CHAPTER VI: APPRAISING AND

REWARDING PERFORMANCE

PRESENTED BY:
BABY JEAN G. ABLAY
PART 1
 “The typical persons rate his or her performance at about the 80th percentile. So,
people tend to believe they’re doing better than most of the people around them”.
-Edward E. Lawler

 “Managers should give constructive feedback to employees, so that they can

improve their performance”.
-Sherry E. Moss and Juan I. Sanchez
 CHAPTER OBJECTIVES
TO UNDERSTAND:
 Total reward System
 Money as an Economic and Social Medium of Exchanges
 The Role of Money in a Motivational Models
 Behavioral Considerations in Performance Appraisal
 The Characteristics of Good Feedback Programs
 The Process of Attribution
 How and Why to Like Pay with Performance
 Uses of Profit-Sharing, Gain-Sharing and Skill-Base Pay Programs
 INCENTIVES

This chapter focuses first on how

incentives are combined with other parts of
wage and salary administration to build a
complete reward system that encourages
motivation.
BASED PAY AND SKILL-BASED PAY
 motivate employees to progress to jobs of higher skills
and responsibility.
 PERFORMANCE PAY
Is an incentives to improve performance on the job.
 Profit sharing
motivates workers toward teamwork to improve an
organization’s performance.
 MONEY AS MEANS OF REWARDING
EMPLOYEES
Money has a Social Value
Certainly, money is valuable because of the goods and
services that it will purchase and also, money is a social medium
of exchange. Money has status value when it is being received
and spent. It represents to employees what their employer
thinks of them. It is also an indication of one employee’s status
relative to that of other employees.
 APPLICATION OF THE MOTIVATION MODELS

Money Satisfies many Drives and Needs

Drives: Achievement oriented employees maintain a
symbolic scorecard in their minds by monitoring their total
pay and comparing it with that of others.
Needs: Pay is viewed primarily as a hygiene factor,
although it may have at least short-term motivational value as
well.
 EXPECTANCY
 Expectancy Theory states that Valence x Expectancy x
Instrumentality = Motivation
 This means that if money is to act as a strong motivator, an employee
must want more of it (valence), must believe that effort will be
successful in producing desired performance (expectancy) and must
trust the monetary reward will follow better performance
(instrumentality).
 Money is often has a high valence. This dual role means that most
employees do respond to money as a reward.
BEHAVIORAL MODIFICATION

The two desired conditions for applying

contingent rewards under behavior
modification principles, employees can see
that there is a direct connection between
performance and reward.
 EQUITY
Employer must understand the employee’s
perspective.

Cost-Reward Comparison
 the employee identifies and compares personal costs
and rewards to determine the point at which they are
equal.
 ADDITIONAL CONSIDERATION IN THE USE OF
MONEY

 Extrinsic and Intrinsic Rewards: Money is essentially an extrinsic reward rather

than any one, so it is easily administered in behavior modification programs.

 Four Interdependent Path that lead to Intrinsic Motivation:

1. A sense of meaningfulness
2. A sense of choice
3. A sense of competence
4. A sense of progress
Compliance with the Law: Compensation management is
also complicated by the need to comply with a wide range of
federal and state laws.
Equal Pay Act of 1963: Affects employers who are engaged
in interstate commerce and most employees of federal, state,
and local governments.
People doing the same work receive equal pay regardless of the
sex of the person holding the job.
Comparable Worth: Seeks to guarantee equal pay for
equal work. This approach demands that reward
systems be designed so people in different but
comparable jobs those of equal value to the employer
receive similar levels of pay.

Other Factors: Equality, secrecy, control, and flexibility

are considerations.
 ORGANIZATIONAL BEHAVIOR AND
PERFORMANCE APPRAISAL
 Management by Objectives (MBO) is a cyclical process that often
consists of four steps as a way to attain desired performance:
1. Objectives Setting
 Joint determination by manager and employee of appropriate levels of
future performance for the employee, within the context of overall unit
goals and resources.
2. Action Planning
 Participated or even independent planning by the employee as to how
to reach those objectives.
3. Periodic Reviews
Joint assessment of progress toward objectives by manager
and employee, perform informally sometimes spontaneously.

4. Annual Evaluation
More formal assessment of success in achieving the
employees’ annual objectives, coupled with a renewal of the
planning cycle.
 PERFORMANCE APPRAISAL
 Performance Appraisal plays a key role in reward systems.
Appraisal is necessary in order to do the following:
1. Allocate scarce resources in a dynamic environment.
2. Motivate and reward employees.
3. Give employees feedback about their work.
4. Maintain fair relationships within groups.
5. Coach and develop employees.
6. Comply with regulations.
 THE PERFORMANCE APPRAISAL SYSYTEM
Is an organizational necessity.
Is based on well-defined, objectives criteria
Is based on careful job analysis
Uses only job-related criteria
Is supported by adequate studies
Is applied by trained, qualified raters
Is applied objectively throughout the organization
APPRAISAL PHILOSOPHY
Appraisal Philosophy – performance emphasis with goals and
mutual goal setting and feedback.
1. Performance Orientation
 It is not enough to put forth effort; that effort must result in
the attainment of desired outcomes (product of services)
2. Focus on goals or objectives
- Employees need to have a clear of what they are suppose to be
doing priorities among their task.
3. Mutual goal setting between supervisor and employee
 This is the belief that people work harder for goals and objectives that
they have participated in setting.
4. Clarification of behavioral expectations
 This is often done via a behaviorally anchored rating scale which
provides the employee and manager with concrete examples of various
levels of behaviors.
5. Extensive Feedback Systems
- Employees can fine-tune their performance better if they know what
they are doing n the eyes of the organization.
Thank you for Listening!!!