1. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-1 Chapter 6 Appraising and Rewarding Performance

2. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-2 A COMPLETE PROGRAM Figure 6-1 The reward pyramid : The makeup of a complete pay program (read from bottom)

3. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-3 MONEY AS A MEANS OF REWARDING EMPLOYEES Application of the Motivational Models Drives Needs Expectancy Behavior Modification Equity Cost-reward comparison

4. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-4 MONEY AS A MEANS OF REWARDING EMPLOYEES Figure 6-3 Cost of performance in relation to reward for employee

5. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-5 MONEY AS A MEANS OF REWARDING EMPLOYEES Additional Considerations in the Use of Money Extrinsic and Intrinsic Rewards Compliance with the Law Equal Pay Act of 1963 Comparable worth Other Factors

6. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-6 ORGANIZATIONAL BEHAVIOR AND PERFORMANCE APPRAISAL Management by objectives (MBO) 1. Objective setting 2.Action planning 3.Periodic reviews 4.Annual evaluation Performance appraisal

7. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-7 ORGANIZATIONAL BEHAVIOR AND PERFORMANCE APPRAISAL Appraisal Philosophy 1. Performance orientation 2.Focus on goals or objectives 3.Mutual goal setting between supervisor and employee 4.Clarification of behavioral expectations 5.Extensive feedback systems The Appraisal Interview Suggested Approaches Self-appraisal

8. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-8 ORGANIZATIONAL BEHAVIOR AND PERFORMANCE APPRAISAL 360-Degree Feedback Programs Performance feedback 360-degree feedback Appraisal Problems Nature of Attributions Attribution Self-serving bias Fundamental attribution bias Related Ideas Perceptual set Self-fulfilling prophecy Applications of Attributions Managerial Effects

9. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-9 ECONOMIC INCENTIVE SYSTEMS Purposes and Types Economic incentive system Complete pay program Incentives Linking Pay with Performance Piece rate Advantages Difficulties

10. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-10 ECONOMIC INCENTIVE SYSTEMS Figure 6-9 Advantages and disadvantages of incentives linking pay with performance

11. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-11 ECONOMIC INCENTIVE SYSTEMS Wage Incentives More Pay for More Production Wage incentives Difficulties Rate setting Loose rates Output restriction Profit Sharing Nature and Merits Profit sharing Difficulties

12. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-12 ECONOMIC INCENTIVE SYSTEMS Gain Sharing Gain-sharing plan Behavioral Basis Contingency Factors At-risk pay Skill-Based Pay Advantages Difficulties

13. McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-13 Questions