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Organization Development and Change : 

Organization Development and Change Thomas G. Cummings Christopher G. Worley Chapter Seventeen: Performance Management

Learning Objectivesfor Chapter Seventeen : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-2 Learning Objectivesfor Chapter Seventeen To present a model for understanding the components and relationships associated with performance management To explore three interventions concerned with managing the performance of human resources: goal setting, performance appraisal, and reward systems

A Performance Management Model : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-3 A Performance Management Model Workplace Technology Business Strategy Employee Involvement Goal Setting Reward Systems Performance Appraisal Individual and Group Performance

Characteristics of Effective Goals : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-4 Characteristics of Effective Goals Goals are Challenging Challenging but realistic Goals are set participatively Goals are Clear Goals are specific and operationally defined Resources for goal achievement are negotiated

Management by Objectives(MBO) : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-5 Management by Objectives(MBO) MBO attempts to align personal goals with business strategy through increased communications and shared perceptions between managers and subordinates MBO programs may go beyond manager and subordinate roles to address individuals, work groups, and to reconcile conflicts.

MBO Application Stages : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-6 MBO Application Stages Involve the whole work group Goals set jointly by manager and subordinate Action plans are established Criteria and yardsticks are established Work progress and contract reviewed and adjusted periodically Records of meetings are maintained

Performance Appraisal Elements : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-7 Performance Appraisal Elements

Performance Appraisal Application Stages : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-8 Performance Appraisal Application Stages Select the appropriate stakeholders Diagnose the current situation Establish the system’s purposes and objectives Design the performance appraisal system Experiment with implementation Evaluate and monitor the system

Characteristics of Effective Appraisal Systems : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-9 Characteristics of Effective Appraisal Systems Timely Accurate Accepted by the users Understood Focused on critical control points Economically feasible

Reward System Design Features : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-10 Reward System Design Features

Characteristics of Effective Reward Systems : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-11 Characteristics of Effective Reward Systems Availability Timeliness Performance Contingency Durability Equity Visibility

Types of Rewards : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-12 Types of Rewards Pay Skill-based pay plans Performance-based pay systems link pay to performance Gain sharing involves paying bonuses based on improvements in the operating results Promotions Benefits

Slide 13: 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-13 Individual Plan Productivity 4 1 1 4 Cost effectiveness 3 1 1 4 Superiors’ rating 3 1 1 3 Group Productivity 3 1 2 4 Cost effectiveness 3 1 2 4 Superiors’ rating 2 1 2 3 Organization- Productivity 2 1 3 4 wide Cost effectiveness 2 1 2 4 Salary-Based Pay for Performance Ratings Ties pay to performance Negative side effects Encourage cooperation Employee Acceptance

Slide 14: 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-14 Employee Acceptance Individual Plan Productivity 5 3 1 2 Cost effectiveness 4 2 1 2 Superiors’ rating 4 2 1 2 Group Productivity 4 1 3 3 Cost effectiveness 3 1 3 3 Superiors’ rating 3 1 3 3 Organization- Productivity 3 1 3 4 wide Cost effectiveness 3 1 3 4 Profit 2 1 3 3 Ties pay to performance Negative side effects Encourage cooperation Stock/Bonus Pay for Performance Ratings

Gain Sharing Pay Plan Considerations : 

Cummings & Worley, 8e (c)2005 Thomson/South-Western 17-15 Gain Sharing Pay Plan Considerations Process of design - participative or top-down? Organizational unit covered - plant or companywide? Determining the bonus - what formula? Sharing gains - how and when to distribute? Managing change - how to implement system?