Management Chapter 14 Managing And Enhancing Performance The Big Picture Managing And Enhancing

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Chapter 14: Managing and Enhancing Performance: The Big Picture

Chapter 14

Managing and Enhancing Performance:

The Big Picture

Learning Objectives

Opening Case: Leading in a Virtual World

Chapter Outline

Closing Case: Creating Humane Work Schedules

Discussion Questions

Additional Resource: Muslims Face Growing Bias in the Workplace

Learning Objectives

After studying this chapter, students should be able to accomplish the following objectives.

1. Describe the relationships among performance measured at different levels within an

3. Describe the role of incentive pay and identify different programs for individual-based and

team-based incentive plans

5. Discuss how organizations evaluate performance-enhancement programs

6. Discuss how recent world events have affected the role of HR

Opening Case: Leading in a Virtual World

Case Summary

The Association for Talent Development (ASTD) conducted a survey to determine the most

important leadership skills for a “co–located environment.” The top responses included the

ability to do the following: set clear goals and measurements for projects, provide a consistent

focus on the big picture, operate in a highly complex environment promote, and stimulate

organizational commitment.

Chapter 14: Managing and Enhancing Performance: The Big Picture

Some of the challenges facing virtual leaders include the potential feelings of isolation for

remote workers. Lack of face-to-face contact can limit the clarity of communication and also can

act as a barrier to organizational commitment. The ASTD concluded that several best practices

are associated with virtual leadership. First, and most important, effective communication is

essential. The second-best practice identified by ASTD was team building. When your team is

geographically dispersed, it’s essential that leaders plan intentional team-building activities,

including structured work-related events as well as more casual social events, if possible.

Finally, leaders must establish the ground rules for their organizations. The unwritten rules of

corporate culture are harder to communicate in the virtual world, so it’s important to be clear

about work-hour expectations as well as risk tolerance. The authors of the ASTD report arrive at

a very important conclusion: “While at first glance it may seem that all the same leadership skills

are needed, it may be that leaders in a virtual environment need just a little more of everything:

more knowledge of technology, more knowledge on how to work with team dynamics, stronger

communication skills, and, of course, a little more patience.”

Think It Over

1. Do you think virtual leadership requires a different skill set than traditional leadership?

Why or why not?

2. How would you feel about working for a boss who lives half way around the world? How

might this affect you as an employee?

Chapter Outline

Introduction

Chapter 14: Managing and Enhancing Performance: The Big Picture

Every decision and activity engaged in by the human resource (HR) manager is supposed to help

improve performance in some way. Of course, employee satisfaction is also important—but

I. Enhancing Performance at Different Levels

The most basic level of performance is that of the individual employee, and this is the level that

most people find easiest to conceptualize. It is critical that any performance-enhancement

A. Training and Development

Training and development activities within an organization are a very basic form of

performance-enhancement intervention. The training process begins with some type of needs

assessment. The outcome of this assessment provides information about gaps between present

B. Job Redesign

Chapter 14: Managing and Enhancing Performance: The Big Picture

A much different approach to enhancing organizational performance is through the redesign

of jobs. Specifically, this technique involves changing—redesigning—jobs so that the work

itself will motivate employees to exert greater effort. This motivation is stimulated by making

the job more interesting or more challenging.

Based on the assumption that doing the same basic task over and over is the primary cause of

worker dissatisfaction, job enlargement was developed to increase the total number of tasks

that workers perform. As a result, all workers perform a wide variety of tasks, presumably

reducing the level of job dissatisfaction. Although job enlargement does have some positive

consequences, they are often offset by several disadvantages:

A more comprehensive approach, job enrichment, assumes that increasing the range and

variety of tasks alone is not sufficient to improve employee motivation. Thus, job enrichment

The job characteristics approach is an alternative to job specialization in that it does take

into account the work system and employee preferences. As illustrated in Figure 14.1, the job

characteristics approach suggests that jobs should be examined and improved along the

following five core dimensions.

• Skill variety is the number of tasks a person does in a job.

The higher a job rates on these five dimensions, the more employees will experience various

Chapter 14: Managing and Enhancing Performance: The Big Picture

psychological states. Experiencing these states, in turn, presumably leads to high motivation,

high-quality performance, high satisfaction, and low absenteeism and turnover. Finally, a

variable called growth-need strength is presumed to affect how the model works for different

people. People with a strong desire to grow, develop, and expand their capabilities (indicative

of high growth-need strength) are expected to respond strongly to the presence or absence of

the basic job characteristics; individuals with low growth-need strength are expected not to

respond as strongly or consistently.

Work teams represent a much different way of approaching job design. Under this

arrangement, a group is given responsibility for designing the work system to be used in

performing an interrelated set of jobs. These groups are sometimes referred to as self-directed

work teams or autonomous work teams, and they are permanent parts of the organizational

architecture.

II. Alternative Work Arrangements

A. Alternative Work Schedules

The two most common alternatives to the traditional workweek are programs known as

flexible work hours and compressed workweeks. Employees working under flexible work

hour plans usually must still work a full 40 hours per week and, typically, 5 days a week. The

Chapter 14: Managing and Enhancing Performance: The Big Picture

Contemporary Challenges in HR: Work Is Where You Do It

Once upon a time “going to work” meant getting dressed in appropriate attire at a

predetermined time, driving or using public transportation to get to an office or other work site,

and staying there for a predetermined period of time before returning home. But for some

people today, “going to work” may mean slipping into shorts and t-shirt and walking down the

hall to their home office. More and more organizations are allowing employees to work from

home on at least an occasional basis. The general term for this practice is telecommuting. On

the plus side, many employees like telecommuting because it gives them added flexibility.

Organizations may benefit for several reasons as well: (1) they can reduce absenteeism and

turnover since employees will need to take less “formal” time off, and (2) they can save on

facilities such as parking spaces because fewer people will be at work on any given day.

Students’ answers will vary. Factors such as work–life balance, productivity, and

interpersonal relationships at the workplace may influence individuals’ preferences.

2. What complications might exist for managers whose employees work from home all or

part of the time?

may not be as productive as they are at the workplace, may not be as responsive to

queries or requests, and may work during unrealistic hours; this may pose a challenge,

especially if the employees are part of a team.

Chapter 14: Managing and Enhancing Performance: The Big Picture

Compressed workweeks are arrangements in which the employee works the required number

of hours (typically 40) but does so in fewer than 5 days. The employee gains the flexibility of

3 days off a week, presumably making it less likely that he or she will lose work time to deal

B. Alternate Work Sites

Table 14.1shows the number and distribution of people currently working under an alternative

work arrangement. Home work programs include arrangements that are often referred to as

cottage industries. It is more common, however, to operate in what can be called an electronic

Alternative work sites present a more serious challenge to the HR manager. In the past, the

AFL-CIO has complained that work-at-home arrangements allow management to impose

Chapter 14: Managing and Enhancing Performance: The Big Picture

unfair working conditions on employees, and it also makes it more difficult for unions to

organize workers. As with alternative work schedules, communication among employees is

difficult under these arrangements, and it is extremely difficult for a new employee to become

socialized.

In addition, some individuals may simply lack the self-discipline to get the work done in a

completely unconstrained environment, although the available evidence suggests that this

outcome is not much of a problem. What does seem to be a problem is that these alternative

work sites are likely to increase employees’ sense of alienation at work. They have no social

connections and no support from coworkers, and so loyalty and commitment to the

organization is unlikely to develop.

III. Incentives and Performance-Based Rewards

The most basic form of incentive compensation is merit pay, which generally refers to pay

awarded to employees on the basis of the relative value of their contributions to the organization.

Merit-pay plans, then, are formal compensation plans that base at least some meaningful

portion of compensation on merit.

Another basic approach is based on systems of skill- and knowledge-based pay. Under these

systems, instead of rewarding employees for increased performance, they are rewarded for

acquiring more skills or knowledge. But these skills or this knowledge is related to what the

organization believes it will need in the future.

Although problems are associated with these systems and their administration, they offer an

alternative to more traditional merit-pay systems and provide a more strategic long-term focus

for the organization. In addition, they allow the organization to move employees toward focusing

A. Individual Incentive Pay Plans

Individual incentive plans reward individual performance on a real-time basis. Rather than

increasing a person’s base salary at the end of the year, an individual instead receives some

level of salary increase or financial reward in conjunction with demonstrated outstanding

performance in close proximity to when that performance occurred. Individual incentive

salespeople. For example, sales representatives for consumer products firms and retail sales

agents may be compensated under this type of commission system. In general, the person

might receive might receive a percentage of the total volume of attained sales as her or his

commission for a period of time. Some sales jobs are based entirely on commission, while

others use a combination of base minimum salary with additional commission as an incentive.

Chapter 14: Managing and Enhancing Performance: The Big Picture

B. Team and Group Incentive Plans

In addition to incentive plans designed to improve individual performance, there are plans that

focus on group or team performance. These programs are particularly important for managers

manager approves. Resulting cost savings or productivity gains that the team or group is able

to achieve are then quantified and translated into dollar values. A predetermined formula is

used to allocate these dollar savings between the employer and the employees themselves.

One specific type of gainsharing plan is an approach called the Scanlon plan. The Scanlon

plan has the same basic strategy as gainsharing plans because teams or groups of employees

level. These rewards come most commonly in the form of prizes and awards.

Other kinds of team- or group-level incentives go beyond the contributions of a specific work

group. These incentives are generally organization wide. One longstanding method for this

approach is profit sharing, in which some portion of the company’s profits is paid at the end

of the year into a shared pool that is distributed to all employees.

Alternatively, some firms offer stock-purchase plans, which are typically offered to all the

employees of a firm rather than just the executives. Under these plans, employees are entitled

to the stock only if they remain with the company for a specified period of time. If they leave

before that time, they have no rights to the shares of stock.

Employee stock ownership plans (ESOPs) represent another group-level reward system that

some companies use. Under the ESOP, employees are gradually given a major stake in the

ownership of a corporation. Although group reward systems can be effective in some

IV. Performance Management and Feedback

A. Performance-Management Techniques

According to reinforcement theory, all behavior is a function of its consequences—whether

actual or anticipated—and so one can shape behavior by arranging for the “right” set of

consequences. Behavior modification is the systematic and simultaneous application of

positive reinforcement and either punishment or extinction (or both).

Goal theory suggests that employees will exert the greatest effort when they have specific,