1. Identify and Describe the Stages in the Process for Developing Employees (text p. 380; ppt slides: )

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1 Developing, Appraising, and Rewarding Employees Identify and Describe the Stages in the Process for Developing Employees (text p. 380; ppt slides: ) Developing Employees The development of employees begins when individuals enter the organization and does not end until they leave. Every person in the organization will be affected by the ways in which the enterprise recruits and develops its people. Recruiting Recruiting is the process of attracting qualified applicants for available positions. Applicants can come from internal sources employees who want to change positions and from external sources, those outside the organization (e.g., databases, newspaper ads). By developing a job profile that accurately defines the duties, responsibilities, and skills required for the job, the recruiter can search for the person with the appropriate technical skills. Recruiters must understand a firm s value system and understand its intangible needs to fill positions with people who will fit into a firm s culture and who can work effectively. Selection and Screening Fig Screening is the process of eliminating applicants who are unlikely to be successful on the job. Selecting is the process of determining which applicants will be offered jobs; one way to do this is by checking the applicant s education, previous employment, credit history, and driving record. Another useful screening and selecting tool is the job interview. Structured interviews ask all applicants the same question; unstructured interviews focus on specific objectives but allow the interviewer to make comparisons among job candidates. Fig lists common questions applicants often ask hiring managers. Another common approach is the use of screening tests such as the demonstration test, which demonstrates proficiency in a specific job-related skill such as word-processing. Regardless of the type of test used, the company must be careful that it does not discriminate against an applicant.

2 248 Chapter 10 Inquiries that invade privacy provide a good example of discriminatory practices in hiring; job applications and job interviews cannot delve into areas that are not job related. Orientation Orientation is the process of introducing new employees to their work group, their superior, and their tasks. Many important advantages are associated with an effective orientation: Reduction in the costs of instruction A lessening of anxiety regarding job failure A reduction in employee turnover A saving in time spent on assistance An increase in the employee s job satisfaction Training Employee training can take many forms; the first step is to identify the objectives of the training: What does the individual need to know? The basic types of training include: Apprentice training, designed to teach employees the rules for getting the work done Vestibule training takes place in an environment that simulates the actual workplace. The immediate superior and fellow workers provide on-the-job training. Off-the-job training is done away from the workplace for nontechnical activities or ideas. Virtual training uses a computer and a well-designed learning program, e-learning. There is an increased scope and depth of training that companies offer to employees; virtual training has gained momentum and is predicted to be the vehicle for training for the future. Honeywell, one of the largest companies in America, is challenged to find talented employees; it developed the world s learning management system, which will serve 111, 000 employees worldwide. Another development is diversity training designed to teach managers how to deal with America s changing workforce. A third development in training is the use of in-house programs; Wal-Mart has a 20-week training program for all managers, assistant managers and management trainees. More common, however, are firms that combine in-house and university-linked training for their people.

3 Developing, Appraising, and Rewarding Employees 249 Appraising Subordinates How does one separate the best from the average or poor performers? The answer is a well-designed performance appraisal process. To understand the performance appraisal process, it is necessary to: Examine the performance appraisal cycle Examine the appraisal tools used for evaluation Compare the attributes of appraisal techniques Learn to recognize he problems that can accompany a performance appraisal 2. Discuss the Performance Appraisal Cycle (text p. 387; ppt slide: 10.6) Performance Appraisal Cycle Fig The performance appraisal cycle helps managers to set goals and evaluate subordinate performance. There must be established performance standards to specify what the worker is to do. There must be a method of determining individual performance. There must be some comparison of performance. An evaluation of performance should be made on the basis of the comparison. Once the last step is completed, the manager and the subordinate are read to establish performance standards for the next evaluation period. 3. Identify Four Performance Appraisal Tools and Tell How Each Can Be Used in Appraising Employees. (text p. 388; ppt slides: ) Performance Appraisal Tools Many kinds of appraisal tools can be used to evaluate employee performance. Graphic Rating Scales Fig Graphic rating scales evaluate employees on the basis of predetermined factors.

4 250 Chapter 10 In Fig. 10.3, the factors on which the employee is to be evaluated are identified and the degrees of evaluation spelled out. The rater, usually the subordinate s boss, reads each of the factors and checks the appropriate box; by totaling the value associated with every factor, the rater obtains a total score. Each rating level communicates a different message and has a different outcome; there are advantages and disadvantages for having a different number of rating levels. Paired Comparison Method Fig The paired comparison method compares each person against all others being evaluated; it is more discriminating than graphic rating scales. This method compares each employee to every other one in the group with respect to a number of factors; it determines who is best and who is worst. A rater may end up with five to ten paired comparison forms before compiling the scores and getting an overall evaluation for each employee. Management by Objectives Fig Management by objectives is a process by which superior and subordinate jointly set goals that then are used for evaluating the individual. How MBO Works Fig Advantages of MBO The manager identifies the goals of the unit over the next evaluation period The duties and responsibilities of each individual are clearly described The manager and subordinate mutually set goals for the subordinate An annual goal-setting worksheet is used to help the subordinate reach objectives Each subordinate s goals are checked to determine whether objectives are met. Results are measured against goals at the end of the assigned time and the cycle starts again MBO is easy to understand and gives attention to the subordinate in the goal-setting process. MBO places a strong emphasis on quantifiable objectives tied to a time dimension, and there is a concentration on the organization s key goals. In the MBO approach, emphasis is given to working with a small, manageable number of objectives; MBO coordinates the activities of units by linking each with those above.

5 Developing, Appraising, and Rewarding Employees 251 Another advantage is that MBO encourages the manager to delegate time-consuming activities and devote energy to planning and control. Overall, MBO has been well accepted in many organizations; managers like the systematic approach and the emphasis given to planning, organizing, and controlling Degree Evaluation Reviews Fig These reviews are carried out by a person s superior, subordinates, peers, work group, and others in frequent contact. The reviews have six steps: The employee and manager agree of a list of individuals to do the evaluation The evaluators complete the forms The manager summarizes the data The manager and subordinate discuss results and develop a plan of action The 360-degree summary and action plan are used to evaluate the individual The action plan is used as a guide to provide leadership direction to the individual. The overall development process is linked closely to the firm s business strategy,so that all new skills, knowledge, and training help the individual meet goals. 4. Describe Four Major Problems Associated with Performance Appraisal. (text p. 397; ppt slide: 10.9) Performance Appraisal Problems Performance appraisal helps the manager to identify those who should be rewarded for adequate or superior performance and those who are not. However, such an approach can yield erroneous results if the appraisal form is designed improperly or it the rater is biased. Clarity of the Appraisal Form A common appraisal problems relates to clarity of the form; if every appraiser doesn t have an identical interpretation of what the factors and ratings mean, uniformity is impossible

6 252 Chapter 10 To overcome this, it is necessary to describe on the evaluation form the factors and degrees on which the employee will be evaluated to ensure that the appraisers apply a uniform interpretation. The Halo Effect A halo effect occurs when the appraiser gives a worker the same rating on all factors, regardless of actual performance. Many firms find that a training program can alleviate this problem by helping managers identify these built-in biases and work to correct them. Central Tendency With central tendency, everyone receives an average rating, regardless of how effective a person has been. A problem faced by managers who rate their people this way is that the best workers start looking for new jobs because their chances for salary increases or promotions are limited. One way to overcome this problem is to use a paired comparison evaluation or MBO. Leniency With leniency, the highest possible ratings are given out to all; failure to distinguish between those doing an outstanding job and those doing a poor job results in inaccurate ratings. Many organizations use paired comparison evaluation to overcome this problem. 5. Explain Ways of Dealing With Appraisal Problems (text p. 398; ppt slide: 10.10) Dealing with Appraisal Problems Two major issues must be dealt with in performance appraisal: validity and reliability. Validity means that the instrument measures what it is designed to measure; if work quantity is important, then this factor should be on the rating form. Reliability means that the instrument measures the same factor repeatedly; if work quality but not quantity is of interest, the raters must understand this.

7 Developing, Appraising, and Rewarding Employees 253 Research has shown that validity and reliability continue to be problems when appraising individuals. Research shows that when people are required to explain why they gave the evaluation they did, they are more careful about how they carry out the process, and evaluations are more accurate. Rewarding Performance 6. Identify Ways For Rewarding Performance (text p. 400; ppt slide: 10.11) The manager is in a position to reward a subordinate on the basis of performance appraisal. In determining the type and degree of reward to give, it is necessary to examine three important areas: extrinsic and intrinsic rewards; performance rewards; and discipline. Extrinsic and Intrinsic Rewards Extrinsic rewards are external and physical such as money, increased fringe benefits and the use of a company car. Intrinsic rewards are internal and psychological such as a feeling of accomplishment, increased responsibility, and the opportunity to achieve. Intangible rewards and recognition are more powerful motivators than money; research showed that most employees prefer to feel proud of their work than receive a higher salary. The effective leader realizes that a mixture of extrinsic and intrinsic rewards is needed; which mix will be best depends on applying expectancy theory to a specific situation. Expectancy theory says that motivation = valence (preference) x expectancy (probability of occurrence): effective leaders understand what rewards motivate their subordinates. If John has the highest sales, he wins a trip, but he has a family and bills to pay, this would not be his preference (valence) and would not motivate him.

8 254 Chapter Examine the Link Between Performance and Rewards (text p. 402) Linking Performance and Rewards How closely should performance and rewards be linked? Studies show that people who expect to receive a reward perform no better than those who expect no reward at all. Management must carefully design its reward system using wages, incentive programs, and benefit programs. Wages, Incentive Programs, and Benefit Programs Wages are agreed-on or fixed rates of pay; most people are salaried annually. Incentive pay plans tie rewards directly to output; hiring bonuses and retention bonuses are used to attract and keep talented people and are becoming increasingly popular. At Lincoln Electric, for example, more than seventy-five people on the shop floor have earned in excess of $100,000 annually thanks to the firm s incentive program. Some organizations found they can save money by instituting an organization-wide incentive program; management believes that increased efficiency and cost savings can be affected. Benefit programs come in many different versions t include life, health, and accident insurance; sick leave; workers compensation; pension plans; and unemployment insurance. Causal Link? Table 10.2 Research reveals that high-performance companies more closely link pay to performance than do their less effective counterparts. The first step is to institute the proper rewards system; many companies are willing to set up a compensation plan that promotes the link between pay and performance. Many of these pay-for-performance plans make use of what are called nontraditional rewards such as profit sharing, bonuses, individual incentives, gain-sharing, and small-group incentives. Stock options and employee stock purchase plans are often misunderstood and underutilized as employee benefits. Among service companies, organization structures are being flattened, positions are being removed, and everyone is being given a greater opportunity to share in the reward system.

9 Developing, Appraising, and Rewarding Employees 255 Offering the right rewards and benefits is crucial to hiring, motivating, and retaining employees. Organizations can link rewards and performance only when four conditions are present: Individual performance can be measured objectively There is a low degree of interdependence It is possible to develop measures for all the important aspects of the jobs. Effort and performance are closely related over a relatively short period. In establishing the link, managers focus on actions that reward people for work well done. Reward: solid solutions instead of quick fixes risk taking applied creativity decisive action people for working smarter rather than merely working harder simplification 8. Describe the Types of Discipline Used When Performance is Inadequate (text p. 407; ppt slides: ) Discipline Table 10.3 Sometimes instead of giving rewards to employees, the leader must discipline some of them; often this is known as a negative reward. In dealing with people in each category, the manager must consider the primary and secondary goals to pursue; the manager must understand both types of discipline and how they are administered. Types of Discipline Fig Most for disciplinary processes employ what is called progressive discipline, beginning with oral warning. An oral warning involves orally pointing out an infraction of a rule. A written warning is a warning that is placed in an employee s personnel life.

10 256 Chapter 10 A disciplinary layoff involves sending a person home without pay for a predetermined time. Discharge is the separation of the individual from the organization. Administering Discipline One of the most effective methods of employing discipline is the red-hot-stove-rule, which applies discipline immediately, consistently, and impersonally. When someone touches a hot stove, the burn is immediate; warning comes from the heat; anyone who touches the stove is burned consistency, and the burn is for anyone impersonal. Discipline Should Be Immediate As soon as the manager knows that a worker has broken a rule, discipline should follow. There Should be Advance Warning The organization should make clear, and the employees should know what the penalties are for breaking them. Management should follow two important guidelines in giving advance warning never have too many rules. Discipline Should be Consistent If two people commit the same offense, each should be given the same discipline. Discipline Should be Impersonal The manager should make it clear that they are all on the same team but that this does not mean the worker can violate the rules with impunity. Dismissal and the Law A new dismissal-related problem has arisen; employees who have been discharged are now suing their former employers, and many have been winning large settlements. At the heart of the matter are the issues of employment at will, which means that the organization has a right to dismiss an employee at any time, regardless of cause. Employees have a right to expect fair and equitable treatment from the employer. Sometimes these two issues are in conflict; most states currently give employees the right to sue for wrongful discharge.