Keeping Great People: Two Ways Organizations Do This
9-4 Describe strategies for retaining competent, high-performing employees.
1 Performance Management System
Desired employee performance levels determined by organizations and managers
Actual employee performance levels measured/appraised by managers
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Exhibit 9–8
Specific Performance Appraisal Methods
| Method | Advantage | Disadvantage |
|---|---|---|
| (A) WRITTEN ESSAY—descriptions of employee’s strengths and weaknesses | Simple to use | More a measure of evaluator’s writing ability than of employee’s actual performance |
| (B) CRITICAL INCIDENTS—examples of critical behaviors that were especially effective or ineffective | Rich examples; behaviorally based | Time-consuming; lack quantification |
| (C) ADJECTIVE RATING SCALES—lists descriptive performance factors (work quantity and quality, knowledge, cooperation, loyalty, attendance, honesty, initiative, and so forth) with numerical ratings | Provide quantitative data; less time-consuming than others | Do not provide depth of job behavior assessed |
| (D) BARS—rating scale + examples of actual job behaviors38,39 | Focus on specific and measurable job behaviors | Time-consuming; difficult to develop measures |
| (E) MBO—evaluation of accomplishment of specific goals | Focuses on end goals; results oriented | Time-consuming |
| (F) 360-degree appraisal 40—feedback from full circle of those who interact with employee | More thorough | Time-consuming |
| (G) Multiperson—evaluation comparison of work group | Compares employees with one another | Unwieldy with large number of employees |
(a) through (f) (see Exhibit 9–8) are ways to evaluate employee performance against a set of established standards or absolute criteria.
(g) (see Exhibit 9-8) is a way to compare one person’s performance with that of one or more individuals and is a relative, not absolute, measuring device.
Three approaches to multiperson comparison
Group-order ranking
Evaluator places employees into a particular classification (“top fifth,” “second fifth,” etc.; “top third,” “middle third,” “bottom third”; or whatever classification is desired). Note: Number of employees placed in each classification must be as equal as possible.
Individual ranking approach
Evaluator lists employees in order from highest to lowest performance levels. Note: Only one can be “best.” In the appraisal of whatever number of employees, the difference between the first and second employee is the same as that between any other two employees. And no “ties” allowed.
Paired comparison approach
Each employee is compared with every other employee in the comparison group and rated as either the superior or weaker member of the pair. Note: Each employee is assigned a summary ranking based on the number of superior scores he or she achieved. Each employee is compared against every other employee—an arduous task when assessing large numbers of employees.
Traditional Manager-Employee Performance Evaluation Systems May Be Outdated Due To:41
—Downsizing—supervisors may have more employees to manage, making it difficult to have extensive knowledge of each one’s performance.
—Project teams and employee involvement—others (not managers) may be better able to make accurate assessments.42
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When Employee’s Performance Is Not Up to Par…
| WHY? | WHAT TO DO |
|---|---|
| Job mismatch (hiring error)→ | Reassign individual to better-matched job |
| Inadequate training→ | Provide training |
| Lack of desire to do job (discipline problem)→ | Try employee counseling, a process designed to help employees overcome performance-related problems; attempt to uncover why employee has lost his/her desire or ability to work productively and find ways to fix the problem; or take disciplinary/punitive action (verbal and written warnings, suspension, and even termination). |
2 Compensating Employees: Pay and Benefits
Compensation–Pay for doing a job
An effective and appropriate compensation system will:43
—Help attract and retain competent and talented individuals
—Impact strategic performance44
—Keep employees motivated
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A compensation system should reflect the changing nature of work and the workplace.
Determining pay levels isn’t easy, but employees expect appropriate compensation.
Different jobs require:
Different kinds and levels of knowledge, skills, and abilities (KSAs) that have varying value to the organization
Different levels of responsibility and authority
Alternative approaches to determining compensation:
Skill-based pay systems—reward employees for job skills and competencies they have. Job title doesn’t define pay, skills do.45 Usually more successful in manufacturing organizations than in service organizations or in organizations pursuing technical innovations.46
Variable pay systems—individual’s compensation is contingent on performance.
90% of U.S. organizations use variable pay plans47
As shown in Exhibit 9–9, other factors influencing compensation and benefit packages include:
Exhibit 9–9
What Determines Pay and Benefits?
Compensation–Employee Benefits: Non-cash compensation from employers
Compensation package is > just hourly wage or annual salary
Also includes employee benefits—important and varied nonfinancial rewards designed to enrich employees’ lives
Benefit packages can vary widely and often reflect efforts to provide something that each employee values
Some benefits—Social Security, workers’ and unemployment compensation—are legally required, but organizations may provide others such as paid time off from work, life and disability insurance, retirement programs, and health insurance.48
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