Performance Management Flashcards
Differences between Traditional and Current Performance Appraisal
Traditional - annual evaluation, rearview mirror, focus on performance appraisal, superior evaluation
Current - frequent feedback, focus on the future, emphasis on coaching and development, superior is also evaluated
What is striking about Google’s approach to great leadership?
on one hand they are competent people but they also have a focus [not only on their and the team results] but on the people that they lead - interested in having them become better
What is striking about GE’s approach to great leadership?
- each employee has medium term objective or priorities
- managers have frequent discussions, touchpoints, on progress in objective achievement. Discussion, goals, and decisions are recorded
- an app with the summary, with notes or even with recorded messages
- focus on continuous improvement
What are Ratings (Performance Appraisal) and how can they be implemented?
- Informal feedback and coaching are not appropriate to all sectors
- ratings may create healthy competition
- ratings on a quarterly basis (deloitte)
- ratings on competencies (pwc)
- going back to formal appraisal but keeping quarterly conversations
Trends in Compensation (9)
- Equity is a priority and impacts the company performance
- Increased use of variable compensation (paying for performance)
- Self service and flexible rewards and benefits to accommodate multigenerational workforce
- Competitiveness for jobs associated with AI
- Employee development is key for performance retention (rather than just assuming people will stay)
- Break bonuses in smaller and more regular amounts, more frequent recognition
- Pay for skills
- Flexible work arrangements and job sharing
- Better compensation software to increase efficiency and integration with HR workflows (more direct monitorization of how you are doing)
How can you assess internal equity?
Job Evaluation:
- define compensable factors > job characteristics, which organization values and chooses to pay (eg. job complexity, education, experience, responsibility
- rate jobs on extent the compensable factors are present in jobs - attribute points
- create a salary line, correlating salary with number of points.
What is a Compensation Package?
All the ways employees may be compensated for their work!
Component of Compensation Package (5)
- cash (salary, performance-pay)
- benefits (car, gym, meals, day care)
- indirect compensation (health, holidays)
- intrinsic rewards (responsibility, autonomy, development)
- social rewards (recognition)
What is the aim of performance pay?
Incentive Design
- aims to increase motivation
- attract and retain talent in organizations
- motivate value creating behaviors in organizational members
- motivate employees to invest in firm specific human capital - knowledge and social networks
How should a firm structure their incentives? (5 steps)
- Define goals and expected outcomes (and how they will be assessed)
- Establish the eligible people receiving the incentive (company, team, individual)
- Establish a time horizon (short, medium, long term)
- Effort vs results: reward means or outcomes > some time one or the other may make the most sense
- Structure the incentives: annual bonus, stock options, commissions.
what are 3 key characteristics incentives should have? how can you guarantee this?
transparent, accurate, and equal
through measurement!
- qualitative/subjective vs quantitative/objective
> are we assessing revenue brought in by sales person or satisfaction reported
what is general human capital?
Increases the value of employees in the labor market (competitors). The cost is usually supported by the workers, indirectly, in lower salaries, or directly, through payment of fees.
what is frm specific human capital?
More difficult since it has no market value (only firm-specific). The cost is supported by the company.
what is company specific HC?
knowledge of procedures, culture, and systems unique to a company
what is relationship HC?
effectiveness stemming from established relationships with colleagues
