of tasks. Copyright © 2019 Chicago Business Press Copyright © 2019 Chicago Business Press  Rater Biases ◦ Rating of frequency and criticality of tasks and KSAs is susceptible to: ◦ Self-serving bias ◦ Social projection and false consensus bias ◦ Carelessness consensus bias → These biases exaggerate the importance of certain tasks & KSAs based on the KSAs that incumbents have Copyright © 2019 Chicago Business Press  Rater Biases ◦ Self-serving bias ◦ People report that their own behaviors and personality traits are more needed for successful job performance compared to behaviors and personality traits of others. This is because people tend to attribute success to themselves and failure to external causes. ◦ Social projection bias ◦ People believe that others behave similarly to themselves and, hence, lead people to think about themselves when reporting KSAs for their job instead of people in general. ◦ False consensus bias ◦ People to believe that others share the same beliefs and attitudes as themselves. ◦ Carelessness bias ◦ Participants in job analysis differ in how carefully they attend to the job analysis rating task. Copyright © 2019 Chicago Business Press  Rater Training An experimental study involving two independent samples of 96 administrative support assistants and 95 supervisors working for a large city government implemented a successful Web-based training program (takes only about 15 minutes) that succeeded in mitigating these biases. ◦ Across the five job characteristics rated, individuals who did not participate in the Web-based training program were (62% administrative support assistants and 68% supervisors) more likely to provide a higher rating than if the same individual provided the job analysis ratings after participating in the training program. Copyright © 2019 Chicago Business Press  Rater Training Web-based training: 5 steps ◦ Provide raters with a definition of each rating dimension. ◦ Define the scale anchors. ◦ Describe what behaviors were indicative of each dimension. ◦ Allow raters to practice their rating skills. ◦ Provide feedback on the practice. Copyright © 2019 Chicago Business Press  Generic Job Descriptions ◦ O*NET – http://online.onetcenter.org/ ◦ Nation's primary source of occupational information. Its database contains information on hundreds of standardized and occupation- specific descriptors. ◦ The database is continually updated by surveying a broad range of workers from each occupation. ◦ O*NET descriptions can be easily adapted and changed to accommodate specific local characteristics. Copyright © 2019 Chicago Business Press The O*NET® Content Model  Summary Report for Tractor- Trailer Truck Drivers (from O*NET) Job Description as A Key Prerequisite ◦ Behaviors ◦ The skill “equipment maintenance.” ◦ The extent to which the employee “performs routine maintenance on equipment and determines when and what kind of maintenance is needed.” ◦ Results ◦ (1) quality, (2) quantity, (3) cost-effectiveness, and (4) timeliness. ◦ Number of accidents (i.e., quality) and amount of load transported over a specific period of time (i.e., quantity). Performance Planning  Performance Planning ◦ Armed with knowledge of the organization's strategic goals and information about the position, the supervisor and the employee formally meet to discuss, and agree upon, what needs to be done and how it should be done. ◦ This performance planning discussion includes a consideration of both results and behaviors as well as a development plan. Copyright © 2019 Chicago Business Press  Performance Planning: Results ◦ Results refer to what needs to be done or the outcomes an employee must produce. ◦ Key accountabilities ◦ Broad areas of a job for which the employee is responsible for producing results. This information is typically obtained from the job description. ◦ Specific objectives ◦ Statements of important and measurable outcomes. ◦ Performance standards ◦ A yardstick (准绳) used to evaluate how well employees have achieved each objective. Performance standards provide information about acceptable and unacceptable performance (e.g., quality, quantity, cost, and time). Copyright © 2019 Chicago Business Press  An Example ◦ Job of university professors ◦ Two key accountabilities are teaching and research. ◦ An objective for teaching could be “to obtain a student evaluation of teaching performance of 3 on a 4-point scale.” An objective for research could be “to publish two articles in scholarly refereed journals per year.” ◦ Performance standards could be “to obtain a student evaluation of teaching performance of at least 2 on a 4-point scale” and “to publish at least one article in scholarly referred journals per year.” ◦ Thus, the objective is the desired level of performance, whereas the standard is usually a minimum acceptable level of performance. Copyright © 2019 Chicago Business Press Performance Planning: Behaviors ◦ Although it is important to measure results, an exclusive emphasis on results can give a skewed or incomplete picture of employee performance. ◦ For some jobs it may be difficult to establish precise objectives and standards. For other jobs, employees may have control over how they do their jobs but not over the results of their behaviors. ◦ Behaviors, or how a job is done, thus constitute an important component of the planning phase. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall  Competencies ◦ A consideration of behaviors includes discussing competencies, which are measurable clusters of KSAs that are critical in determining how results will be achieved. ◦ Customer service, written or oral communication, creative thinking, and dependability. Copyright © 2019 Chicago Business Press  Performance Planning: Development Plan ◦ An important step before the review cycle begins is for the supervisor and employee to agree on a development plan. At a minimum, this plan should include identifying areas that need improvement and setting goals to be achieved in each area. ◦ Development plans usually include both results and behaviors. Copyright © 2019 Chicago Business Press Performance Execution  Performance Execution ◦ Once the review cycle begins, the employee strives to produce the results and display the behaviors agreed upon earlier as well as to work on developmental needs. The employee has primary responsibility and ownership of this process. ◦ Employees need to have active input in the development of job descriptions, performance standards, and the creation of the rating form. ◦ At later stages, employees are active participants in the evaluation process in that they provide a self-assessment, and the performance review interview is a two-way communication process. Copyright © 2019 Chicago Business Press  Performance Execution: Employee’s Responsibilities ◦ Commitment to goal achievement ◦ The employee must be committed to the goals that were set. One way to enhance commitment is to allow the employee to be an active participant in the process of setting the goals. ◦ Ongoing requests for feedback and coaching ◦ The employee needs to take a proactive role in soliciting performance feedback before the review cycle is over and coaching from her supervisor before a serious problem develops. ◦ Communication with supervisor ◦ Employee should communicate openly and regularly with the supervisor. Copyright © 2019 Chicago Business Press  Performance Execution: Employee’s Responsibilities ◦ Collecting and sharing performance data ◦ The employee should provide the supervisor with regular updates on progress toward goal achievement, in terms of both behaviors and results. ◦ Preparing for performance reviews ◦ The employee should engage in an ongoing and realistic self-appraisal so that immediate corrective action can be taken if necessary. The usefulness of the self-appraisal process can be enhanced by gathering informal performance information from peers and customers. Copyright © 2019 Chicago Business Press Performance Execution: Manager’s Responsibilities ◦ Observation and documentation ◦ Supervisors must observe and document performance on a daily basis. It is important to keep track of examples of both good and poor performance. ◦ Updates ◦ As the organization’s goals may change, it is important to update and revise initial objectives, standards, and key accountabilities and competency areas. ◦ Feedback ◦ Feedback on progression toward goals and coaching to improve performance should be provided on a regular basis certainly before the review cycle is over. Copyright © 2019 Chicago Business Press Performance Execution: Manager’s Responsibilities ◦ Resources ◦ Supervisors should provide employees with resources and opportunities to participate in developmental activities. Thus, they should encourage participation in training, classes, and special assignments. ◦ Reinforcement ◦ Supervisors must let employees know that their outstanding performance is noticed by reinforcing effective behaviors and progress toward goals. Also, supervisors should provide feedback regarding negative performance and how to remedy the observed problem. Copyright © 2019 Chicago Business Press Performance Assessment  Performance Assessment ◦ Manager assessment ◦ Self-assessment ◦ Other sources (e.g., peers, customers) Copyright © 2019 Chicago Business Press  Multiple Assessments ◦ It is important that both the employee and the manager take ownership of the assessment process because they provide good information to be used in the review phase. ◦ The discrepancies between self-views and the views that important others that is most likely to trigger development efforts, particularly when feedback is more negative than are employee self-evaluations. ◦ Self-appraisals can reduce an employee’s defensiveness during an appraisal meeting and increase the employee’s satisfaction with the performance management system as well as enhance perceptions of accuracy and fairness and therefore acceptance of the system. Copyright © 2019 Chicago Business Press Multiple Assessments Are Necessary To… Increase employee ownership Increase commitment Provide information Ensure mutual understanding Copyright © 2019 Chicago Business Press Performance Review  Overview of Appraisal Meeting ◦ It provides a formal setting in which the employee receives feedback on his or her performance. ◦ Achilles’ heel of the entire process ◦ Managers are uncomfortable providing performance feedback, particularly when performance is deficient. ◦ This high level of discomfort can be mitigated through training those responsible for providing feedback. ◦ Providing feedback in an effective manner is extremely important because it leads not only to performance improvement but also to employee satisfaction with the system. Copyright © 2019 Chicago Business Press  Overview of Appraisal Meeting ◦ People are apprehensive about both receiving and giving performance information, and this apprehension reinforces the importance of a formal performance review as part of any PM system. ◦ Jack Welch once asked the managers if their organization’s leaders provide subordinates with honest and straightforward performance feedback. Only about 5% of the people raised their hands. ◦ Avoiding giving negative feedback is very dangerous because it conveys the message that mediocrity is acceptable and damages the morale of the top performers. Copyright © 2019 Chicago Business Press  Performance Review ◦ The appraisal discussion focuses on: ◦ the past ◦ What was done (i.e., results) and how it was done (i.e., behaviors). ◦ the present ◦ What new compensation, if any, the employee may be receiving as a result of his performance. ◦ the future ◦ The employee’s developmental progress as well as plans for the future.  Self-Assessment during the Performance Review meeting at "The Office" ◦ What did you see? ◦ What about this self-assessment made it ineffective? Copyright © 2019 Chicago Business Press  Six Steps for Conducting Productive Performance Reviews ◦ Identify what the employee has done well and poorly by citing specific positive and negative behaviors. ◦ Solicit feedback from your employee about these behaviors. Listen for reactions and explanations. ◦ Discuss the implications of changing, or not changing, the behaviors. Positive feedback is best, but an employee must be made aware of what will happen if any poor performance continues. Copyright © 2019 Chicago Business Press  Six Steps for Conducting Productive Performance Reviews ◦ Explain to the employee how skills used in past achievements can help him overcome any current performance problems. ◦ Agree on an action plan. Encourage the employee to invest in improving his performance by asking questions such as “What ideas do you have for ______?” and “What suggestions do you have for ______?” ◦ Set up a meeting to follow up and agree on the behaviors, actions, and attitudes to be evaluated. Copyright © 2019 Chicago Business Press  Summary ✓Ongoing process ✓Each component is important ❖If one is implemented poorly, the whole system suffers ✓Links between components must be clear Copyright © 2019 Chicago Business Press Thank You Q &A