Tying Employee Performance to Compensation in a High Involvement Organization

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Tying Employee Performance to Compensation in a
High Involvement Organization

• Bill Markis
• billmarkis_at_hotmail.com

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Introduction

• The purpose of this informal presentation ?that I
  have given to staff at the International Maize
  and Wheat Improvement Center (CIMMYT) and to
  Human Resources students at Cal Poly Pomona? is
  to show an example of the work that I have been
  doing in Compensation
• Please let me introduce myself

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Who is Bill Markis?

• Several years experience as Director/Manager of
  Human Resources
• A Bachelor of Arts in Industrial Relations from
  Iberian American University
• A Master of Business Administration from
  Pepperdine University
• Certification as a Senior Professional in Human
  Resources

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Objective of Performance Management

• To communicate with employees and provide them
  specific feedback on performance
• To avoid Social Loafing the tendency of
  individuals to slack when work is shared and
  individual performance is not assessed.(¹)

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Traditional Approach

• Employees were forced to endure a once-a-year
  paperwork exercise of performance appraisals
• Not very effective
• Dreaded by employees and managers alike

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Traditional Appraisal Factors

• Employees and managers were evaluated on traits
  such as
• Dependability
• Punctuality
• Loyalty
• not on their accomplishments

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Traditional Appraisal was Dysfunctional

• There was, at the most, only a vague connection
  between the appraisal content and the work
  results that were needed by the organization to
  be successful

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The New Approach

• Personality trait rating forms have been replaced
  with more objective measures of performance
  focusing on job-related outcomes and behaviors
• Employees and supervisors jointly list specific
  objectives to be accomplished during the
  appraisal period
• Performance measurement levels (Meet and Exceed)
  are defined

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Traditional versus New Measurement Systems
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360 Degrees

• Employees can receive appraisal feedback from
  their peers and subordinates as an adjunct to an
  appraisal from a manager or supervisor

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Timing of review

• Change the process from a paperwork exercise into
  an ongoing dialog where there will be no
  once-a-year surprises
• From being a once-a-year event to an ongoing
  process, with short formal reviews every six
  months

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Dynamic Process

• Formal reviews are focused on a discussion of
  progress in
• Meeting objectives
• Plans for the following appraisal period

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Objective Setting

• Objectives should encompass
• Plans for personal contribution to corporate or
  team objectives
• Quality and production increase
• Cost reduction
• Improvement in safety customer service
• Teamwork objectives
• Learning and development objectives

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What Drives Objective Setting

• Objectives relate to personal accomplishments
  consistent with the objectives of the employees
  team or work group and are dictated by
• Competitive requirements
• Corporate strategy
• Market conditions
• Customer demands

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Typical Types of Objectives

• Managers and employees in the work group should
  develop objectives consistent with company
  strategy and customer needs
• Quality measures
• Financial measures
• Timeliness measures
• Productivity/efficiency

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Employee Development

• Performance management focuses on
• Increasing an employees value to the team
• Personal development
• Employee development is an important part of the
  appraisal process
• Improve an existing skill
• Develop a new skill that brings value to the work
  group

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Long-term Objective

• A long-term objective shall be an expectation of
• Best in class or world class
• Performance
• Quality
• Customer service
• Flexibility
• as called for by our companys strategy

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Short-term Objective

• Is an intermediate target that is better than
  current performance, but not necessarily as
  challenging as the long-term objective
• It is challenging but attainable
• It can be gradually made more difficult over
  time, thus establishing a pattern of continuous
  measurable improvement toward the long-term
  objective, which itself becomes more challenging
  over time

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Define Performance LevelsExceeds Expectations

• Overall performance clearly and consistently
  meets most position requirements and exceeds many
• Compared with others performing the position,
  this performance level clearly exceeds that of
  others among the better performances for this
  performance period

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Define Performance LevelsMeets Expectations

• Performance accomplished by a competent employee
  who is experienced and fully trained to perform
  the position
• Effective performance indicates that position
  requirements are consistently met and some
  occasionally exceeded

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Define Performance LevelsBelow Expectations

• Performance has continually failed to meet the
  minimum acceptance standards of the position for
  which the person was hired
• Performance is not fully proficient and is below
  expectations that are normally achieved by a
  proficient employee

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Sample Objectives forAdministrative Assistant
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Sample Objectives for Human Resources
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Motivation

• Objective setting in the organization has an
  important influence in employee motivation
• Specific and difficult objectives lead to higher
  employee performance provided those who had to
  attain them accepted the objectives

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Employee Participation

• The degree of employees acceptance of objectives
  is a function of
• Their level of participation in setting
  objectives
• The extent to which they perceive that the final
  objectives are attainable

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Reinforcement

• Employee behavior is strongly influenced by the
  consequences of that behavior
• Positive behavior that is inspired and reinforced
  is more likely to reoccur
• Reinforce approximations of the final desired
  behavior or result of that behavior

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Relationship of Reinforcement to Objective Setting

• The motivational impact of objectives comes from
  employees anticipation that they will be
  reinforced for attaining an objective

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Self-fulfilling Prophecy

• Objective attainment itself is reinforcing since
  it enhances an employees sense of accomplishment
  and self-worth
• If the objective is too difficult, employees will
  not try to attain it or they will become
  frustrated with trying to attain it and stop
  trying

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Link Performance to Pay
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References

• Workplace 2000, The Revolution Reshaping
  American Business from Joseph H. Boyett and
  Henry P. Conn, Dutton, 1991
• Performance Now! software, by Knowledge Point
• (¹) Julia Whitty, writer for Mother Jones