Managing and Enhancing Performance

1. Chapter 14 Managing and Enhancing Performance

2. Chapter 14 Objectives • Describe the relationships among performance measured at different levels within an organization and discuss how training, development, and job redesign can help improve performance • Discuss the role of alternate work arrangements in motivating and enhancing performance • Describe the role of incentive pay and identify different programs for individual-based and team-based incentive plans

3. Enhancing Performance at Different Levels • The goal of productivity improvement programs is to improve productivity by increasing employee motivation. • Extrinsic rewards: given by the employer to employees. • Intrinsic rewards: those that come from within a person. • Successful productivity improvement programs are able to establish a clear connection between employee efforts and rewards. • Many theories attempt to explain the motivational process.

4. Enhancing Performance at Different Levels Expectancy Theory Model

5. Firm-Level Performance Is an indication of the likelihood of long-term survival of the firm. Generates profits for potential profit sharing and determines the firm’s stock price. Enhancing Performance at Different Levels

6. Enhancing Performance at Different Levels – Training and Development Training and development contributes to performance enhancement by: • Enhancing recruitment • Increasing worker competence (new and current) • Reducing the likelihood of unwanted turnover.

7. Enhancing Performance at Different Levels – Training and Development • Enhancing Recruitment: • Attract best candidates

8. Enhancing Performance at Different Levels – Training and Development • Increasing the competence of new employees: • Technical training: Provide technical knowledge and skills needed to perform a job. • Orientation training: Learn about the job, the company, and its policies and procedures. • Literacy training: Improve basic skills in such areas as writing, basic arithmetic, listening/following oral instructions, speaking, and understanding manuals, graphs, and schedules.

9. Enhancing Performance at Different Levels – Training and Development • Increasing the competence of current workers: • Remedial training: Implemented when workers are deficient in some skills. • Change-related training: Used to keep up-to-date with various changes including technology, laws or procedures, or the organization’s strategic plan. • Developmental programs: Provide employees with the appropriate skills needed for higher level positions.

10. Enhancing Performance at Different Levels – Training and Development • Reducing the likelihood of unwanted turnover: • Training can prevent unnecessary terminations by: • Building employee job skills, improving job performance. • Improving supervisors' capabilities for managing “underperforming” workers. • Reeducating people whose skills have become obsolete, allowing the organization to assign them to new job responsibilities. • Effective training programs can reduce turnover by strengthening employee loyalty.

11. Enhancing Performance at Different Levels – Training and Development • Training • The process of providing employees with specific skills or helping them correct deficiencies in their performance. • Current Job • Individual Employees • Immediate • Fix current skill deficit • May be seen as negative • Development • An effort to provide employees with the abilities the organization will need in the future. • Current and future job • Work group and organization • Long term • Prepare for future work demands

12. Enhancing Performance at Different Levels – Training and Development Challenges of Training • Is training the solution to the problem? • Are the goals of training clear and realistic? • Is training a good investment? • Will the training work?

13. Enhancing Performance at Different Levels – Training and Development Managing the Training Process

14. Enhancing Performance at Different Levels – Training and Development Managing the Training Process – Needs Assessment • Levels of needs assessment:

15. Enhancing Performance at Different Levels – Training and Development Managing the Training Process – Needs Assessment • First Step to Conducting a Needs Assessment: • Perform a "Gap" Analysis: • Current situation vs. Desired or necessary • situation • The difference or the "gap" between • the current and the necessary will • identify our needs, purposes, and • objectives: • Problems or deficits • Impending change • Opportunities • Strengths • New directions • Mandated training

16. Enhancing Performance at Different Levels – Training and Development Managing the Training Process – Development and Conduct of Training • Approaches vary by:

17. Enhancing Performance at Different Levels – Training and Development • Development and Conduct of Training Phase: • Location Options – On the Job (OJT): • Job rotation • Apprenticeships • Internships • Advantages: • Relevant to job • Can be inexpensive to implement • Immediate feedback • Disadvantages: • Can be costly in customer satisfaction • Wide variation in quality and content of • teaching

18. Enhancing Performance at Different Levels – Training and Development • Development and Conduct of Training Phase: • Location Options – Off- the-Job Training: • Advantages: • Gives employees uninterrupted time • More conducive to learning/less • distractions • Disadvantages: • Learning may not transfer back to job • Employees may view training as an • opportunity to enjoy time away from • work

19. Enhancing Performance at Different Levels – Training and Development • Development and Conduct of Training Phase: • Presentation Options: • Slides and Videotapes • Teletraining • Computers • Simulations • Replicate job demands at off-site • facility • Virtual Reality (VR): • The use of a number of • technologies to replicate the entire • real-life working environment in real • time • Classroom Instruction and Role-plays

20. Enhancing Performance at Different Levels – Training and Development • Development and Conduct of Training Phase: • Types of Training Options: • Skills Training: • Job aids: • External sources of information that provide job related • information • Retraining • Cross-functional Training • Team Training

21. Enhancing Performance at Different Levels – Training and Development • Development and Conduct of Training Phase: • Types of Training (cont.): • Creativity Training – brainstorming • Literacy Training • Diversity Training • Crisis Training • Customer Service Training • Ethics Training

22. Enhancing Performance at Different Levels – Training and Development • Phase 3 – The Evaluation Phase • Return on Investment (ROI)

23. Enhancing Performance at Different Levels – Job Redesign • Job Redesign: • Job Rotation • Job Enlargement • Job Enrichment

24. Enhancing Performance at Different Levels – Job Redesign • Job Characteristics Model • Aims to redesign jobs to be more intrinsically rewarding. • Characteristics that make a job intrinsically rewarding are skill variety, task identity, task significance, autonomy, and job feedback. • Some specific techniques for enriching a job: • Combine tasks • Establish client relationships • Reduce direct supervision • Increase identification with product/service

25. Job Characteristics Model

26. Enhancing Performance at Different Levels – Job Redesign Job Enrichment • Strengths • Makes jobs less automated, and more interesting and rewarding. • Enrichment leads to improvements in productivity, quality, absenteeism rates, and retention. • Weaknesses • Production may become less efficient. • Employees preferring highly automated jobs may oppose job enrichment efforts.

27. Enhancing Performance at Different Levels – Job Redesign • Self-managed work teams • Consist of 6 to 18 employees from different departments who work together to produce a well-defined segment of finished work. • Team members are given the authority to plan, organize, and coordinate, and take corrective actions. • To prepare team-members for self-management, the organization must provide training in three areas: • Technical skills • Interpersonal skills • Administrative skills

28. Alternative Work Arrangements • Alternative Work Arrangements: • Flexible work hour plans • Compressed workweeks • Telecommuting • Job sharing • Part-time employment

29. Incentives and Performance-Based Rewards • Merit pay plans • Grant employees annual pay raises based on their levels of job performance. • The merit pay guidechart shows the size of a merit pay raise associated with each level of job performance. • Merit pay plan—strengths • Established effort-performance and performance–reward link. • Publicized merit pay guidecharts to strengthen the performance–reward link.

30. Incentives and Performance-Based Rewards • Merit pay plan—weaknesses • Fail to establish a clear performance-reward link. • Fails when employees do not value the rewards offered by the company. • Hinder performance-reward link when supervisors fail to distinguish between employees within the team • Time lag exists between behavior and reward. • Is not very cost-efficient. • Productivity hindered if these plans fail to reward behaviors that contribute to organizational goals.

31. Incentives and Performance-Based Rewards – Individual Incentive Plans • Piece rate plans • Base an individual’s wages on the number of “pieces” or product units he or she produces. • Piece rate plans vary. • Straight piecework: pays workers a set amount for each unit produced. • Different piece rates: depends on whether the worker has met the standard.

32. Incentives and Performance-Based Rewards – Individual Incentive Plans • Piece rate plans • Strengths • Cost efficient. • Employees know what to do to earn reward. • Performance standards are objective. • Rewards are tied directly to performance. • Weaknesses • Pressure placed on employees to produce. • Workers may resist management’s attempts to introduce new technology or systems. • Workers are not rewarded for suggesting new ideas. • Employees may neglect aspects not covered in the performance goals. • Encourage competition rather than teamwork.

33. Incentives and Performance-Based Rewards – Team and Group Plans • Gainsharing plans offer employees a cash award for meeting or exceeding goals based on the collaborative performance of a team of employees. • Most gainsharing plans feature the following: • The organization has productivity goals that can be achieved through effective teamwork. • Employees receive cash bonuses if goals are met. • Productivity is measured by an explicit formula with objective measures. • Employees are encouraged to submit suggestions for cutting production costs or increasing productivity.

34. Incentives and Performance-Based Rewards – Team and Group Plans • The Scanlon Plan • Is a gainsharing plan. • Aims to cut production costs, relative to output. • For implementing a Scanlon Plan: • Calculate the ratio of production cost/sales value of production that would be expected in a typical year. • Decide how production costs are to be cut. • Allocates bonuses in the following manner: 75 percent is paid out and 25 percent is held in reserve for lean periods in which there are no bonuses.

35. Incentives and Performance-Based Rewards – Team and Group Plans • Gainsharing plans • Strengths • Effort-performance and performance-reward links are strong. • Link performance with the organization’s mission. • Promote teamwork. • Are cost-effective. • Weaknesses • Employees may perceive rewards as being unfairly distributed. • Employee suggestions for improving efficiency may dwindle over time. • May suffer if payout formulas are inflexible.

36. Incentives and Performance-Based Rewards – Team and Group Plans • Profit-sharing plans • Reward group, rather than individual, performance. • The payout is based on profits rather than gains. • A portion of the company’s profits is contributed to individual employee accounts.

37. Incentives and Performance-Based Rewards – Team and Group Plans • Three types of profit-sharing plans: • Deferred plans: An individual’s profit-sharing earnings are distributed at retirement. • Distribution plans: The company fully distributes each period’s earnings as soon as the profit-sharing pool is calculated. • Combination plans: Employees receive a portion of each period’s earnings immediately; the remainder awaits future distribution.

38. Incentives and Performance-Based Rewards – Team and Group Plans • Profit-sharing plans • Strengths • Improves productivity by making employees’ interests compatible with employers’ goals. • Employees may gain a greater sense of ownership. • Weaknesses • Only marginally address effort-performance-rewards links. • Not always cost efficient. • Rewards are not timely.