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Transcript

Reward Systems

Introduction

Appraisal Techniques

Performance Appraisal

Choosing Appraisal Systems

Performance Appraisal & Rewards

Team 5 (Gwyneth, Charleston, Jessica, Thomas, Thu, Zi Wei, Wei Ju)

My friend - Sally

1

Have you had any experience

with Situation A or B?

PAUSE...

Manager does not have time to additional time to do 1-1 check-ins

Performance is purely based on manager's impression

Only knew the broad strokes of what to improve on

Situation A

Not able to verbalise what to improve on

Importance of timely and constructive feedback

BANK

Frequent check-ins

Fellow colleagues (peers, subordinates, superiors) can submit achievements, good behaviours + review

Situation B

Manager also tried to find out how to help Sally enhance her performance

Sally did improve and help her team clinched the most collaborative team award

This is the place to work and grow

Performance Appraisal

2

  • Systematic way of evaluating employees across various dimensions to ensure organisations are getting what they pay for.

  • Various forms of appraisals (normally F2F)
  • Boss - subordinate
  • Peer appraisal
  • 360 appraisal

3. Problems

Which role you prefer? Appraiser or Appraisee?

Key Factors to Consider

  • Coupled with feedback system? (e.g. never knew my boss view me that way!)
  • Perceived to be fair and tied to performance? (e.g. was there favoritism shown?)
  • Clear and transparent reward system tied to performance? (e.g. behind-the-scene tribal council)

1. Key factors to be considered

Timely feedback is key

Uses of

Performance Appraisal

2. Uses of Performance Appraisal

  • Feedback, feedback, feedback! - What went well and what areas could be improved
  • Self-development - Strengths & weaknesses of individuals to maximise potential
  • Reward system - performance bonus!!
  • Personnel devisions - promote, demote, transfers
  • Training & Development - skills required for current/future role

3. Typical appraisal Problems / pitfalls

1. Central tendency error

2. Strictness/leniency

3. Halo effect

4. Recency

5. Personal biases

a. Cannot differentiate between categories and just give a global rating for overall performance

b. Personal likes/dislikes - e.g. racial/sexual

c. Focus on the most recent performance

d. Lump everyone’s performance into an average category, resulting in failure to recognize high/low performers

e. Extreme spectrum of the central tendency

4. Ways to Reduce Error

  • Ensure Dimensions relate to specific job activity

  • Avoid defining terms (e.g. average)

  • Observe on a regular basis (& document)

  • Evaluate reasonable numbers of persons (fatigue is real!)

  • Ensure Dimensions are clear, meaningful and relevant (agreed by both parties)

  • Provide Comprehensive rater trainings

What practices are used in the performance appraisal process? systems?

(Learning Outcome 2)

3

Appraisal Techniques

APPRAISAL

TECHNIQUES

Graphic Rating Scales

  • The appraisers rated on several evaluations dimensions (quantity of work, quality of work, knowledge of job, attendance)
  • Assign a rating on each dimension

Pros: straight forward and easy to understand

Cons: Openness to central tendency, strictness

and leniency errors

Critical Incident Technique

Supervisors record an employee's either unusual success or unusual failure aspect of job performance

Pros:

-> Good references for appraisal interviews

-> Good qualitative information

Cons:

-> Difficult to use this technique for promotion or salary decisions since lack of quantitative data.

Behaviourally anchored rating scales (BARS)

Step 1: select a job that can be described in observable behaviours

BARS

Step 2: identify performance dimensions by managers or supervisors

Step 3: generate scales to describe job performance

Step 4: create scales values to job performance

Step 5: develop final rating scales

Behaviourally anchored rating scales (BARS)

Pros & Cons

Pros:

-> Reduce bias

-> Employees less defensive during performance appraisals

-> Focus more on job-related behaviours, and ignore less relevant issues

-> Aid in employee training and development by identifying those domains needing most attention

Cons:

-> Considerable time and effort in designing the forms are required before actual rating

-> Little applicability in job areas such as research science since this technique relies on observable behaviours.

Behavioral Observation Scales

Behavioral Observation Scales

• Measures behaviors that you want the employee to achieve

-> Performance

• Scale from 1 to 5 to indicate the frequency of each behavior

• Easier to construct than BARS

Management by Objective

Management by Objective

• Goal-setting theory of motivation

• Individuals work with supervisors

-> Establish goals and objectives

-> Be responsible during the year

Assessment Centre

Have you ever take part in an AC? And how was your experience?

Assessment Centres

role-playing

case analyses

personal interview

psychological tests

In-basket exercises

• Evaluate employee’s long-range potential

• Use almost exclusively on managerial personnel

• Trained observers make judgements on managers’ behaviors

Statistics

Aptitude Test Statistics

2020/2021

Comparison

Comparison

4

How do organizations choose the best appraisal system for their organization?

(Learning Outcome 3)

Functions of Reward System

1) Job Effort and performance to enhance when employees felt rewarded for their good performance. Job satisfaction

2) Attendance and attention: influenced employee efforts at work.

3) Commitment to organization.

4) A heavy component of decision-making process to choose to work and contribute for an organization is their reward and compensation.

Functions of Reward system

What are the bases for reward distribution

Reward is limited resource. Hence it is important to have systematic approach to distribute the available resource. The system can be depended on 4 basis

1) Relative Power ( within the organization )

2) Equality

3) Need

4) Distributive justice ( merit based incentive program)

Basis to create Reward System

Extrinsic vs Intrinsic Rewards

Extrinsic and Intrinsic rewards

Extrinsic and Intrinsic rewards

Intrinsic reward is derived from performing the job itself. The sense of accomplishment when complete tasks, excelling at one role.

Pros:

1) Cost saving for employers

2) Sustainable

Cons:

1) Difficult to achieve

2) Double-edge sword ( need to pair with appropriate extrinsic rewards)

Extrinsic reward administered externally. (Wages, bonuses, benefits, promotions etc...).

Pros:

1) Highly effective. Immediate effect.

2) Expectation and reputation

Cons:

1) Costly and difficult to implement

2) Diminishing returns

Money vs Motivation

Money vs Motivation

Like all tools, performance reward contingencies need to be used correctly, to get the best results from this.

1) Trust between managers and subordinates.

2) Accurate appraisal system. Measurement of individual needs to be accurate and fair.

3) Monetary reward to high performers must be significantly higher poor performance.

4) Few , or no negative consequences from high performers.

Pay Secrecy

Pay Secrecy

Widely acceptable practice among private industries.

Salary is personal matter / privacy invasion.

Negative effects:

1) Lack of transparency leads to overestimation of their peer's or their manager's salary.

2) Perceived inequality.

High performer may get high rewards, but still unsatisfied as he thinks his peers / managers are receiving higher rewards.

Pay Secrecy

What about total transperancy?

Full transparency is great for employees. "Know your worth" has an actual meaning.

Employees can compare themselves against high performing peers / seniors.

Employees can have a roadmap / mentors to reach their desired brackets of incomes

Cons:

1) Comparison breads jealousy. Jealousy leads to demands.

2) Macro POV, pay transparency leads to comparison between different companies. Over time, concentration of talents to bigger companies ( who can afford higher monetary rewards).

5

How do organizations choose the best appraisal system for their organization?

(Learning Outcome 4)

Pros: Improved performance

Cons:

1) may at times lead to employees competing with one another, with undesirable results

2) prefer compensation to be based on seniority or job classification

3) where quality control systems are lax, individual incentives such as piece rates may lead employees to maximize units of output while sacrificing quality

Individual vs Group Incentive

Individual Incentive

vs

Group Incentive

Pros: employees are encouraged to cooperate with one another and with the corporation so that all employees can benefit.

Creative Pay Practices

Gain Sharing

Lump-sum increase

Examples of Group Incentives

Skills-based Incentives

Participative pay decisions

Flexible Benefits

Guideline

• Does the plan capture attention? Do employees discuss the plan and take pride in their early successes?

• Do employees understand the plan? Can employees explain how the plan works, and do they understand what they must do to earn the incentive?

• Does the plan improve communication? As a result of the plan, do employees understand more about corporate mission, goals, and objectives?

• Does the plan pay out when it should? Are incentives being paid for desired results, and are they withheld for undesirable results?

• Is the company performing better as a result of the plan? Are profits or market share up or down? Have any gains resulted in part from the incentive plan?

Q & A?

Q&A

Thank you for listening!

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