Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5 C H
A
P
T
E
R
Evaluation,Feedback
and Reward of
Individual Behavior
?DESCRIBE several purposes of performance
evaluation,
?EXPLAIN why a 360-degree Feedback Program is
considered more thorough,
?DISCUSS reinforcement theory,
?DESCRIBE the elements in a model of rewards,
?COMPARE intrinsic and extrinsic rewards,
?UNDERSTAND the role rewards play in turnover,
absenteeism,performance,and commitment,
?IDENTIFY several innovative reward systems,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-3
Purposes of Evaluation
? Provide a basis for reward
allocation
? Identify high-potential
employees
? Validate the effectiveness of
employee selection
procedures
? Evaluate previous training
programs
? Stimulate performance
improvement
? Develop ways of overcoming
obstacles and performance
barriers
? Identify training and
development opportunities
? Establish supervisor-employee
agreement on performance
standards
Judgmental Orientation Developmental Orientation
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-4
Relevancy in Evaluations
Deficiency
Occurs when the evaluation does not
focus on all aspects of the job
Contamination
Occurs when activities not part of the
job are evaluated
Distortion
Occurs when an improper emphasis is
given to various job elements
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-5
? Encourage higher levels
of employee participation
? Set specific performance
goals
? Train supervisors and
evaluate effectiveness
Improving the Evaluation Process
? Communicate results to
employees
? Recognize and reinforce
good performance
? Realize that effective
evaluation is an ongoing
process
Reinforcement
Behavior is influenced by its consequences and it is possible to
affect behavior by controlling such consequences,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-6
GUIDELINES
?Provide frequent feedback beyond the typical
one year formal review
?Allow employee participation in the feedback
sessions
?Focus on both effective and ineffective
performance
?Address results,goals,and goals
accomplished; not personalities
Improving Evaluation Feedback
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-7
Multisource Feedback
?Alternative to traditional
supervisor-only,or top-
down approaches
?Uses multiple appraisers
of work performance
?Still needs to be more
thoroughly researched
360-Degree Approach
Subordinates
Peers
Supervisors
Self-
appraisal
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-8
Reinforcement Theory
? Punishment
? Presenting an
uncomfortable or
unwanted consequence
? Extinction
? Withholding positive
reinforcement for a
learned behavior
Operant Conditioning
Attempts to influence behavior through the use of rewards
and punishments that are consequences of behavior
? Reinforcers
? Positive - stimulus that
strengthens the probability
of a behavioral response
? Negative - increases the
frequency of a response
following removal of a
negative reinforcer
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-9
Reinforcement Schedules
Continuous Reinforcement
? Response is reinforced each time it occurs
? Use faces practical constraints in the workplace
Intermittent Reinforcement
? Response is reinforced only after some instances of a response
? Constitutes almost all workplace reinforcement
Passage of Time
Fixed interval
Variable Interval
Number of Desired Responses
Fixed ratio
Variable ratio
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-10
Individual Rewards
Main Objectives of Reward Programs
?To attract qualified people to join the
organization
?To keep employees coming to work
?To motivate employees to achieve
high levels of performance
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-11
A Model of Individual Rewards
?Performance results from a combination of,
? An individual’s level of effort
? An individual’s level of ability,skill,and experience
?Performance results formally or informally
evaluated by management
?Rewards distributed by management,
? Intrinsic Rewards - Self-administered by the person
? Extrinsic Rewards - Initiated from the outside
?Evaluated by the individual to determine degree
of equity and satisfaction
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-12
Categories of Rewards
?Completion
?Achievement
?Autonomy
?Personal Growth
?Financial
? Salary and wages
? Employee benefits
?Interpersonal
?Promotions
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-13
Administering Rewards
? Positive Reinforcement
? Emphasis on the desired behavior that leads to job
performance
? Decisions needed on type and timing
? Modeling and Social Limitation
? Motivation stems from observing,models” receiving
valued reinforcements
? Expectancy Theory
? Determine types of rewards desired
? Create conditions so rewards can be applied
Major Theoretical Approaches
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-14
Rewards Affect Organizational Concerns
Turnover
? Focus on frequency and who is leaving
? Strive for an equitable and favorably comparable reward
system
? Reward systems based on merit best for retaining high
performers
Absenteeism
? Focus reward system on,
? The value of rewards perceived by employees
? The amount of the rewards
? Perceived relationship between rewards and attendance
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-15
Rewards Affect Organizational Concerns
? Involves three
attitudes,
? Sense of identification
? Feeling of
involvement
? Feeling of loyalty
? Intrinsic rewards are
especially important
? Extrinsic and extrinsic
rewards both play a
role
? Conditions must exist
like,
? Rewards are valued by
employees
? Rewards are related
to job performance
Organizational
Commitment
Job Performance
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-16
Innovative Reward Systems
?Increases organizational flexibility
?May need fewer distinct job classifications
?Fewer employees may be needed
?May reduce turnover and absenteeism
SKILL-BASED PAY
Pay levels based on how many skills employees
have or how many jobs they can do
Potential
Advantages
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-17
Innovative Reward Systems
BROADBANDING
?Reduction in the number of
salary or pay grades
?Creates a smaller number of
broad salary ranges
?Places more emphasis on
basing salary increases on
skills and performance
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-18
Innovative Reward Systems
Gain-Sharing
? Allows employees
contributing to improved
performance to share in
the proceeds
? Formula used to distribute
gains based on cost
reductions
? Best known - Scanlon Plan
Employee Stock
Ownership Plans
(ESOPs)
?Employees gain a direct
stake in the company
?Employees receive stock or
cash to purchase stock in the
company
?Research on effectiveness is
mixed
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5 C H
A
P
T
E
R
Evaluation,Feedback
and Reward of
Individual Behavior
?DESCRIBE several purposes of performance
evaluation,
?EXPLAIN why a 360-degree Feedback Program is
considered more thorough,
?DISCUSS reinforcement theory,
?DESCRIBE the elements in a model of rewards,
?COMPARE intrinsic and extrinsic rewards,
?UNDERSTAND the role rewards play in turnover,
absenteeism,performance,and commitment,
?IDENTIFY several innovative reward systems,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-3
Purposes of Evaluation
? Provide a basis for reward
allocation
? Identify high-potential
employees
? Validate the effectiveness of
employee selection
procedures
? Evaluate previous training
programs
? Stimulate performance
improvement
? Develop ways of overcoming
obstacles and performance
barriers
? Identify training and
development opportunities
? Establish supervisor-employee
agreement on performance
standards
Judgmental Orientation Developmental Orientation
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-4
Relevancy in Evaluations
Deficiency
Occurs when the evaluation does not
focus on all aspects of the job
Contamination
Occurs when activities not part of the
job are evaluated
Distortion
Occurs when an improper emphasis is
given to various job elements
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-5
? Encourage higher levels
of employee participation
? Set specific performance
goals
? Train supervisors and
evaluate effectiveness
Improving the Evaluation Process
? Communicate results to
employees
? Recognize and reinforce
good performance
? Realize that effective
evaluation is an ongoing
process
Reinforcement
Behavior is influenced by its consequences and it is possible to
affect behavior by controlling such consequences,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-6
GUIDELINES
?Provide frequent feedback beyond the typical
one year formal review
?Allow employee participation in the feedback
sessions
?Focus on both effective and ineffective
performance
?Address results,goals,and goals
accomplished; not personalities
Improving Evaluation Feedback
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-7
Multisource Feedback
?Alternative to traditional
supervisor-only,or top-
down approaches
?Uses multiple appraisers
of work performance
?Still needs to be more
thoroughly researched
360-Degree Approach
Subordinates
Peers
Supervisors
Self-
appraisal
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-8
Reinforcement Theory
? Punishment
? Presenting an
uncomfortable or
unwanted consequence
? Extinction
? Withholding positive
reinforcement for a
learned behavior
Operant Conditioning
Attempts to influence behavior through the use of rewards
and punishments that are consequences of behavior
? Reinforcers
? Positive - stimulus that
strengthens the probability
of a behavioral response
? Negative - increases the
frequency of a response
following removal of a
negative reinforcer
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-9
Reinforcement Schedules
Continuous Reinforcement
? Response is reinforced each time it occurs
? Use faces practical constraints in the workplace
Intermittent Reinforcement
? Response is reinforced only after some instances of a response
? Constitutes almost all workplace reinforcement
Passage of Time
Fixed interval
Variable Interval
Number of Desired Responses
Fixed ratio
Variable ratio
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-10
Individual Rewards
Main Objectives of Reward Programs
?To attract qualified people to join the
organization
?To keep employees coming to work
?To motivate employees to achieve
high levels of performance
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-11
A Model of Individual Rewards
?Performance results from a combination of,
? An individual’s level of effort
? An individual’s level of ability,skill,and experience
?Performance results formally or informally
evaluated by management
?Rewards distributed by management,
? Intrinsic Rewards - Self-administered by the person
? Extrinsic Rewards - Initiated from the outside
?Evaluated by the individual to determine degree
of equity and satisfaction
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-12
Categories of Rewards
?Completion
?Achievement
?Autonomy
?Personal Growth
?Financial
? Salary and wages
? Employee benefits
?Interpersonal
?Promotions
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-13
Administering Rewards
? Positive Reinforcement
? Emphasis on the desired behavior that leads to job
performance
? Decisions needed on type and timing
? Modeling and Social Limitation
? Motivation stems from observing,models” receiving
valued reinforcements
? Expectancy Theory
? Determine types of rewards desired
? Create conditions so rewards can be applied
Major Theoretical Approaches
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-14
Rewards Affect Organizational Concerns
Turnover
? Focus on frequency and who is leaving
? Strive for an equitable and favorably comparable reward
system
? Reward systems based on merit best for retaining high
performers
Absenteeism
? Focus reward system on,
? The value of rewards perceived by employees
? The amount of the rewards
? Perceived relationship between rewards and attendance
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-15
Rewards Affect Organizational Concerns
? Involves three
attitudes,
? Sense of identification
? Feeling of
involvement
? Feeling of loyalty
? Intrinsic rewards are
especially important
? Extrinsic and extrinsic
rewards both play a
role
? Conditions must exist
like,
? Rewards are valued by
employees
? Rewards are related
to job performance
Organizational
Commitment
Job Performance
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-16
Innovative Reward Systems
?Increases organizational flexibility
?May need fewer distinct job classifications
?Fewer employees may be needed
?May reduce turnover and absenteeism
SKILL-BASED PAY
Pay levels based on how many skills employees
have or how many jobs they can do
Potential
Advantages
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-17
Innovative Reward Systems
BROADBANDING
?Reduction in the number of
salary or pay grades
?Creates a smaller number of
broad salary ranges
?Places more emphasis on
basing salary increases on
skills and performance
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
5-18
Innovative Reward Systems
Gain-Sharing
? Allows employees
contributing to improved
performance to share in
the proceeds
? Formula used to distribute
gains based on cost
reductions
? Best known - Scanlon Plan
Employee Stock
Ownership Plans
(ESOPs)
?Employees gain a direct
stake in the company
?Employees receive stock or
cash to purchase stock in the
company
?Research on effectiveness is
mixed
