Describe and evaluate the effectiveness of performance management systems and goal setting interventions in organizations

MGT 517

Unit 5 Lecture

Unit Learning Outcomes

Unit 5

ULO 1. Describe and evaluate the effectiveness of performance management systems and

goal setting interventions in organizations

ULO 2. Describe the process of implementing management and leadership development

interventions

ULO 3. Understand how career planning and development interventions improve the

individual’s personal competencies and enhance traditional human resource

approaches

Chapter 15 is the first of three chapters devoted to human resources management

interventions.

A Model of Performance Management

Performance management is an integrated process of defining, assessing, developing,

and reinforcing employee work behaviors and outcomes. Figure 15.1 illustrates the

practices and methods of performance management including goal setting, performance

appraisal, training and development, and reward systems.

Goal Setting

Goal setting involves managers and subordinates jointly establishing and clarifying

employee goals. It is also an important part of the balanced scorecard method.

Characteristics of Goal Setting

The first element of goal setting concerns establishing goals that are perceived

as challenging but realistic and to which there is a high level of commitment. This

can be accomplished by varying the degree of goal difficulty and the level of

employee participation in goal setting.

1. Establishing Challenging Goals

Employees tend to meet challenging yet achievable goals better than easy

goals.

2. Clarifying Goal Measurement

To clarify goal measurement, objectives should be operationally defined. This

also requires that employees and supervisors negotiation the resources

necessary to achieve the goals.

Application Stages

The goal-setting process includes these four steps.

• Diagnosis of the job, work group, employee needs, and the context factors of business strategy, workplace technology, and employee involvement

• Preparation for goal setting by increasing interaction and communication and providing training in goal-setting

• Setting of goals

• Review of the goals to ensure they are appropriate

Management by Objectives

Management by objectives (MBO) seeks to align personal goals with business

strategy. It involves a systematic and periodic meeting to jointly plan the work,

review accomplishments, and solve problems. These are the steps to using

MBO.

• Work group involvement

• Joint manager-subordinate goal setting

• Establishment of action plans

• Establishment of criteria for success

• Review and recycle

Effects of Goal Setting and MBO

Goal setting appears to provide positive results.

Performance Appraisal

Performance appraisal is a feedback system that involves the direct evaluation of

individual or work group performance by a supervisor, manager, or peers. Application

15.1 demonstrates the trend in goal setting and appraisal processes to use feedback of

results achieved as well as how results were achieved.

The Performance Appraisal Process

Table 15.1 summarizes several common elements of performance appraisal

systems. Each element includes traditional approaches and high-involvement

approaches. The elements are purpose, appraiser, role of appraisee,

measurement, and timing. Performance measurement is typically the source of

many problems because it is seen as a subjective process.

Application Stages

The process of designing and implementing a performance appraisal system

includes six steps.

• Select the right people

• Diagnose the current situation

• Establish the system’s purposes and objectives

• Design the performance appraisal system

• Experiment with implementation

• Evaluate and monitor the system

Effects of Performance Appraisal

Despite the difficulties in using performance appraisals, the link between them

and performance outcomes is positive.

Reward Systems

Both intrinsic and extrinsic rewards can enhance performance and satisfaction.

Structural and Motivational Features of Reward Systems

The design features of a reward system are summarized in Table 15.2. These

features include whether rewards will be:

• Person/job based or performance based

• Individual or group based

• Equitable internally and/or externally

• Related to one’s hierarchical position

• A mix of types

• Guaranteed

• Associated with seniority

Reward System Design Features

The most popular model describing the relationship between rewards, work

design and employee involvement, and task performance is the value

expectancy model. The value expectancy model posits that employees will

expend effort to achieve performance goals that they believe will lead to

outcomes that they value. This effort will result in the desired performance goals

if the goals are realistic, if employees understand what is expected of them, and

if they have the necessary skills and resources. Key objectives of reward

systems interventions are to identify the intrinsic and extrinsic outcomes that are

highly valued and to link them to the achievement of desired performance goals.

The ability of rewards to motivate desired behavior depends on these five factors:

(1) availability of rewards, (2) timeliness of the rewards, (3) performance

contingency which links the rewards to the particular performance desired, (4)

durability of the rewards, and (5) visibility of the rewards.

Skill- and Knowledge-Based Pay Systems

These pay systems are designed around people’s skills and abilities. They must

be based on the skills needed for effective operations. Such systems contribute

to organizational effectiveness by providing a more flexible workforce.

Performance-Based Pay Systems

Linking pay to performance is a popular reward system. Pay-for-performance

plans tend to vary along three dimensions: (1) the organizational unit by which

performance is measured, (2) the way performance is measured, and (3) what

rewards are given for good performance. Table 15.3 lists different types of

performance-based pay systems varying along these dimensions and rates them

in terms of other relevant criteria.

Gain-Sharing Systems

Gain sharing involves paying employees a bonus based on improvements in the

operating results of an organization. The following choices must be made to

develop a gain-sharing plan.

• The process of designing and implementing the plan

• The size of the unit to be included

• The formula for the bonus

• The sharing process

• The frequency of the bonus

• How changes will be made to the plan over time

• The rules for participation

Promotion Systems

Promotions are also rewards and a system for offering promotions is important.

Reward-System Process Issues

Two process issues affect employees’ perceptions of reward systems: (1) who

should be involved in designing and administering the reward system, and (2)

what kind of communication should exist with respect to rewards.

Coaching and Mentoring

Coaching involves working with organizational members, typically managers and

executives, on a regular basis to help them clarify their goals, address potentially limiting

behavioral style issues, and improve their performance. Mentoring is similar to coaching

and involves establishing a relationship between a manager and someone more

experienced and another member who is less experienced. Coaching involves using

guided inquiry, active listening, reframing, and other techniques to help others see new

or different possibilities and to help them direct their efforts in meaningful ways.

What Are the Goals?

The top three reasons for coaching are to facilitate a transition, to act as a

sounding board, and to address derailing behavior.

Application Stages

The coaching process closely follows the process of planned change outlined in

Chapter 2. The stages are listed below.

• Establish the principles of the relationship

• Conduct an assessment

• Debrief the results

• Develop an action plan

• Implement the action plan

• Assess the results

The Results of Coaching and Mentoring

There are very few studies which assess the effectiveness of coaching and

mentoring.

Management and Leadership Development Interventions

In management and leadership development, the focus is on developing the skills and

knowledge the organization believes will be necessary to implement future strategies

and manage the business.

What Are the Goals?

The goals are to focus on the changing skills and knowledge of a group of

organization members to improve their effectiveness or to build the capabilities of

an organization system.

Application Stages

Management and leadership development interventions generally follow a

process of needs assessment, setting instructional objectives and design,

delivery, and evaluation.

The Results of Development Interventions

Most of the evaluation research consists of only reactions, the weakest measure

of effectiveness.

Career Planning and Development Interventions

Career planning and development is a large area within human resource management.

We have chosen to orient the material around the career stages of an individual and

note how the organization may adjust its human resource practices. This developmental

orientation can be compared with the issue orientation adopted in the workforce diversity

section.

What Are the Goals?

Career planning and development interventions provide the appropriate

resources, tools, and processes necessary to help organization members plan

and attain their career objectives. A career consists of a sequence of work-

related positions occupied by a person during the course of a lifetime. Career

planning is concerned with individuals choosing jobs, occupations, and

organizations at each stage of their careers. Career development involves

helping employees attain career objectives. Research suggests that employees

progress through at least four distinct career stages as they mature and gain

experience. Each stage has unique concerns, needs, and challenges.

• The establishment stage is the phase at the outset of a career when people are uncertain and dependent upon others.

• The advancement stage is the phase characterized by employees acting as independent contributors who are concerned with achievement and advancement.

• The maintenance stage involves a leveling off and holding on to career successes. Most people at this stage have achieved their career successes and now they are focused on mentoring others. For those who are dissatisfied with their careers, they may experience a midlife crisis. These people may redirect their career paths.

• The withdrawal stage is the final stage and it involves leaving a career.

Application Stages

The two primary application steps are establishing a mechanism for career

planning and assembling an appropriate set of career development processes.

1. Establish a Career Planning Mechanism Do so by using the four career stages to make career planning more effective

as shown in Table 16.1. Figure 16.1 illustrates individual career planning as it

relates to human resources planning.

2. Assemble an Appropriate Set of Career Development Processes As shown in Table 16.2:

a. Realistic Job Preview b. Assessment Centers c. Job Rotation and Challenging Assignments d. Consultative Roles e. Developmental Training f. Performance Management g. Work-Life Balance Interventions h. Phased Retirement

The Results of Career Planning and Development

The variety of interventions makes program evaluation very difficult though the

overall assessment is positive.

Workforce Diversity Interventions

What Are the Goals? Figure 17.1 presents a general framework for managing diversity in organizations. The model suggests that an organization’s diversity approach is a function of internal and external pressures for and against diversity. Management’s perspectives and priorities with respect to diversity can range from resistance to active learning and from marginal to strategic. Within management’s priorities, the organization’s strategic responses can range from reactive to proactive. The organization’s implementation style can range from episodic to systemic.

Application Stages Table 17.1 summarizes several of the internal and external pressures facing organizations, including age, gender, race, disability, culture and values, and sexual orientation. 1. Age

To address age diversity, OD interventions such as work design, wellness

programs, career planning and development, and reward systems must be

adapted to different age groups.

2. Gender Jobs may need to be adapted to address gender needs such as the special

demands for working parents.

3. Race and Ethnicity Training may be needed to reduce discrimination issues and mentoring

programs can ensure that minorities in the advancement stage get the

appropriate coaching.

4. Sexual Orientation Like racial issues, sexual orientation diversity must deal with discrimination

issues as well as how to adjust benefits to provide for family units that may

not be recognized under the law.

5. Disability

OD interventions including work design, career planning and development,

and performance management can be used to integrate the disabled into the

workforce.

6. Culture and Values Management practices must be designed with various culture values in mind

and support both career and family orientations. Not all cultures want the

same thing from work.

The Results for Diversity Interventions

Diversity interventions have been growing rapidly but the evaluation efforts have

been primarily survey-based and/or anecdotal.

Employee Stress and Wellness Interventions

Organizations are increasingly aware of the relationship between employee wellness and productivity. What Are the Goals?

Wellness comprises the various life/nonwork satisfactions enjoyed by individuals, work and job-related satisfactions, and general health. One study concluded that workers have sought more interesting and enriched jobs but a price of that shift is increased amounts of stress. Stress has been linked to hypertension, heart attacks, depression, diabetes, and various other diseases.

Application Stages Stress and wellness interventions involve (1) diagnosing stress and being aware of its causes, and (2) alleviating and coping with stress to improve wellness. 1. Diagnosing Stress and Becoming Aware of Its Causes

Stress refers to the reaction of people to their environments. It involves both physiological and psychological responses to environmental conditions. Figure 17.2 identifies specific occupational stressors, potential dysfunctional consequences, and interventions to address stress. People’s individual differences determine the extent to which the stressors are perceived negatively. a. Workplace Stressors. Figure 17.2 identifies several organizational

sources of stress including the physical environment, individual situations, group pressures, and organizational conditions. Three key individual sources of stress are related to work overload, role conflict, and role ambiguity.

b. Individual Differences. The consequences of stress can be subjective, behavioral, cognitive, physiological, and organizational. When people

respond to stress, they may respond in terms of how they think, how they feel, and how they behave. Organizations may encourage employees to participate in stress charting and health profiling to identify stress symptoms so that corrective action can take place.

2. Alleviating and Coping with Stress to Improve Wellness After diagnosing the presence and causes of stress, the next step in stress management is to do something about it. Some possible interventions are noted.

a. Role Clarification. This involves helping employees better understand the demands of their work roles.

b. Supportive Relationships. This tactic can help employees have the support they need to cope with stress.

c. Work Leaves. Taking leaves in the form of vacations, sabbaticals, unpaid leaves, or leaves of absence can help employees a chance to renew.

d. Health Facilities. Facilitates that enable employees to exercise, meditate, and other wellness activities can help to prepare employees to better manage stress.

e. Employee Assistance Programs. These programs help employees whose personal problems affect their work performance.

The Results of Stress Management and Wellness Interventions

Overall the recommendation is positive even though true evaluation is difficult.

 

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