Expert answer:Performance Appraisal Assignment
Solved by verified expert:Hello. Attached is the assignment instructions and chapters 8 and 9 of the textbook. Please read the instructions carefully. The paper requires 3 total scholarly sources. 1 must be from the chapter reading, the other 2 must be from outside scholarly sources. Let me know if you have any questions.
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Write a paper describing how effective performance appraisals can increase employee
performance. This paper should include sections on the strategic advantages of performance
appraisals, potential forms of bias within the appraisal system, as well as how performance
appraisals can contribute to the achievement of strategic objectives. The paper should be 2-3
pages in length.
Writing the Performance Appraisal Assignment:
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The paper should be 2-3 pages in length, excluding the cover page and reference page,
and formatted according to APA style as outlined in your approved style guide.
Must include a cover page that includes:
o Name of paper
o Student’s name
o Course number and name
o Instructor’s name
o Date submitted
Must include an introductory paragraph with a succinct thesis statement.
Must address the topic of the paper with critical thought.
Must conclude with a restatement of the thesis and a conclusion paragraph.
Must use APA style as outlined in your approved style guide to document all sources.
Must include, on the final page, a Reference List that is completed according to APA
style as outlined in your approved style guide and has at least two references in addition
to the text.
Compensation and Incentives
8
TheaDesign/iStock/Thinkstock
Learning Outcomes
After reading this chapter, you should be able to do the following:
• Discuss various psychological perspectives on pay and reward systems.
• Apply motivation theories to pay and reward systems’ design and implementation.
• List and describe various pay structures and types of pay.
• Link compensation with other functions within the HRM process.
• Explain the ways HR laws and labor unions influence the design and implementation of compensation and
reward systems.
• Discuss opportunities, challenges, and recent developments in the area of compensation.
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Introduction
Introduction
Pay and benefits are critical factors in the attraction, motivation, and retention of talent. The key
to a successful pay and benefits package it its power to motivate employees to consistently
exhibit attitudes and behaviors that are aligned with the organization’s goals, strategies, and
culture. Thus, the motivational role of these rewards should determine pay and benefits. Employers should offer pay and benefits that are competitive with other employers’ pay and benefits;
employers should also clearly use pay and benefits to motivate employees to attain specific outcomes that the organization wants to see. There are many perspectives on motivation, and each
perspective has implications for how pay and benefit systems should be designed and implemented. The next section discusses some of these perspectives’ implications for compensation
and incentives. These perspectives are applied to various types of benefits in the next chapter.
Opening Case Study
Is There a War for Engineering Talent Driving Up Salaries?
Access the following links:
http://money.cnn.com/2013/07/25/news/economy/engineering-jobs-pay/index.html
http://www1.salary.com/Engineering-Salaries.html
Salaries rise and fall with supply and demand. The article in the first link highlights
shortages in engineering talent, which are driving up salaries and benefits. However, this
information can be misleading. It may be true that there are shortages in a few highly specialized engineering subfields, but the higher salaries and benefits come at a high cost,
namely unfavorable locations, hours, and working conditions. Furthermore, the shortages
tend to be temporary, and so do the job assignments. The second link offers a more realistic
perspective on salaries in various engineering subfields. These dilemmas require careful
consideration and extensive analyses in order to determine the appropriate salaries and
benefits for each position, and thus attract and retain talent. These topics are discussed in
more detail in this chapter.
Discussion Questions
1. Browse through the various engineering subfields. Which ones seem to offer premium
salaries? At what level/years of experience do salaries seem to increase exponentially?
When do they seem to level off?
2. Look specifically for the specializations mentioned in the article. Are the salaries cited in
the article realistic?
3. Try different zip codes. Do some locations seem to offer higher salaries than others?
Are premium salaries related to cost of living in these locations, the desirability of those
locations, both, or neither?
4. Broaden your search beyond engineering, perhaps in your own field and/or your city/
state. What are the salary ranges in your specialization and related fields? What about
your geographic location?
5. What are some opportunities that you can pursue to improve your salary prospects?
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Section 8.1
The Motivational Role of Pay and Rewards: A Psychological Framework
8.1 The Motivational Role of Pay and Rewards:
A Psychological Framework
Organizations look for ways to motivate employees in the workplace, and pay and rewards
play an important role in motivation. This section offers three perspectives—content, process
and equity, and behavioral perspectives—on motivation and the ways that pay and reward
systems should be designed and implemented. As shown in Figure 8.1, these Figure 8.1: Compensation and incentives
motivational perspectives are central
to the effective design and implementation of compensation and incentives
Attraction and
recruitment of
processes.
talent
Job analysis
and job design
Selection and
job fit
Content Perspectives
Content perspectives focus on the
source that triggers motivation: people’s needs. When there is no need,
there is no motivation. Many traditional
motivation theories were developed
based on content perspectives, including Maslow’s hierarchy of needs, Alderfer’s ERG theory, Herzberg’s two-factor
theory, and McClelland’s acquired needs
theory.
Maslow’s hierarchy of needs (1943)
places psychological needs in a hierarchy that starts with the simplest physiological needs and ends with the most
complex psychological needs. The theory
argues that lower-level needs have to be
met first in order for higher-level needs
to motivate people. The hierarchy starts
with the simplest needs:
Performance
appraisal/
management
Strategic HR
planning
Benefits and
benefit
administration
Training and
development
Compensation
and incentives
Pay
structure
Content
perspectives
Appropriate
types of pay
Motivation
Job
classification
system
Process and
Behavioral
• Physiological needs include hunequity
perspectives
perspectives
ger and thirst.
• Safety needs include the need for
shelter and clothing.
Pay grades
• Belongingness needs include the
and pay
ranges
need for love and affiliation.
• Esteem needs include the need
for status.
• Self-actualization needs include the need for achievement.
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The Motivational Role of Pay and Rewards: A Psychological Framework
Section 8.1
For example, a regular paycheck is motivating because it can help fulfill physiological and
safety needs. A supportive manager and friendly coworkers can help fulfill needs for belonging, and a promotion can help fulfill esteem and self-actualization needs.
Alderfer’s ERG theory (1969) simplifies Maslow’s hierarchy and divides core needs into
three groups, represented by the abbreviation ERG:
• Existence can be compared to Maslow’s physiological and safety needs.
• Relatedness can be compared to Maslow’s belongingness, or social, needs.
• Growth can be compared to Maslow’s esteem and self-actualization needs.
Moreover, unlike Maslow, Alderfer believed that different people may be motivated to satisfy
their needs in different sequences. For example, Alderfer believed that when growth needs
are frustrated, people may regress back to what Maslow would consider lower-level needs.
This regression may explain situations when employees are denied promotions and ask
instead for a raise, corner office, or designated parking spot. In these cases, employees may
play for coworkers’ sympathy by bragging about past accomplishments and complaining
about managers’ lack of appreciation for their past efforts. These behaviors do not help
employees satisfy their growth needs; instead, they show regression to existence and relatedness needs.
Herzberg’s two-factor theory (Herzberg, Mausner, & Snyderman, 1959) describes factors
that can increase and decrease employee motivation and satisfaction. This theory postis
that factors that decrease motivation are likely to be extrinsic—such as working conditions,
organizational politics and policies, compensation and benefits, and coworker relationships.
These extrinsic factors are referred to as hygiene factors. On the other hand, factors that
increase motivation are likely to be intrinsic—
such as nature of work, career advancement
opportunities, and feelings of achievement.
These intrinsic factors are referred to as motivators. Thus, hygiene factors are necessary to
prevent job dissatisfaction, but they are not sufficient to motivate a person in the absence of motivators related to job content.
Creatas Images/Creatas/Thinkstock
According to Herzog’s theory, factors that
increase motivation, such as feelings of
achievement, are likely to be intrinsic.
McClelland’s acquired needs theory (1958)
argues that there are two types of needs: ones
that people are born with, and others that are
acquired through life experiences. Acquired needs
include the needs for achievement, affiliation, and
power, which motivate people to behave in ways
they believe will help them fulfill these needs.
For example, one employee may be motivated by
promotion prospects that could fulfill his achievement and power needs. Another employee may be
motivated to do her fair share of the work in order
for her team to appreciate her efforts, which can
fulfill her affiliation needs.
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The Motivational Role of Pay and Rewards: A Psychological Framework
Section 8.1
Process and Equity Perspectives
Whereas content perspectives focus on the source of motivation, process and equity perspectives focus on the process leading to motivation. They address the reasons and mechanisms for people’s actions as well as the resulting level of satisfaction. Motivation theories
based on process perspectives include:
•
•
•
•
Vroom’s expectancy theory
Goal setting theories
Equity theories
Justice theories
Each of those theories informs the design and implementation of compensation and incentive
systems that would motivate employees. For example, compensation and incentive systems
are more motivating when they are perceived to be more equitable and just.
Vroom’s expectancy theory (1964) explains the motivation process using three dimensions:
1. Expectancy is an individual’s belief that expending effort on an activity will probably
lead to high performance. For example, an employee who believes that he can do a
task is more likely to attempt it than an employee who feels incapable of completing the same task. Rewards for low-expectancy tasks are unlikely to motivate an
employee to make additional effort.
2. Instrumentality is the perceived probability that successful performance will lead to
desired outcomes. For example, an employee who views bonuses as linked to performance on a particular task is more likely to focus on that task. The more strongly
performance is linked to rewards, the more motivating the rewards are.
3. Valence is the relative weight or value that an employee places on particular rewards
or outcomes. For example, an employee who cares more about growth opportunities
than money will be more motivated to perform the tasks that are most likely to lead
to those opportunities, such as volunteering for challenging projects, even if no extra
pay is involved.
Goal setting theories view humans as being motivated to pursue challenging goals. In particular, specific, measurable, difficult goals have been found to lead to higher performance
than goals that are easy or ill-defined (e.g., when people are simply encouraged to do their
best). This benefit fades when goals are so difficult that they are perceived as unachievable
or unrealistic (Locke & Latham, 2002). Goals with set deadlines also tend to be more motivating. Thus, rewards for meeting deadlines and for achieving specific, measurable, challenging
goals will likely motivate employees toward higher performance. In fact, those goals sometimes become their own rewards because the goals are intrinsically motivating and do not
necessarily need any additional, extrinsic rewards (Amabile, Hill, Hennessey, & Tighe, 1994;
Wiersma, 1992).
According to equity theory (Adams, 1965), employees choose specific behaviors based on
whether they believe they are treated fairly. Employees form this belief as a result of comparing their own inputs and outcomes with those of others. The behavior can be positive
or negative, depending on the belief the employee holds. For example, one employee may
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The Motivational Role of Pay and Rewards: A Psychological Framework
Section 8.1
believe that he or she has invested the same amount of time, effort, and resources (equal
inputs) as another employee, but the other employee received more pay, incentives, or recognition (unequal outcomes). This belief generates a perception of inequity. To restore equity,
the employee may reduce his or her inputs (e.g., work less) or try to increase his outcomes
(e.g., ask for a raise or a promotion). On the other hand, if an employee worked longer or
harder than another employee but also received proportionately more outcomes, then both
employees will perceive the situation to be equitable.
Employees are motivated by knowing that their employer treats them with fairness, respect,
and dignity. They also want to make sure that their organization is being fair and transparent
in its values, its processes, and the impact it has on various stakeholders. Justice theories
(Colquitt, Conlon, Wesson, Porter, & Ng, 2001; Greenberg, 1993) attribute motivation to perceptions of five forms of justice:
• Distributive justice is the perceived fairness of the distribution of outcomes such as
pay and incentives.
• Procedural justice is the perceived fairness of the procedures used to determine
such outcomes as pay and incentives. For example, if an organization uses objective
performance criteria as the basis for raises and promotions, then employees will
perceive procedural justice in this arrangement.
• Informational justice is the thoroughness of the information provided to explain outcomes. For example, an organization may base annual bonuses on criteria that are
high in procedural and distributive justice. But the decisions may still be perceived
as unfair if those criteria and their application are not explained effectively.
• Interactional justice is the degree of perceived respect in interactions among individuals in an organization. For example, it would be just not to give a raise or a promotion
to a poor performer. However, if the performance deficiencies are communicated to
the employee in a berating, demeaning, or belittling way, then that communication
process is high on informational justice but low on interactional justice.
• Organizational justice is the overall perceived fairness of the organization’s processes and outcomes. For example, an organization may base its pay and incentives on a specific, clearly communicated set of criteria. But organizational justice
will be perceived as low if the performance appraisal system used to assess the
criteria is too subjective, or if the managers evaluating performance are biased or
discriminating.
Behavioral Perspectives
Generally speaking, behavioral perspectives are concerned with how behaviors
are learned and reinforced. The foundations of those perspectives date back to
Pavlov’s 19th century experiments, in
which he conditioned dogs to salivate at
the sound of a bell they associated with
the presence of food. These perspectives
can also be traced to Skinner’s early 20th
century operant conditioning experiments, in which he manipulated the
© Corbis
The foundation for behavioral perspectives is
based on Dr. Ivan Pavlov’s canine behavioral
experiments from the 19th century.
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Section 8.1
The Motivational Role of Pay and Rewards: A Psychological Framework
behavior of lab rats and pigeons by varying the consequences he administered for various
types of behavior. Thorndike’s law of effect captures the essence of behavioral perspectives:
that behaviors followed by positive consequences tend to increase in frequency, while behaviors followed by negative consequences tend to decrease in frequency.
Based on those behavioral perspectives, pay, incentives, and other workplace rewards should
be directly linked to the workplace behaviors believed to lead to the desired performance.
This linkage improves performance by making rewards contingent on performance. For
example, sales representatives receive commissions that are proportionate to their sales volume, which promotes selling behaviors. On the other hand, a fixed paycheck, while important
and desirable, does not necessarily motivate employees to work harder. In fact, this reward
may become an expectation and promote a sense of entitlement. In some situations, a fixed
paycheck is necessary—e.g., in managerial jobs that do not lend themselves to commissions
or unit-based pay. In these situations, it is best to use other incentives that can be administered contingently. Examples include regular feedback and recognition (Luthans & Stajkovic,
1999; Stajkovic & Luthans, 1997). Some organizations also provide blended forms of compensation, such as a combination of a fixed salary base and a variable commission-based
component. This type of compensation package combines the benefits of income stability
with the motivation and behavioral reinforcement of performance-based pay.
A Moment in the Life of an HR Manager
You Get What You Pay For
How would you train a pet to behave in a certain way? You’d reward the desired behavior to
reinforce it, and punish the undesirable behavior until it disappears. The same behavioral
management foundations have been applied to motivation in human beings. Unlike the process theories of motivation, behavioral management is not too concerned with why people
are motivated by certain rewards or the mental processes that explain their motivation.
Behavioral management emphasizes observable behavior and how it can be predicted, using
specific environmental cues and tangible or measurable reward systems.
Rewarding A, While Hoping for B:
Web Link
http:www.ou.edu/russell/UGcomp/Kerr.pdf
This article is a management classic, in which Steven Kerr illustrates how reward systems can
fail to promote performance if they are not linked to the right behaviors. It is one of the most
read and appreciated resources on applying a behavioral perspective to reward systems.
Can we shape people’s behavior in the workplace by managing the c …
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