This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
RPM Notes
Week 1 – Introduction to fundamentals of performance and rewards
Topic 1: Managing Employee Performance and Reward: Concepts, Practices, Strategies Human resource processes and planning:
Stakeholder Main performance criteria Shareholders/own Executives Line managers Employees Customer/clients Suppliers Government Community Environment
What is performance? (cybernetic model)
What should a performance management system do?
- Communication: desired competencies, behaviours and results to achieve its strategic objectives
Individual performance
Work group performance
Organisational performance
Personal results e.g. quantity,
quality
Personal behaviour e.g. effort, citizenship
Personal competencies
e.g. knowledge, skills, abilities,
attitudes
Group results e.g.
productivity, quality
Work group behaviour e.g. team-‐working
Work group competencies e.g. collective
know-how
Organisational results
e.g. profitability, customer
satisfaction,
Organisational behaviour
e.g. customer-‐focus,
cooperation,
Organisational competencies
e.g. core competencies and people
Outcomes (Results)
Processes (Behaviours
)
Inputs (Competen
cies)
- Build relationships: between internal stakeholders - Monitor and measure: individual and group performance by valid, reliable and felt
fair means. - Provide timely feedback: on recent performance, including strengths, weaknesses
and areas for improvement. - Develop: individual and group performance capabilities - Evaluate: individuals for purposes of selection and promotion, and evaluate
individuals and groups for reward allocation. Key requirements for an effective performance management system: 1. Validity (Are the right things being measured?)
• The ‘goodness’ of the performance criteria and measures used • ‘Is this one of the things we should measure?’ (= construct validity) • ‘Are we measuring enough of the right things?’ (= content validity) • ‘Are we really measuring what we say we are trying to measure?’ (= criterion-related
validity) 2. Reliability (Are valid measures being applied accurately?)
• Accuracy • Consistency • No measurement error or bias
3. Cost-effectiveness 4. Felt-fairness/procedural justice (Are the decision-making processes seen as fair?)
• Explain performance standards in advance • Early and ongoing notice of areas of underperformance • Opportunity (time and resources) to improve
Adequate notice
• Have employees provide input to assessment process, e.g. self-assessment
• Opportunity to explain • Right to refute and appeal
Fair hearing (or ‘voice’)
• Correct standards • Standards applied consistently • Judgement based on evidence related to standards
Validity and reliability
What are rewards? - A reward is an organisation that provides its employees either intentionally or
unintentionally in exchange for the employee’s potential or actual work contribution
- It is to which employees as individuals attach a positive valence as a need satisfier.
How much? (=results) - team incentives - team non-cash recognition awards
Large group short-term incentives (LTIs) How much? (=results)
- profit sharing - gainsharing - goal-sharing
Organisation-wide-long term incentives (LTIs) How much? (=results)
- share bonus plans - share purchase plans - share options plan - share appreciation and other rights plans
What should a good reward system do? Primary organisational aims:
- Attract the right people at the right time for the right jobs, tasks or roles - Retain the best people by recognizing their contribution - Motivate employees to deliver to the best of their capabilities - Develop employees’ performance capabilities by encouraging and rewarding
them for demonstrated improvement in capability Associated aims:
- Satisfy needs i.e. be of value to employees in satisfying their needs - Be fair i.e. be commensurate with contribution and comparable to rewards
received by other employees - Be legal i.e. comply with relevant legal requirements and mandated minimum
standards - Be affordable i.e. be within the financial means of the organisation and cost-
effective - Be strategically aligned i.e. support the organization’s business strategy and
structure. Working with psychology
- Work behaviours - Work attitudes - The psychological contract - Organisational justice - Motivation in theory and practice
- Content theories - Process theories
Work behaviours They are physical and/or verbal actions by individuals that are:
1. Observable 2. Measurable 3. Casually linked to desired performance results, either positively or negatively
Three key types of behaviour
1. Membership behaviour - When people decide to join and remain with an organisation - Characteristics are:
1. Affective commitment (wish to remain because of perceived emotional benefits) 2. Normative commitment (felt obligation to remain because of perceived indebtedness
to the organisation) 3. Continuance commitment (felt need to remain because of perceived costs of
leaving) The psychological contract
- A contract: an agreement about the mutual responsibilities of parties in an exchange relationship. Involves a promise, a payment/consideration and an acceptance.
- The psychological contract: perceptions or expectations by each party as to what they and the other party have undertaken to give and receive in the exchange.
- Why does it exist? Because the employment exchange is typically very open-ended and imprecise, often leading to ‘contract drift’.
Psychological contract: employee perspective.
Management-espoused psychological contracts: relational vs transactional
And you’ll be a part of: � an exciting, dynamic
organisation (for as long as we
And you’ll be a part of: � a dull but safe organisation
(for the long haul)
We’ll provide: � A challenging work
environment � Opportunities for you to
develop your knowledge, skills, abilities and marketability
We’ll provide: � A secure job (here) � Internal training opportunities � Steady pay increases � Financial security
If you: � Develop the competencies we
need � Apply them in ways that help
If you: � Are loyal � Work hard � Do as you are told
Basis of the employment exchange: � Economic-instrumental
Basis of the employment exchange: � Social-emotional exchange
Key principle: � ‘A flexible, mutually
beneficial partnership’ for as
Key principle: � ‘A fair day’s work for a fair
day’s pay’ over the long term
‘Transactional’ (espoused new ‘Relational’ (espoused traditional
� How am I treated by the decision-makers? Basic requirements for procedural justice:
• Same standards consistently applied • Judgement based on evidence • Fair hearing/voice (including right to refute and appeal) • Adequate notice (of underperformance; opportunity to improve)
Distributive justice: equity theory (J.S. Adams)
Perceived outcomes: Pay, benefits, recognition, status, achievement, satisfaction, security, etc. Perceived inputs: Knowledge, skills, ability, qualifications, experience, age, seniority, loyalty, effort, time, performance, responsibility, etc. Possible behavioural responses:
- Leave for a more rewarding position elsewhere - Change outcomes within organisation - Change inputs
Possible cognitive responses: - Rationalise away the felt inequity by altering perception of the ‘self’s’ own inputs and
outcomes - Psychologically distort inputs and outcomes of the ‘comparison other’ to eliminate
! Process of cognitive theories of motivation ‘Perceived pathways and outcomes motivate.’
- Seek to explain (and exploit) the cognitive processes by which individuals decide to pursue particular pathways to reward attainment and need satisfaction rather than others.
Main process theories: - Expectancy theory - Goal-setting theory - Reinforcement theory
Motivation: from theory to HR practice Some key implications for effective performance management:
- Identify the essential performance capabilities (knowledge, skills and abilities) for the position and ensure that employee capacities match these requirements (expectancy theory – expectancy)
- Encourage task self-efficacy (expectancy theory, goal-setting theory) - Set tasks that are specific and challenging, but attainable (goal-setting theory) - Encourage employee ownership of performance criteria (goal-setting theory)
- Ensure that performance achievement is accurately measured (expectancy theory – instrumentality)
- Provide timely and positive feedback (goal-setting theory) - Do not overlook the importance of intrinsic motivation (two-factor theory)
Some key implications for effective reward management:
- Understand individual employee needs and how these differ between employee groups (content theories)
- Offer individuals valued rewards, i.e. rewards that address high salience needs (Maslow’s hierarchy of needs; expectancy theory – valence)
- Link rewards clearly and directly to performance in a timely way (expectancy theory – instrumentality)
- Deliver on the rewards promised (expectancy theory – instrumentality) - Strike an appropriate balance between financial and other rewards (two-factor theory) - Do not overlook the potential of intrinsic rewards (two-factor theory) - Manage perceptions of work inputs, reward outcomes and comparisons