1. PERFORMANCE MANAGEMENT

2. 1.How can I best measure the performance of my employees? 2.What is the best way to give my employees developmental feedback to improve their perfrmance? 3.How can I communicate the information to employees? 4.How should I manage poorly performing employees? QUESTIONS 9-2

3. Performance Managemenet is the process of : 1.Evaluating the peroformance of your employees against he standards set for them 2.Helping them develop action plans to improve their performance ANSWER: PERFORMANCE MANAGEMENT 9-3

4. Focuses on Results (what) Behaviors (how) EFFECTİVE PERFORMANCE MANAGEMENT 9-4

5. Results What the employee achieved Job outputs #.of products sold or produced etc. Business results (revenue, market share, etc) Measurable accomplishments (reducing costs to desired level etc.) Objectives achieved (finishing a cost saving project etc.) Loyalty to schedules, budgets, deadlines (labor budget, finishing project on time etc.) Quality, quantity, cost timeliness (no product returns etc.) Behaviors How the employee performed. Obedience to organizational, values, teamwork knowledge, attitudes, skills TWO COMPONENTS OF HUMAN PERFORMANCE

6. Results criteria are driven from well expressed job descriptions (main job responsibilities) And special projects Behavior criteria are driven from competencies Core competencies expected from all employees Job competencies Technical Administrative Operations Managerial Sales Customer service.... PERFORMANCE APPRAISAL CRITERIA

7. Companies use performance management for both administrative and developmental purposes. Administrative Purposes: Salary adjustment, rewards, transfers, demotions, promotions, disciplinary purposes…etc. Developmental Purposes: Use PM to improve employees actual performance to add more value to the organization. Training needs are adjusted, determine steps to develop employees potential…etc. PURPOSE 9-7

8. STEP 1: IDENTIFY PERFROMANCE DIMENSIONSSTEP 2: DEVELOPING PERFORMANCE MEASURESSTEP 3: EVALUATING EMPLOYEE PERFORMANCESTEP 4: PROVIDING FEEDBACK STEP 5: DEVELOPING ACTION PLANS TO IMPROVE EMPLOYEE PERFROMANCE STEPS IN PM! 9-8

9. STEP 1: IDENTIFYING PERFORMANCE DIMENSIONS Performance dimensions are specific tasks and activities for which employees are responsible for such as: Work output (quality and quantity) Personal competencies Goal (objective) achievement Global performance measure is a single score to reflect overall performance 9-9

10. Should be valid, specific, and have clear(specific) standards. Valid: The measure should give consistent results over time and across raters. Standard: You should set standards for any performance to measure. Specific: Should reflect actual needs of the position STEP 2: DEVELOPING PERFORMANCE MEASURES 9-10

11. Manager can use various ways to evaluate the performance of their employees. They can either focus on outcomes or on traits/behaviors(knowledge, attitudes, desire, commitment) of their employees. STEP 3: EVALUATING EMPLOYEE PERFORMANCE 9-11

12. Trait based- assumes that certain traits drive performance, so it measures certain personal characteristics of the position holder Behavior based – assumes that certain behaviors drive performance, so it measures what the position holder does (for supervisors and below) Knowledge/skill based – assumes that certain knowledge/skills drive performance, so it measures what the position holder knows, applies (production, clerical workers, some professionals) Results based - assumes that achievement of objectives equals performance; so it measures what the position holder achieves (professionals, managers, executives) CHOİCE OF APPRAİSAL SYTEM

13. GRAPHIC RATING SCALE OF TRAITS Raters evaluate employees based on various traits or attributes they possess relevant to their performance 9-13

14. BEHAVIORALLY ANCHORED RATING SCALES (BARS) 9-14

15. INDIVIDUAL PERFORMANCE Forced distribution—managers are forced to distribute employees into predetermined categories and prevented from rating everyone as outstanding, or average 9-15

16. 9-16 CONTEMPORARY PERFORMANCE APPRAİSAL SYSTEMS Management by Objectives (MBO) Competency Based Performance Evaluation Balanced Scorecard (BS) 360-Degree Approach

17. 9-17 MANAGEMENT BY OBJECTIVES (MBO) A comprehensive and formal goal-setting and appraisal system requiring: 1.Setting of organization’s goals. 2.Setting of departmental goals. 3.Discussion of departmental goals. 4.Defining expected results (setting individual goals). 5.Conducting periodic performance reviews. 6.Providing performance feedback.

18. Goal: Raising the present competency levels of the employees to the expected levels Performance is viewed in terms of the process employees use to achieve their job results Result based performance appraisal focuses only on “what” they have accomplished (i.e., performance goals), Competency based performance appraisal focuses on “how” the work was performed, using competencies for providing feedback. COMPETENCY BASED PERFORMANCE EVALUATİON 9-18

19. BALANCED SCORECARD (BS) An approach developed by Kaplan and Norton - provides a framework of various measures to ensure the complete and balanced view of the performance of the employees Balancing performance on a number of metrics versus a single one like profits. It is an integrated performance management system that directs and evalutes a company’s performance through “key performance indicators”( measure of performance) set in the four areas: (financial, customer related, operational, individual)

20. Involves gathering performance data from as many sources as possible—supervisors, peers, subordinates, and customers Can be cumbersome and takes time to sift through all the feedback 360-DEGREE APPROACH 9-20

21. Supervisors—a key source but may not have time to monitor and observe employees every day Co-Workers—may be able to comment on cooperation and support, but may intentionally slope rating Self-Appraisal—can be useful starting point and developmental tool to help employee improve performance Subordinates—may be hard to separate skill from “likeability” Customers—satisfaction levels may only report extremely good or bad experiences SOURCES OF PERFORMANCE DATA 9-21

22. Most firms include training for both managers and employees on how to effectively give and receive feedback, Most firms require appraisals every six months to a year Focus on behaviors rather than employee Balance approach—positive and improvement areas Involve/engage employee in discussion STEP 4: PROVIDING FEEDBACK 9-22

23. Seek to understand causes of poor performance, which could stem from: Work environment Design of jobs Technology Support or performance of co-workers Employee’s competencies, attitudes and behaviors STEP 5: DEVELOPING ACTION PLANS TO IMPROVE PERFORMANCE 9-23

24. Ensure they know what is expected of them Ensure they know how to be successful Reach agreements on targets for improved performance and timelines Ensure manager’s support 9-24

25. Removing barriers to employee success Training and development activities Coaching and mentoring Work design and technology solutions TAKING ACTION 9-25

26. Compensation

27. The Importance of Compensation Attract and retain employees. Ensure best levels of employee performance in meeting the organization’s strategic objectives.

28. Compensation’s Components –Direct compensation in the form of wages or salary Base pay (hourly, weekly, and monthly) Incentives (sales bonuses and or commissions) –Indirect compensation in the form of benefits Legally required benefits (e.g., Social Security) Optional (e.g., group health benefits)

29. Theory Behind Compensation Equity Theory –Comparing inputs and outputs of a similar co-worker –Perceived inequity affects employee effort Expectancy Theory –People are motivated by intrinsic and extrinsic outcomes they desire. –People will only be motivated if outcome is possible. –People will only be motivated if outcome is contingent.

30. “Monkeys Demand Equal Pay” A recent study shows brown capuchin monkeys refused to play along when they saw another monkey get a better payoff for performing the same work. The monkeys were trained to trade a stone token for a piece of cumber. When the reward was the same for both monkeys, they took the cucumber 95 percent of the time. But it was a different story when one monkey was given something better -- namely, a grape. Then, the other monkey often pitched a fit -- either throwing the token, refusing to eat the cucumber or giving it to the other monkey. Associated Press 2003

31. Types of Base Pay Systems Job-based –Pay the job (not the person) –Market-based (external equity focus) –Point factor-based (internal equity focus) Skills / knowledge-based –Pay the person (not the job) –62% of F1000 firms used some type of skill based pay in 1999

32. Job Based Pay AttractionDepends on market pricing MotivationNo performance impact Skill DevelopmentLearn job-related and upward mobility skills CultureBureaucratic, hierarchical StructureHierarchical, individual jobs and differentiation CostGood control of individual pay

33. Individual Skill/Knowledge Based Pay AttractionAttracts learning-oriented individuals, high skills individuals MotivationLittle performance impact Skill DevelopmentMotivates needed skill development CultureLearning, self-managing StructureFlat or team-based CostHigher individual pay

34. When to Use a Job-based Pay Policy A job-based pay work best in situations where: –Job duties are stable. –Skills are generic. –Employees move up through the ranks over time. –Jobs are fairly standardized within the industry. Drawbacks of a job-based pay system –Discounts individual ability. –Discourages lateral movement. –Tends to be bureaucratic, mechanistic, and inflexible. –Employees’ perceptions of equity are more important than market or point data.

35. Individual-based Compensation Individual-based compensation works when: –The firm has a relatively educated workforce. –Employees often do different jobs –Technology changes frequently. –Employee participation and teamwork are encouraged. –Opportunities for upward mobility are limited. –Opportunities to learn new skills are present. –The costs of employee turnover and absenteeism in terms of lost production are high.

36. Variable Pay Incentives Linking performance to pay –Individual – Bonuses, piece-rates, stock options –Team – Bonuses and awards –Plant / Unit / Business – Gainsharing, profit sharing –Corporation – ESOP’s “Line of sight” is the perceived link between individual behavior and the reward.

37. Individual Merit AttractionGood for high performers MotivationGood line of sight Skill DevelopmentLearn skills that lead to rewarded performance CulturePerformance oriented, job focused StructureIndividual and independent jobs CostDepends on the size of the awards

38. Team Incentives AttractionGood if team performs well MotivationModerate line of sight Skill DevelopmentEncourages team skills CultureTeam focused StructureTeam-based and integrated CostHigh if significant awards given

39. Organizational Plans AttractionGood if organization performs well MotivationWeak line of sight Skill DevelopmentEncourages broad understanding of business CultureBusiness involvement StructureOrganization wide integration CostPossible self-funding if based on performance improvement

40. Pay for Performance Requires 1.Definition of performance –How are we going to measure and compare people? 2.Distribution of performance –Can we distinguish high and low performers? 3.Decide the increase for each level of performance. –How large a difference between high and low performers?

41. Key Strategic Issues in Compensation Determining compensation relative to the market. Striking a balance between fixed and variable compensation. Deciding whether or not to utilize team-based versus individual pay. Creating the appropriate mix of financial and non- financial compensation. Developing a cost-effective compensation program that results in high performance.

42. New Thinking for the New Millennium Strategic approaches to may compensation (pay) systems more responsive: –Pay the person for individual worth (knowledge, skills and competencies) rather than for the value of a job they perform. –Reward excellence through a pay for performance compensation that establishes a clear relationship between a significant amount of pay and attainment of organizational objectives. –Individualize the pay system to give employees choices in how they are rewarded and what reward they receive.

43. EMPLOYEE BENEFITS AND SAFETY PROGRAMS

52. Occupational Safety «Send everyworker home whole and healthy everyday» Workplace Violance Programs Murder…!!! Stop violance at work!!! Ergonomic Programs Th science of undertsanding the capablities of humans in terms of their work requirements

53. LABOR UNIONS Final Homework Due on 20th of August!!! This homework will consitute 50% of your final exam! Write a brief report about the development of «labor union» in Turkey. You can check the following web pages for your summary in English!! http://notoku.com/turkiyede-sendikaciligin- gelisimi/ http://notoku.com/turkiyede-sendikaciligin- gelisimi/ http://grcnozdemir.brinkster.net/1946gts%C 3%B6.htm http://grcnozdemir.brinkster.net/1946gts%C 3%B6.htm http://bagimsizrehberler.blogcu.com/sendik a-nedir-turkiye-de-ve-dunyada-sendikal- orgutlenme/12736089 http://bagimsizrehberler.blogcu.com/sendik a-nedir-turkiye-de-ve-dunyada-sendikal- orgutlenme/12736089