organizational behavior

Microsoft PowerPoint Presentation to AccompanyOrganizational Behavior SEVENTH EDITION

Gregory Moorhead and Ricky W. Griffin

Copyright by Houghton Mifflin Company. All rights reserved.

Chapter 8Goal Setting, Performance Management, and Rewards


Copyright by Houghton Mifflin Company. All rights reserved. *Learning ObjectivesDescribe how goal setting can enhance motivation and performance.Discuss performance measurement in organizations.Describe the role of performance measurement in total quality management.Discuss individual rewards in organizations and describe their relationship to performance.Explain the various issues associated with managing reward systems.


Copyright by Houghton Mifflin Company. All rights reserved. *Goal Setting and MotivationGoal settingIs a useful method of enhancing employee performance. From a motivational perspective, a goal is a desirable objective.Goals are useful for two purposes:Goals provide a useful framework for managing motivation. Managers and employees can set goals for themselves and then work toward them.Goals are an effective control device; control is monitoring by management of how well the organization is performing.Self-efficacyIs the extent to which we believe we can still reach our goals even if we failed to do so in the past.


Copyright by Houghton Mifflin Company. All rights reserved. *Goal Setting TheoryEdwin Lockes goal-setting theory of motivation assumes that behavior is a result of conscious goals and intentions. By setting goals for people in the organization, a manager is able to influence their behavior.


Copyright by Houghton Mifflin Company. All rights reserved. *Components of Goal-Setting TheoryGoal DifficultyIs the extent to which a goal is challenging and requires effort. Difficult, yet realistic, goals are the most effective.Goal SpecificityIs the clarity and precision of a goal. Specific, rather than vague, goals are the most effective.Goal AcceptanceIs the extent to which persons accept goals as their own. Goal CommitmentIs the extent to which a person is personally interested in reaching a goal.


Copyright by Houghton Mifflin Company. All rights reserved. *Broader Perspectives on Goal SettingManagement By Objectives (MBO)A collaborative goal-setting process through which organizational goals cascade down throughout the organization.MBO programs help implement goal-setting theory on a systematic basis throughout the organization.

Overall GoalsSubsidiary/Unit GoalsSubordinate GoalsReview and Revise Subordinate Goals


Copyright by Houghton Mifflin Company. All rights reserved. *Evaluation and ImplicationsResearch on goal-setting theory has confirmed:That goal difficulty and specificity are closely associated with performance.That goal acceptance and commitment are important.That goal-setting theory may focus too much on short-run goals at the expense of long-term performance.The usefulness of MBO is limited by:Lack of top management support.Overemphasis on quantitative goals.Excessive paperwork and record keeping (documentation).


Copyright by Houghton Mifflin Company. All rights reserved. *Performance Management in OrganizationsThe Nature of Performance ManagementPerformance measurement, or performance appraisal, is the process by which someone(1) evaluates an employees work behavior by measurement and comparison with previously established standards;(2) documents the results; and(3) communicates the results to the employee.Performance Management System (PMS)Incorporates the total quality management context along with organizational policies, procedures, and resources.


Copyright by Houghton Mifflin Company. All rights reserved. *Performance Management BasicsThe AppraiserTypically employees supervisorProblems in appraisalsIncomplete or inaccurate information about an employees performanceAppraisers lack of first hand knowledge about the employeeMultiple rater systems360 degree feedback


Copyright by Houghton Mifflin Company. All rights reserved. *Performance Management Basics [continued]Frequency of AppraisalTypically once a yearConvenient for administrative purposesAppraisal Strategy IssuesCultural differencesIndividualisticCollectiveFatalistic


Copyright by Houghton Mifflin Company. All rights reserved. *Performance Measurement and Total Quality ManagementTotal Quality Management (TQM)Focuses on the customerCreates an environment of trust and opennessEmphasizes working in teamsBreaks down internal organizational barriersInstills team leadership and coachingEndorses sharing power Promotes continuous improvement.Use of the TQM approach involves fundamental changes in the organizations culture.


Copyright by Houghton Mifflin Company. All rights reserved. *Incremental Versus Continual ImprovementTraditional approaches to improving performance focused on incremental improvement. Continuous improvement (CI) under TQM assumes that performance can be elevated on a constant basis.


Copyright by Houghton Mifflin Company. All rights reserved. *Factors Supporting TQM, PMS, and CICommitment to ObjectivesA strong PMS is based on a strong commitment from the entire organization, especially top management.Job AnalysisThe process of systematically gathering information about specific jobs to use in developing a PMS. Performance PlanAn understanding between an employee and a manager about what and how a job is to be done such that both parties know what is expected, and how success is defined and measured.


Copyright by Houghton Mifflin Company. All rights reserved. *Factors Supporting TQM, PMS, and CI [continued]Measurement of PerformanceThe cornerstone of a good PMS is the method for measuring performance.Popular methods for evaluating individual performance are:Graphic rating scalesChecklistsEssays or diariesBehaviorally anchored rating scales (BARS)Forced-choice systemsMBO


Copyright by Houghton Mifflin Company. All rights reserved. *The Learning OrganizationThe ConceptTo facilitate the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs.Goals of a learning organizationTo constantly upgrade employee talents, skills, and knowledge through:Total Quality ManagementContinuous ImprovementPerformance Measurement


Copyright by Houghton Mifflin Company. All rights reserved. *Individual Rewards in OrganizationsThe Reward SystemConsists of all organizational components, including people, processes, rules and procedures, and decision-making activities involved in allocating compensation and benefits to employees in exchange for their contribution to the organization.


Copyright by Houghton Mifflin Company. All rights reserved. *Roles, Purposes, and Meaningsof RewardsPurposes of RewardsAttract, retain, and motivate qualified employees.Provide equitable, fair, and competitive compensation for an employees contribution to the organization.Encourage desired performance behaviors by employees.Meanings of RewardsThe surface value of a reward is its objective meaning or worth to an employee.The symbolic value of a reward is its subjective and personal meaning or worth to an employee.


Copyright by Houghton Mifflin Company. All rights reserved. *Types of Rewards in Compensation PackagesBase PayIncentive SystemsPiecework ProgramsGain sharing ProgramsBonus SystemsLong-Term CompensationMerit PayProfit-SharingEmployee Stock Option Plans


Copyright by Houghton Mifflin Company. All rights reserved. *Types of Rewards in Compensation Packages [continued]AwardsCash, Plaques, RecognitionBenefitsPayment for Time Not Worked (Both on and off the job)Social Security ContributionsUnemployment CompensationLife and Health Insurance ProgramsPension or Retirement Plans


Copyright by Houghton Mifflin Company. All rights reserved. *Managing Reward SystemsLinking Performance and RewardsEmployees must perceive that their rewards are linked to their performance.Pay differences are based on job-related performance factors.


Copyright by Houghton Mifflin Company. All rights reserved. *Managing Reward Systems [continued]Flexible Reward SystemsAllow employers to offer employees the combination of benefits that best suits the employees needs.Examples:Younger workers may prefer strong health insurance benefits.Financially secure mid-career employees may prefer more time off.


Copyright by Houghton Mifflin Company. All rights reserved. *Expatriate CompensationOrganizations that ask employees to accept assignments in foreign locations must usually adjust their compensation levels to account for differences in cost of living and similar factors. Amoco uses the system shown in the next slide


Copyright by Houghton Mifflin Company. All rights reserved. *The Expatriate Compensation Balance SheetThe employees domestic base salary is first broken down into three categories taxes, consumption, savings. Then adjustments are made until an appropriate equitable level of compensation is achieved.


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