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Reward Systems
Introduction
Appraisal Techniques
Performance Appraisal
Choosing Appraisal Systems
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
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
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
3. Problems
Which role you prefer? Appraiser or Appraisee?
Timely feedback is key
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
What practices are used in the performance appraisal process? systems?
Pros: straight forward and easy to understand
Cons: Openness to central tendency, strictness
and leniency errors
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.
Step 1: select a job that can be described in observable behaviours
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
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.
• 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
• Goal-setting theory of motivation
• Individuals work with supervisors
-> Establish goals and objectives
-> Be responsible during the year
Have you ever take part in an AC? And how was your experience?
• Evaluate employee’s long-range potential
• Use almost exclusively on managerial personnel
• Trained observers make judgements on managers’ behaviors
Aptitude Test Statistics
2020/2021
How do organizations choose the best appraisal system for their organization?
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.
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)
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
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
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).
How do organizations choose the best appraisal system for their organization?
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
Pros: employees are encouraged to cooperate with one another and with the corporation so that all employees can benefit.
Gain Sharing
Lump-sum increase
Skills-based Incentives
Participative pay decisions
Flexible Benefits
• 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?
Thank you for listening!