Performance evaluation is the process of assessing an employee’s job performance and productivity over a specified period of time. Show
Explain the human resource responsibility of evaluating employee performance, focusing specifically on the various available methods Key TakeawaysKey Points
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Performance evaluation, or performance appraisal (PA), is the process of assessing an employee’s job performance and productivity. The assessment is conducted based on previously established criteria that align with the goals of the organization. Various employee attributes can be assessed during this process, including organizational-citizenship behavior, accomplishments, strengths and weaknesses, and potential for future improvement. The management of performance plays a vital role in the success or failure of the organization, as human resources are a significant investment that must provide meaningful returns. An ineffective performance-evaluation system can create high turnover and reduce employee productivity. Pros and Cons of Performance AppraisalsBenefits of the PA system include increased employee effectiveness, higher likelihood of improved employee performance, the prompting of feedback, enhanced communication between employers and employees, fostering of trust, promotion of goal setting, and assessment of educational and other training needs. Detriments of the PA system include the possible hindrance of quality control, stress for both employees and management, errors in judgment, legal issues arising from improper evaluations, and the implementation of inappropriate performance goals. Performance appraisal is situated at both the individual employee level and the organizational level because human resources (HR) conducts evaluations of individuals in light of organizational goals with the object of improving achievement of these goals. HR relies on a strong performance-management policy; a proper PA should be able to educate employees on the organization, its goals, and its expectations in legal ways. This means that antidiscrimination laws and other employment laws need to shape the PA policy. Methods of Performance EvaluationThere are various ways human resource professionals can approach assessing performance, though integrating various perspectives (i.e., collecting the most differentiated data) will paint the clearest picture. Some examples include: Objective production: Under this method, direct data is used to evaluate the performance of an employee. This often relates to simple and quantifiable data points, such as sales figures, production numbers, etc. However, one drawback of this process is that the variability in performance can be due to factors outside employees’ control. Also, the quantity of production does not necessarily indicate the quality of the products. Still, this data reflects performance to some extent. Personnel: This is the method of recording the withdrawal behavior of employees, such as absences. This personnel data usually is not a comprehensive reflection of an employee’s performance and is best complemented with other metrics. Judgmental evaluation:One of the primary drawbacks of employee performance evaluation is the tendency for positive feedback despite negative behavior. That is, often people are nice enough to provide good evaluations for work that isn’t up to par. Judgmental evaluations focus on benchmarks to more accurately promote constructive criticism (through relative scales). A few examples include:
Peer and Self AssessmentsOften, peer assessments and self-assessments are used to paint a clearer image of performance. Managers are often less aware of employee efficacy than team members or other peers. In self-assessments employees have the right to underline what they think their performance is, and why certain metrics may be misleading. Peer assessments and self-assessments are useful in capturing this data:
Effective feedback is structured in a way that provides actionable conclusions to motivate employee growth through objective assessments.
Explore the various formats and structures for providing feedback Key TakeawaysKey Points
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Employee and manager feedback is one of the more sensitive issues in a workplace, and can be greatly enhanced by careful planning and critical thinking about how to objectively, equitably, and efficiently discuss employee outcomes and assessments. As a result, structuring feedback strategically can be a great benefit to both managers and employees. There are a wide variety of models and structures for providing employee feedback. A few of the more useful structures for feedback are listed below. Feedback StructuresObjective ProductionThe simplest of feedback mechanisms, this essentially looks at basic performance methods such as output, sales, volume, profitability, or other concrete and objective methods of overall productivity. As a structural option for feedback delivery, there are some pros and cons to this method. It works well in jobs where data is readily available and objective, but not so well in jobs relying on more ambiguous metrics. It is also quite impersonal, and can result in employees feeling like ‘just another gear in the machine’. Judgment EvaluationA much less objective approach would be various formats of judgment evaluation. All this really means is that an individual or group of individuals will assess the performance of a given employee, and provide this feedback directly (often in the form of a scale or model). As a result of the potential subjectivity, it is best to provide training to ensure consistency and informed assessment. Some assessment formats include:
360 Degree FeedbackWhile managerial feedback is important, it is also important to balance this with the perspectives of colleagues, subordinates, and those of the individual being assessed (self assessment). In this model, all work groups and implications of a given individual’s work decisions can be assessed from various perspectives. Compared to a static top-down feedback structure, 360 degree feedback has significant advantages in accuracy, objectivity and equality. Start-Stop-ContinueOften simplicity excels in implementing feedback, and the Start-Stop-Continue model is just about as simple as it gets. Agile teams and flat organizational structures focus on peer assessments that leverage models such as this (often coupled with some basic rating scales) to assess employees with the goal of personal growth. This is done using three points of commentary:
The key advantage of this structure is the simplicity of it. Employees have immediate feedback that they can actually act on right away. ConclusionWhile there are countless opinions and models to utilize in structuring feedback, managers should keep in mind that the purpose of feedback is growth and improvement. Any model selected should result in actionable conclusions the employee can use to improve.
Making pay decisions can be a function of HR; payroll surveys and internal measures can help determine what is appropriate.
Analyze the various methodologies used by HRM to measure, benchmark, and ultimately devise appropriate pay strategies Key TakeawaysKey Points
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Pay decisions refer to the methods used by human resources and payroll professionals to choose the pay scales of employees. Techniques that assist payroll professionals in making their pay decisions include:
BenchmarkingBenchmarking is when an organization compares its own pay practices and job functions against those of its competitors. Obvious cautionary points in the use of these kinds of salary surveys include the inclusion of only appropriately similar peers in the comparison, the inclusion of only appropriately similar jobs in the comparison, and accurately weigh and combining rates of pay when multiple surveys are used. There are two types of salary surveys that can be used in benchmarking: labor market comparisons and product market comparisons. Labor market comparisons are best when employee recruitment and retention is a major concern for the employer and when recruiting costs are a significant expense. Product market comparisons are more salient when labor expenses make up a major share of the employer’s total expenses, when product demand is very fluid, when the labor supply is relatively steady, and/or when employee skills are specific to the product market in question. Within the benchmarking process, the job category and range of pay rates within it are important to the payroll professional. Certain key jobs are very common to organizations in a given field and have a relatively stable set of duties. As a result, key jobs are useful in benchmarking since they allow for more accurate comparison across many organizations. Non-key jobs are unique to their organizations and are therefore not useful in benchmarking. Job content is far more important than job title in this context, although it is easy to confuse content for title. Range of pay rates refers to the variety in pay rates that workers in one job area might receive. Salary SurveysThe use of salary surveys demands credible survey sources with multiple participating organizations. Organizations responding to a given survey must be similar to the organization using that survey. Close attention to job function is also crucial; it is inappropriate to match and compare salaries based on job title alone. Internal MeasuresBenchmarking uses external measures to make internal pay decisions. Internal measures are also available in most cases, and include the use of analytic techniques such as projections, simulations, and predictive modeling in the pay decision-making process. External and internal measures have very different focuses. External measures ask the market what any given individual should be paid. Internal measures correlate pay decisions to potential organizational benefits. Pay Grade SystemA pay grade system is simply tiered levels of pay based on position, experience, and seniority. Using a pay grade system has its own risks that should be backed by strongly predictive internal measures because 0nce pay grades are in place, the cost of changing and updating them is significant. This can lead to stagnation in an organization’s pay scale system. Connected to this problem is the fact that an existing pay scale can reward skill sets that were highly useful to the organization in the past more than skill sets that are currently needed. Projections, simulations, and predictive modeling assist in counteracting these issues, as they make use of an organization’s own internal data to ensure that assessments of value and need are accurate. Pay for Performance SystemsVariable pay decision systems like pay-for-performance are designed to motivate employees and ensure intra-organizational cooperation. When designing this kind of system, the first thing to assess is the personnel goals of the organization (as this kind of system can be tailored significantly). Interacting with managers across departments can help payroll professionals understand what is most important to the various areas of the organization at any given time. Merit and incentive pay programs are common forms of pay-for-performance systems. Promotions based on performance rather than set time periods are also critical to pay-for-performance schemes.
Human resources professionals assess organizational and employee needs to identify the ideal incentive systems for collaborative success.
Describe the purpose of an incentive system and learn how human resources professionals can assess organizational needs to select the best one Key TakeawaysKey Points
An incentive system is a business management tool that introduces a structured motivation system to promote desired employee behaviors. Human resources (HR) professionals are tasked with using employee and organizational objectives to identify and implement the best employee incentive programs. How Incentives Improve PerformanceTo be effective, incentive systems must address employee skills and motivation, acknowledgement of employee successes, a clearly-defined set of goals, and a means for assessing progress. These systems must also be tailored to the needs of the organization. Incentive systems are often implemented to prevent and overcome poor performance, failure to meet organizational goals, poor morale, increased turnover, and the stress of increased demands on employees. Incentive systems are grounded in the idea that employee effort increases as workers perceive that they are making progress towards reaching set goals. A successful system promotes full employee participation by offering a wide array of rewards and keeping employees motivated to participate. The Role of Human ResourcesIncentive systems only work when they are closely tailored to the goals of the organization. The system’s goals must be challenging but attainable, or employees will not be motivated to participate. It’s counter-intuitive, but research has shown that monetary rewards are ineffective incentives. One incumbent risk of incentive systems is the moral hazard of encouraging individuals to achieve their own goals and specific targets rather than improving upon organizational performance as a whole. Human resources departments must identify the core culture of the organization and create incentives that match it. For example, a company built on innovation must inspire risk-taking without any guarantees of success. This means performance incentives and metrics may be relatively useless (and most likely damaging) to executing the core organizational goals. Instead, HR could provide incentives like telecommuting or the freedom to devote a percentage of each work day to independent projects (Google does this). At the other end of the spectrum, Walmart promotes rigidly controlled operational efficiency. To reduce employee errors, an incentives system could reward efficiency. The most consistent truck drivers, for example, could receive a reward for their clockwork performance.
Employee benefits are non-wage compensations designed to provide employees with extra economic security.
Break down employee reimbursement to describe a variety of direct and indirect benefits captured by the employee from human resource management Key TakeawaysKey Points
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Employee benefits are non-wage compensations designed to provide employees with extra economic security. These benefits ensure that employees have access to health insurance, retirement capital, disability compensation, sick leave and vacation time, profit sharing, educational funding, day care, and other forms of specialized benefits. Receiving these benefits along with one’s salary is fairly standard in full-time professional employment. Human Resource ResponsibilitiesThe human resources department is the area of an organization responsible for organizing, implementing, and managing employee benefits across the company. Human resources (HR) has a wide range of responsibilities, including hiring, training, assessment, and compensation across the company. Benefits and compensation, however, lay at the center of HR operations and play a central role in both the financial capacity and talent management of any institution. Human resources contribute to the overall employee experience across the span of an employee’s time with the company. Benefits play an important role in maintaining high levels of satisfaction. Employee satisfaction is often overlooked in favor of customer satisfaction, but is just as critical to a healthy business. As a result, HR has a critical task in maintaining high levels of employee satisfaction to ensure maximum operational efficiency. Benefits provided by the company, particularly retirement investing and health insurance, ensure that employees feel taken care of and secure in return for their investment of time and effort. The safety net provided and maintained by the company is a strong motivator of employee loyalty and satisfaction. Legal ConcernsIn most developed nations there are laws that govern benefits and agencies to enforce them. HR is also tasked with understanding the benefits that employees have a legal right to and implementing them properly. The Employee Benefits Security Administration (EBSA) is the agency in the United States responsible for administering, regulating, and enforcing many of these benefits. HR also works closely with the legal department to understand and provide the benefits required by each country they operate in. HR is a central element of any successful business because it maintains the most valuable investment of any business: its people. Employee satisfaction and compensation help companies achieve high efficiency and strong performance from their employees by administering the appropriate level of compensation and benefits.
A promotion is the advancement of an employee’s rank, salary, duties, and/or designation within an organization.
Evaluate human resources’ role in creating promotion opportunities to motivate employees and develop upwards mobility within an organization Key TakeawaysKey Points
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A promotion is the advancement of an employee’s rank, salary, duties and/or designation within an organization. Promotions are often a result of good employee performance and/or loyalty (usually via seniority). The opposite of a promotion is a demotion. The Role of Human ResourcesPrior to promoting someone, the human resources department of an organization must ascertain whether the employee in question can manage the increase in responsibilities that accompanies the new role. If not, additional training may be required to prepare the individual for their new organizational role. Incentives of Being PromotedInternal promotions carry incentives that motivate employee efficacy and ambition. Human resources can manage internal promotional opportunities and benefits to increase employee engagement. A promotion might involve a higher designation. This means that the more senior position has a different title. An example would be a promotion from office manager to regional manager. A promotion can (and often does) mean an increase in salary. The amount of the raise varies widely from industry to industry and from organization to organization within a given industry. Promotions can also carry increases in benefits, privileges, and prestige, although in some cases only the title changes. In very hierarchical organizations, like the military, the change in rank alone is significant and brings with it new responsibilities. In the nonprofit sector pay increases are modest, so the prestige of a promotion is one of its main benefits. In the private sector, promotion can include substantial salary increases, benefit increases, stock options, and various “perks,” such as a bigger office or executive parking. Safeguards and Systematic EquityGenerally speaking, there are more procedural safeguards against preferential treatment in the public sector as compared with the private sector, where senior managers enjoy broad discretion in making promotions. Review of promotion decisions and mandates to document such decisions in personnel files protect against discrimination, bias, and preferential treatment. It is critical for human resources professionals to understand and describe why a given promotion is occurring, justifying it both quantitatively and qualitatively.
Transfers take place in response to goals, needs, talent, or employee requests; HR evaluates and executes transfers.
Identify when it is appropriate to consider strategic or unexpected interdepartmental transfers within a human resources frame Key TakeawaysKey Points
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Evaluating and executing employee transfers is an essential function of human resources management. Transfers can be horizontal, between departments within an organization, or vertical, from one level in the organization to another, either up or down. It is useful to view promotions and demotions as vertical and transfers as horizontal (though they can be vertical as well, to a certain extent). Transfers can occur for many different reasons; they can be driven by employees or managers. Types of employee transfers include: strategic transfers, necessity transfers, and talent/management transfers. Strategic TransfersA strategic transfer may take place when an organization is trying to grow a specific segment of its business. For example, if a car maker wants to strategically grow its quality department to meet the goal of building safer cars, it may want to train additional staff for a transfer to the quality department. It is also highly useful to have a few experienced employees who understand the company better than new employees guide the trajectory of the new project. Necessity TransfersA necessity transfer may take place when there is a demand for employees in a department of the organization where a specific skill set is scarce. This may happen because of layoffs, a change in company strategy, or a scarcity of a certain type of employee. A necessity transfer usually includes an incentive, like a raise, to give employees an incentive to put in the training the transfer will require. Talent TransfersA talent transfer usually moves employees from their original department after it becomes clear that their skill set is more suited to another department. It is predicated on the original department’s ability to absorb the loss of that employee as well as the level of need in the new department. Talent transfers are more likely to be initiated by employees who perceive that they can contribute more to a new department. Finally, employees may also request transfers in an organization for a number of different reasons (i.e., family or personal requirement, location requirements, change in interest, and working with different people). The important component from a human resources perspective is making sure that the employee’s concerns are legitimate and insuring that the transfer will be beneficial for the organization by assessing the employee’s fit in the proposed transfer location. Making sure that employees are working where they have the best fit promotes higher efficiency and synergy.
Organizations must create strong, clear disciplinary policies; all disciplinary actions should be well documented and fairly applied.
Assess the advantages and disadvantages of the methods outlined to discipline employees in the workplace Key TakeawaysKey Points
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Employee discipline problems can be minimized by ensuring that organizational policies are clearly communicated to employees. Consequences for violating organizational policies must be clearly communicated so that employees know and understand them. Organizations must create strong, clear disciplinary policies and enforce them when needed. In addition, organizations must prohibit discrimination and harassment by creating clear and detailed written policies. Types of DisciplineCorrective discipline and progressive discipline are the two most common disciplinary systems in the workplace:
Documentation of DisciplineDocumentation is crucial in cases of employee discipline. If an employee is penalized or fired for an infraction that the organization cannot document, s/h might file–and win—a wrongful termination suit. This is particularly true when performance appraisals are not detailed enough. A lack of consistency in disciplinary procedures is equally dangerous for organizations. If employees receive different disciplinary responses to the same infraction, the organization can be found liable for discrimination even when none was intended. Aggravating and mitigating factors should be considered and documented in each situation. This means that all disciplinary procedures must be well-documented and fairly applied. Methods of DisciplineThere are four main methods of discipline for employee failures and poor conduct: verbal counseling, written warning, suspension, and termination. Other less common forms of discipline include demotion, transfer, and withholding of bonuses.
Dismissal is the involuntary termination of an employee due to incompetence, poor job performance, or violation of policy.
Discuss the common reasons and justifications for employee dismissal from the human resources management perspective Key TakeawaysKey Points
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Dismissal is the involuntary termination of an employee. It is colloquially referred to as being “fired.” Dismissal implies employee fault, although this is not always the case. In most states, an employee can be fired for any reason or no reason at all, as long as they are not fired for a prohibited reason. Indeed, most dismissals are a by-product of economic conditions or organizational failure beyond the individual employee’s control (i.e., layoffs). Reasons for DismissalCommon reasons for dismissal include absenteeism, “time theft” offenses (i.e., improper use of breaks), incompetence, or poor job performance. Gross misconduct offenses, such as violence, serious negligence, repeated insubordination, fraud in the job application process (whenever it is discovered), harassment of co-workers, or drug use at work are grounds for immediate dismissal. At times, even off-the-clock behavior can impact employment and result in a dismissal. For example, if an employee is convicted of driving while under the influence, s/he will not be able to keep a job that requires driving. Other offenses, even if unrelated to job performance, can be seen as a sign of unreliability on the part of the employee and can result in dismissal. Similarly, employees often represent organizations outside of work. It is bad PR for an organization’s employees to be in trouble outside of work. The Role of Human ResourcesDismissal is almost always the last step in a chain of disciplinary actions. Most workplaces recognize some sequence of disciplinary consequences, starting with verbal counseling, moving to written warnings and suspension, usually without pay. In extreme circumstances, however, employees can be summarily dismissed. Regardless of the circumstances of the dismissal, organizations must document all infractions carefully and be consistent in their application of disciplinary measures including dismissal. Organizations that dismiss some employees for a particular infraction but not others leave themselves open to legal liability, even in right-to-work states. Human resources departments are tasked with managing this process, and must ensure complete coordination of company policy with state or federal law. If the dismissal is seen as harassment-based or founded in discrimination, the organization’s unethical acts will have significant legal ramifications and costs. Human resources professionals are mediators who must remain objective when assessing possible employee termination. |