Chapter 9: Performance Management Creating Effective Organizations

Why Performance Appraisals? 1. To recognize and reward good performance 2. To make decisions regarding promotions and hiring 3. To provide individuals with feedback to help in their development 4. To identify training and other needs for individuals and the organization 5. To obtain data for human resource planning

Problems with Appraisals 1. Evaluation and feedback are poor (see exhibit in text) 2. The atmosphere in the interview is highly defensive and not constructive 3. The rating system used is not linked to the desired behaviors 4. The behaviors that are being measured and rewarded are not linked to the organizations mission and goals

Performance Evaluation Methods Rankinghow does an employee compare with others? Rankinghow does an employee compare with others? Classificatione.g. poor to outstanding Classificatione.g. poor to outstanding Graphic Rating Scalemeasure on a scale (e.g. 1 to 7) on various dimensions Graphic Rating Scalemeasure on a scale (e.g. 1 to 7) on various dimensions Behavioral Anchored Rating Scales Describe various employee behaviors Behavioral Anchored Rating Scales Describe various employee behaviors Descriptive Essays Descriptive Essays

Who Might Do Appraisals 1. Superiors 2. Subordinates 3. Peers 4. Self 5. Clients Note: Data gathered from a variety of sources will likely give a better picture of the performance of an individual. However, gathering such data can be time-consuming and costly.

Objectives of Compensation Compensation must be… 1. Legal 2. Adequate 3. Motivating 4. Equitable 5. Secure 6. Cost-effective

Key Wage Legislation 1. Fair Labor Standards Act Record Keeping Record Keeping Minimum Wage Minimum Wage Child Labor Child Labor Overtime Overtime 2. Equal Pay Act 3. Social Security Act 4. Employee Retirement Income Security Act (ERISA) 5. Consolidated Omnibus Budget Reconciliation Act (COBRA) 6. Worker Compensation

Key Decisions in Compensation 1. Wage Level: Where should our compensation be in relation to other companies? 2. Wage Structure: How do we value different jobs in our organization? Which jobs are worth more than others? 3. Individual Wages: How should we reward people who are performing similar work?

Pay Schedule of a Large Restaurant Designed Using a Skill-Based Approach Skill Block SkillsPay 5 Create new items for menu Create new items for menu Find different uses for leftovers (e.g., hot dishes, buffets) Find different uses for leftovers (e.g., hot dishes, buffets) Coordinate and control work of all employees upon managers absence Coordinate and control work of all employees upon managers absence$22/hr 4 Cook existing menu items following recipe Cook existing menu items following recipe Supervise kitchen help Supervise kitchen help Prepare payroll Prepare payroll Ensure quality of food and adherence to standards Ensure quality of food and adherence to standards$16/hr 3 Schedule servers and assign workstations Schedule servers and assign workstations Conduct inventory Conduct inventory Organize work flow on restaurant floor Organize work flow on restaurant floor$9.50/hr 2 Greet customers and organize tables Greet customers and organize tables Take orders from customers Take orders from customers Bring food to tables Bring food to tables Assist in kitchen with food preparations Assist in kitchen with food preparations Perform security checks Perform security checks Help with delivery Help with delivery$6.50/hr 1 Use dishwashing equipment Use dishwashing equipment Use chemicals/disinfectants to clean premises Use chemicals/disinfectants to clean premises Use vacuum cleaner, mop, waxer, and other cleaning equipment Use vacuum cleaner, mop, waxer, and other cleaning equipment Clean and set up tables Clean and set up tables Perform routine kitchen chores (e.g., making coffee) Perform routine kitchen chores (e.g., making coffee)$5/hr

Pay Schedule of a Large Restaurant Designed Using a Job-Based Approach GradeJobs Number of Positions Pay 6Chef2$19.50-$30.00/hr 5ManagerSous-Chef11$10.50-$20.00/hr 4 Assistant Manager Lead Cook Office Manager 221$6.50-$11.00/hr 3 General Cook Short-Order Cook Assistant to Lead Cook Clerk5221$5.50-$7.00/hr 2ServerHostessCashier4544$5.00-$6.00/hr 1 Kitchen Helper DishwasherJanitorBusser Security Guard 23262$4.50-$5.25/hr

Types of Compensation Individual Incentives: Individual Incentives: 1.Salary 2.Merit Pay 3.Bonuses/Stock 4.Piece-Rate 5.Commission 6.Skill-Based Pay 7.Knowledge-Based Pay Group Incentives: Group Incentives: 1.Merit Pay 2.Bonuses 3.Piece-Rate 4.Commissions Company-Wide Incentives: Company-Wide Incentives: 1.Profit Sharing 2.Gain Sharing 3.Scanlon Plans 4.Bonuses/Stock or Stock Options