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Performance Management
and Reward Systems in Context
Aguinis, Herman (2013-08-29). Performance
Management, Chapter 1
Agenda
Case Study
2: Performance Management at
Network Solutions, Inc.
Articles
Performance Management: Impact
and Trend DDI, Roger Sumlin
50 different
systems:
- Wasted time and money
- Unrealistic demands on
managers & employees
- Varying and unfair standards
and ratings.
- Unclear ratings system
Misleading
<5% of all
employees
received the lowest
category of rating:
- Use of misleading information.
- Emerging biases
Demotivati
on
Tha
nk
you!
No recognition
program:
- Decreased motivation to
perform
- Job burnout and
dissatisfaction
70
20%
70%
10%
1: Top 20% among all
employees
2: between Top 20% and
bottom 10% among all
employees
3: Bottom 10% among all
PM Setup_1
Management
Commitment
- Committed to the
plan.
- Stop using any other
systems
- Top leaders
understood and
accepted it
- Feedback
deficiencies
Training&
Process
Development
PM Cycle
PM Setup_2
Reward
System
Rate 1 and 2
Carrier
Developm
ent
Rate 1
Improveme
nt
Opportunity
Rate 3
Carrier
Developm
ent
Rate 1
Correctability
Identification
of effective
and ineffective
performance
Reliabilit
y
Context
congruenc
e
Meaning
fulness
Strategic
Congruence
Practicality
Acceptability
and fairness
Inclusiv
eness
Potential Negative
Outcomes
1. Unconstructive competition
Damages the relationships
3. Practicality
Forced rankings
1. PM Impact on Organizational
Success
ra
St
PM drives the
cultural
strategies that
maximize human
Senior-level support
s
al
CEO Ratings
go
financial performance
Productivity
Product or service quality
Customer satisfaction
Employee job satisfaction
gi
te
i.
ii.
iii.
iv.
v.
1. PM Impact on Organizational
Success
6 strategic performance
areas:
i.
ii.
i. Financial performance
ii.Operating efficiency
iii.Customer satisfaction
iv.Employee performance
v.Innovation/Change
vi.Community/Environment
Agreement on strategy
Clarity of
communication
iii. Focus and alignment of
efforts
iv. Organizational culture
1. PM Impact on Organizational
Success
The 1,200 workers surveyed (1995):
i. They could improve their output by 26%
ii. 1/4 said they could raise productivity by 50%
if they weren't hindered by lack of direction,
support, training, and equipment.
1. PM Impact on Organizational
Success
PM penetration%
Mgmt.
Training
frequently use
competencies from
PM
PM Training
Forced
rankings
Frequently
Nonuse
Mgmt.
competencie Training
Include
teambased
objectives
in
individual
plan
Common
rating
tools
Teambased
objectives
Different
PM
input
Team
apprais
al
Alignmen
t
Accounta
bility and
training
Dramatic message of 6
studies
i. PM is an important Business System
ii. PM makes difference in organizational
performance
iii. Approaches to PM are changing
iv. Senior managers must be attentive to
the PM systems in their organizations.