Chapter 1: Performance Management and Reward Systems in Context

Cash Compensation

Base pay; incentives; COLA

Contributions of Performance Management For Organization/HR Function

Clarify organizational goals; Facilitate organizational change; Fairer, more appropriate administrative actions; Better protection from lawsuits

Performance Management

Continuous process of identifying, measuring, developing the performance of individuals and teams and aligning performance with strategic goals of the organization

Performance appraisal characteristics

Driven by HR; Assesses employees; Once a year; Lacks ongoing feedback

Contributions of Performance Management varies depending on

Employees; Managers; Organizational Functions

Strategic Congruence

The extent to which a performance management system elicits job performance that is congruent with the organization's strategy, goals, and culture.

Performance Appraisal

yearly evaluation of employees to provide feedback and coaching (lacks ongoing feedback)

Tangible returns

Cash compensation (ex. base pay, COLA)

Contributions of Performance Management For Managers

Communicate supervisors' views of performance more clearly; Managers gain insight about subordinates; Better and more timely; differentiation between good and poor performers; Employees become more competent

Performance Management Characteristics

Has strategic business considerations; driven by line manager; has ongoing feedback

Benefits

Income Protection; Allowances; Work/life focus

Contributions of Performance Management For Employees

Increase motivation to perform; Increase self-esteem; Enhance self-insight and development

Disadvantage of poor performance management system for managers

Increased turnover; Decreased motivation to perform; Unjustified demands on managers' resources; Varying and unfair standards and ratings

Strategic Purpose of Performance Management

Link individual goals with organization's goals; Communicate most crucial business strategic initiatives

Disadvantage of poor performance management system for employees

Lowered self-esteem; Employee burnout and job dissatisfaction; Damaged relationships; Use of false or misleading information

Performance Management System Integration with HR

PM provides information for: Development of training to meet organizational needs; Workforce planning; Recruitment and hiring decisions; Development of compensation systems

Reward Systems

Set of mechanisms for distributing tangible returns and intangible or relational returns as part of an employment relationship

Disadvantage of poor performance management system for organization

Wasted time and money; Unclear ratings system;Emerging biases; Increased risk of litigation

Performance Management example

feedback/conversations provided throughout the year, 1st. january, next mid review in june, and finally end of the year with feedback and personal development plans

Performance management is different than

performance appraisal