MGT520:Module 14: Rewarding through Performance Management

MGT520_Module14_PPT_Ch11.pptx

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Part IV: Reward Systems, Legal Issues, and Team Performance Management

Chapter 10: Performance Management, Rewards, and the Law

Chapter 11: Team Performance Management

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Chapter 10 Performance Management, Rewards, and the Law

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Overview

Definition of Reward Systems

Traditional and Contingent Pay (CP) Plans

Reasons for Introducing CP Plans

Possible Problems Associated with CP Plans

Selecting A CP Plan

Putting Pay in Context

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Overview (Continued)

Performance Management and the Law

Some Legal Principles Affecting Performance Management

Laws Affecting Performance Management

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Definition of Reward Systems

Base Pay

Cost of living adjustments (COLA) and Contingent Pay

Short-Term incentives

Long-Term incentives

Income Protection

Work-Life Focus

Allowances

Intangible Returns

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Company Spotlight

Colorado Business Group teamed up with multiple companies to develop a short-term incentive rewards program

Program rewarded doctors for reducing future expensive treatments by focusing on preventative measures

Overall, the program used short-term incentives as part of the performance management system to motivate physicians to focus on treatments that enhanced patient health on an ongoing basis

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Traditional Pay

Salary and salary increases are based on

Position

Seniority

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Contingent Pay (CP)

Salary and salary increases are based on:

Job performance

Also called: Pay for Performance

If not added to base pay, called:

Variable pay

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Reasons for Introducing CP (1)

Performance management is more effective when rewards are tied to results.

CP Plans force organizations to:

Clearly define effective performance

Determine what factors are necessary

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Reasons for Introducing CP (2)

Supervisors and employees are better able to understand what really matters.

CP plans enhance employee motivation to accomplish goals that match organizational needs.

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Reasons for Introducing CP (3)

CP plans help to recruit and retain top performers.

CP plans projects good corporate image.

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CP Plans Help Improve Motivation When:

Employees see clear link between their efforts and resulting performance. (Expectancy)

Employees see clear link between their performance level and rewards received. (Instrumentality)

Employees value the rewards available. (Valence)

motivation =

expectancy x instrumentality x valence

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Reasons Why CP Plans Fail

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Selecting a CP Plan: Issues to Consider

Culture of organization

Strategic direction of organization

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Culture of Organization: Types of Organizations

Traditional

Top-down decision making

Vertical communication

Jobs that are clearly defined

Involvement

Shared decision making

Lateral communications

Loosely defined roles

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CP Systems for Different Organizational Cultures

Traditional organizations

Piece rate

Sales commissions

Group incentives

Involvement organizations

Profit sharing

Skill-based pay

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CP Plans Recommended for Various Strategic Business Objectives

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Company Spotlight

Google has long used contingent pay as part of its compensation system

Emphasizes “fairness” over “equality”

Don’t pay everyone the same, but make sure that pay is commensurate with contribution

Leads to cases where star performers at more junior levels make far more than average performers at more senior levels

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Putting Pay in Context

A reward increases the chance that:

Specific behaviors and results will be repeated, or

Employee will engage in new behavior and produce better results.

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Rewards Can Include:

Pay

Recognition

Public

Private

Status

Time

Sabbaticals

Trust and Respect

Challenge

Responsibility

Freedom

Relationships

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Relational (Intangible Rewards)

https://www.youtube.com/watch?v=zfnFanLCmp8

Which kinds of rewards does Edward Jones provide?

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How to Make Rewards Work

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Using Recognition and Relational Incentives as Rewards

Non-monetary rewards can be powerful if they enhance the chances that specific results and behaviors will be repeated

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Using Recognition and Relational Incentives as Rewards (continued)

Formal commendations and awards

Public recognition, including praise, certificate of accomplishment, and letters of appreciation

Status indicators, such as a new and enhanced job title, larger work area, improve

Extra time off, with or without pay

More challenging work environment, responsibility, and freedom

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Company Spotlight

Graniterock uses both financial and non-financial rewards to reward performance

Employees can earn bonuses of up to US$1,000 for performance that goes “above and beyond” normal job expectations; and supervisors often buy lunch for employees who are putting forth a strong effort

Company holds “recognition days” where employees give presentations before the CEO, executive management, and coworkers; and publishes stories about special efforts in a weekly newsletter

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Legal Issues: Overview

Performance Management and the Law

Some Legal Principles Affecting PM

Laws Affecting PM

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Performance Management and the Law

Performance management systems are usually legally sound if…

Procedures are standardized

Same procedures are used with all employees

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Some Legal Principles Affecting PM: Overview

Employment-at-will

Negligence

Defamation

Misrepresentation

Adverse Impact

Illegal Discrimination

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Employment-at-Will

Employment relationship can be ended at any time by:

Employer

Employee

Exceptions:

Implied contract

Possible violation of legal rights

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Negligence

If organization documents describe a system

and

It is not implemented as described,

Employee can challenge evaluation, charging negligence.

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Defamation

Disclosure of performance information that is

Untrue and

Unfavorable

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Misrepresentation

Disclosure of performance information that is

Untrue and

Favorable

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Adverse Impact / Unintentional Discrimination

PM system has unintentional impact on a protected class.

Organization must demonstrate:

A specific KSA is a business requirement for the job

All affected employees are evaluated in the same way

Organization should review ongoing performance score data by protected class to implement corrective action as necessary.

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Illegal Discrimination or Disparate Treatment

Raters assign different scores to employees based on factors that are NOT related to performance.

Employees receive different treatment as result of such ratings.

Employees can claim they were intentionally and illegally treated differently due to their status.

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Employee Claim of Illegal Discrimination

Direct evidence of discrimination, or

Evidence regarding the following:

Membership in protected class

Adverse employment decision

Performance level deserved reward/different treatment

How others were treated (not in protected class)

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Employer Response to Claim of Illegal Discrimination

Legitimate and nondiscriminatory reason for action

Related to performance

Note: Good performance management system and subsequent performance-related decision, used consistently with all employees, provide defense

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Difference Between Legal and Illegal Discrimination

LEGAL discrimination discriminates among employees based on their level of performance.

ILLEGAL discrimination is based on variables that should not usually be related to performance.

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Legal Principles Affecting Performance Management

https://www.youtube.com/watch?v=lyDACfix7pA

http://fortune.com/2018/02/06/uber-gender-pay-gap-study/

What legal principles does Susan Fowler allege Uber violated?

From a performance management perspective, what could Uber have done to avoid this lawsuit?

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Laws Affecting PM

During past few decades, several countries have passed laws prohibiting discrimination based on:

Race or Ethnicity

Sex

Religion

National Origin

Age

Disability status

Sexual orientation

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Laws in the United States of America

Equal Pay Act of 1963

Civil Rights Act of 1964

Age Discrimination in Employment Act of 1967 (as amended in 1986)

Americans with Disabilities Act of 1990

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Laws in Canada

Canadian Human Rights Code of 1985

Section 15 of the Charter of Rights and Freedoms (1982)

Federal Employment Equity Act (2004)

Federal Contractors Program

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Laws in Australia

The Crimes Act (1914)

Racial Discrimination Act (1975)

Sex Discrimination Act (1984)

Human Rights and Equal Opportunity Commission Act (1986)

Disability Discrimination Act (1992)

Workplace Relations Act (1996)

Equal Opportunity for Women in the Workplace Act (1999)

Age Discrimination Act (2004)

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Characteristics of Legally Sound PM Systems

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Legal Principles Across Borders

Four questions to ask:

What is the work geographic location?

What is the employer status (e.g., U.S.-based firm or not)?

What is the employee status (e.g., U.S. citizenship status)?

Are there international law defenses (i.e., international treaties)?

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Legal Issues: Summary

Performance Management and the Law

Some Legal Principles Affecting PM

Laws Affecting PM

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Quick Review

Definition of Reward Systems

Traditional and Contingent Pay Plans

Problems with Contingent Pay Plans

Selecting Contingent Pay Plans

Putting Pay in Context

Performance Management and the Law

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Chapter 11 Team Performance Management

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Overview

Definition and Importance of Teams

Types of Teams and Implications for PM

Purposes and Challenges of Team PM

Including Team Performance in the PM System

Rewarding Team Performance

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Definition of Team

Two or more people

Interact

Dynamically

Independently

Share common and valued

Goal, Objective, or Mission

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Importance of Teams

Increased pressure, including global competition

Flexibility in flatter organizations

Complexity of products and services

Rapidly changing business environments

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Performance Management and Teams

PM systems should target:

Individual performance

Individual’s contribution to team performance

Performance of entire team

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General Principles of PM Relating to Teams

Design and implement best system possible

Consider dangers of poorly implemented system

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Managing for Improved Team Performance

Don’t limit team processes with other task or organizational requirements

Provide good team design and organizational support

Give feedback only on processes that the team members can control

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Types of Teams

Classified by

Complexity of task

Membership configuration

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Complexity of Task Ranges From:

Routine

Well-defined

Few deviations in how work is done

Outcomes are easily assessed

- to -

Non-Routine

Not defined well

No clear specifications on how to do the work

Outcomes are long term and difficult to assess

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Membership Configuration Includes

Length of time team expects to work together

Stability of team membership

Static

Dynamic

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Types of Teams Based on Membership Configuration and Task Complexity

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Types of Teams

Work or Service Teams

Project Teams

Network Teams

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Work or Service Teams

Intact

Routine tasks

Share similar skill sets

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Project Teams

Assembled for specific purpose

Tasks outside core product or service

Members from different functional areas

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Network Teams

Membership not constrained by:

Time or space

Organizational boundaries

Teams may include:

Temporary or full-time workers

Customers

Vendors

Consultants

Work is extremely non-routine

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Examples of PM Approaches by Type of Team

Type of Team	Type of PM Approach
Work and Service Team	Peer ratings
Project team	Ongoing measurements
Network Team	Development of competencies

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Company Spotlight

A multinational aerospace firm had to manage the performance of 17 expatriate teams

Systems had to be devised to accommodate a multi-stakeholder perspective:

Local client

Home company

Other on-site teams

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Benefits of Virtual Teams

Reduce expenditure on travel

Minimizes personal and professional disruptions due to travel

Minimizes commuting time by allowing employees to telecommute

Reduces the need for large brick-and-mortar office space

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Challenges of Virtual Teams

May lack clear performance standards and team identity

Lack of training on how to improve performance within virtual teams

Difficult for team members to keep up with group developments

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Managing Virtual Teams

How does virtuality affect team performance?

What can managers do to increase the effectiveness of virtual teams?

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Virtual Teams

Company Spotlight

MySQL adapted their performance management system to manage their many virtual teams

Changes include:

Internet Relay Chat for virtual meetings

Software to mark off completed tasks

Focus on outputs and results

Reduced emphasis on chain-of-command structure

Weekly reviews of performance and accomplishments

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Purposes of Team PM

Traditional goals of any PM system

Specific to team performance:

Make all team members accountable

Motivate all team members to have a stake in team performance

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Challenges of Team PM

How do we assess relative individual contribution?

How do we balance individual and team performance?

How do we identify individual and team measures of performance?

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Six Basic Principles for Designing a PM System That Includes Team Performance

Make sure your team is really a team

Make the investment to measure

Define measurement goals clearly

Use a multi-method approach to measurement

Focus on process as well as outcomes

Measure long-term changes

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Performance Management Process

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Prerequisites

Knowledge of mission

Organization

Team

Knowledge of job to be performed by the team, including KSAs

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Prerequisites Team Charters

Summarize job duties, needed KSAs, and working conditions for a team

Similar to individual job descriptions, but also include information on within-team processes such as communication

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Prerequisites Team Charters: Components

Strategic alignment

Team purpose

Team objectives, goals, and priorities

Key stakeholders

Team customers

Team leader and sponsor

Team member roles and responsibilities

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Team member time commitments

Team communication plan

Team ground rules

In/out of scope elements

Key deliverables

Performance analytics

Prerequisites

KSAs conducive to high team-performance:

Communication

Decision-making

Collaboration

Team leadership

Self-control

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Performance Planning

Results expected of the team

Behaviors expected of team members

Developmental objectives to be achieved by team and its members

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Performance Planning

Facilitate adaptive learning

Encourage new behaviors

Facilitate generative learning

Provide best practices recommendations

Facilitate transformative learning

Deep learning by, for example, bringing in members of other teams into the team to work temporarily

 Innovation and change

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Performance Execution

Team Responsibilities

Commit to goal achievement

Seek feedback from

One another

Supervisor

Communicate openly and regularly

Conduct regular and realistic peer appraisals

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Performance Execution

Supervisor Responsibilities

Observe and document

Team performance

Relative contribution of team members

Update team on any changes in goals of the organization

Provide resources and reinforcement

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Performance Assessment

Types of Assessments

Self-appraisals

Peer evaluations

Supervisor evaluation

Outsider appraisals (if appropriate)

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Performance Assessment

Kinds of Performance to be Assessed

Individual task performance

Individual contextual performance

Team performance

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Performance Assessment Dimensions

Effectiveness

Efficiency

Learning and growth

Team member satisfaction

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Performance Review

Two meetings with supervisor or review board

Team meeting

Individual meeting

Emphasis on past, present, and future

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Team Meeting

Discuss overall team

Performance

Results

Information comes from:

Team members

Other teams/outsiders

Supervisor’s evaluation

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Individual Meeting

Discuss how individual behavior contributed to team performance

Information comes from:

Self-appraisal

Peer ratings

Supervisor’s evaluation

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Company Spotlight

Wikipedia is an example of how to manage the performance of a large, virtual, and volunteer community:

Volunteers monitor one another

Policies governing team interactions, along with clearly spelled out consequences

Established escalation and dispute-resolution process

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Rewarding Team Performance

Consider team rewards and individual rewards together

Variable Pay System

Individual is eligible for a bonus if team achieves specific results

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All employees should be eligible

Rewards should be:

Visible

Contingent

Reversible

Avoid factors which cause reward systems to fail

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Rewarding Team Performance

How does cooperation vs. competition affect team performance rewards?

What does the “folly of rewarding A, while hoping for B” refer to in terms of rewarding team performance?

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Rewarding Team Performance

Quick Review

Definition and Importance of Teams

Types of Teams and Implications for PM

Purposes and Challenges of Team PM

Including Team Performance in the PM System

Rewarding Team Performance

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