International HRM

PERFORMANCE MANAGEMENT
CHAPTER 9
Why do we have to
conduct
performance
management? Slid
e2
“NAVIGATE” ACTIONS
NO PERFORMANCE
EVALUATION, NO MOTIVATION

Slid
e4
 PERFORMANCE MANAGEMENT
• “…a process which contributes to the effective
management of individuals and teams in order
to achieve high levels of organisational
performance.” (Armstrong and Baron, 1998; cited CIPD, 2009)

• “...focuses on goal-setting, monitoring and

appraising, developing and rewarding
employees in order to increase employee
performance and to achieve organisational
goals”
(Brewster et al, 2011; p.189)
Slid
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 PERFORMANCE APPRAISAL (PA)
 “The process involving a line manager’s completing an annual
report on a subordinate’s performance and discussing it with the
employee in an appraisal interview” (Brewster et al, 2011;
p.188)
 It is a formal process, which happens periodically (annually, twice a
year etc.)
 Is part of performance management (PM), but not the same thing

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DIFFERENCES BETWEEN PA
AND PM

Slid
e7
PA VS. PM
PA PM
• A process focuses on • Linking individual
judging past performance objectives with the
• Not measuring organisation’s mission and
performance against clear strategic plans
& agreed objectives • Employee has clear
• Periodically conducted concept on how they
contribute to the overall
• Feedback only is given
achievement of the firm
when PA is completed
• Shift the focus on defining
clear development plans
• Ongoing process
• Feedback is provided
continually
Slid
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 PM PROCESS –PM IS CENTRAL
Organisational
strategy

Business plans Training &

development
1. Planning 2. Managing 3. Reviewing
Talent
• Setting • Ongoing • Periodic management
expectations and performance appraisal
objectives feedback, (annual?)
• Job or grade • Provide Reward
coaching and
level behaviours interim reviews feedback,
and performance
Managing poor
competencies rating, and make
performance
formal this
Setting
performance
indicator/ criteria Exit?
Exit?
Adapted from Brewster et al (2011) p.191
 HOW TO SET EFFECTIVE
GOALS
1. Assign specific goals
2. Assign measurable goals
3. Assign challenging but doable goals
4. Encourage participation

Receive no more than 2 complaints/ day Earn 50% profit

GOALS SETTING - SMART
APPROACH  Aims:
 Review date needs to
be address
 Type of measurement/
responsible person

Pass rates

Punctualit Sales
y targets

Attendanc Growth
e targets

Waiting
time
Appraisal Methods
1. Rating
2. Graphic Rating Scale Method
3. Paired Comparison Method
4. Forced Distribution Method
5. Critical Incident Method
6. Behaviorally Anchored Rating Scales
7. Computerized and Web-based Appraisals
 Appraisal Methods
RATING METHOD
1. Rating

2. Graphic Rating Scale Method

3. Paired Comparison Method

4. Forced Distribution Method

5. Critical Incident Method

6. Behaviorally Anchored Rating

Scales

7. Computerized and Web-based

Appraisals

• Is a commonly used traditional method of performance appraisal.

• An employee is numerically rated from 1 to 10 on various job
performance criterions, such as:
o Attendance
o Attitude
o Performance
o Output
o Sincerity
o Initiative, etc.
 Appraisal Methods
GRAPHIC RATING
1. Rating
SCALE METHOD
2. Graphic Rating Scale Method

3. Paired Comparison Method

4. Forced Distribution Method

5. Critical Incident Method

6. Behaviorally Anchored Rating

Scales

7. Computerized and Web-based

Appraisals

• Is a commonly used to rate the behaviour of staffs.

• Team-work
• Responsibility
• Ethics
• Etc.
• An employee is rated against different description of working
behaviour
 PAIRED
Appraisal Methods
COMPARISON
1. Rating

2. Graphic Rating Scale Method

METHOD
3. Paired Comparison Method

4. Forced Distribution Method

5. Critical Incident Method

6. Behaviorally Anchored Rating

Scales

7. Computerized and Web-based

Appraisals
 FORCED
Appraisal Methods
DISTRIBUTION
1. Rating

2. Graphic Rating Scale Method

METHOD
3. Paired Comparison Method

4. Forced Distribution Method

5. Critical Incident Method

6. Behaviorally Anchored Rating

Scales

7. Computerized and Web-based

Appraisals

 Raters are forced to divide his employees evenly into certain categories
which vary from organization to organization method
 Potential drawbacks:
o It creates false competition between employees.
o All employees might not fit neatly into a category, leading to their
placement in such a category that does not reflect their true
image.
o Raters may end up placing more visible employees in superior
categories and less visible ones in poor category, irrespective of
their job performance.
 BEHAVIORALLY
Appraisal Methods
ANCHORED RATING
1. Rating

2. Graphic Rating Scale Method

SCALES
3. Paired Comparison Method

4. Forced Distribution Method

5. Critical Incident Method

6. Behaviorally Anchored Rating

Scales

7. Computerized and Web-based

Appraisals

A BARS can be developed in

following steps.
1. Collecting samples of effective and
ineffective job behavior from the
experts
2. Converting these samples into
performance dimension
3. Relocating the performance
dimension (from unacceptable to
outstanding)
4. Rating the performance dimension
accordingly, starting from 1
5. Finally, using the scale anchor to
evaluate employee’s performance
 Chapter 8

REWARDS (CONT)
What is reward?
What is Reward Management?

Reward management is concerned with the

strategies, policies and processes required to
ensure that the value of people and the
contribution they make to achieving
organizational, departmental and team goals is
recognized and rewarded

(Armstrong, 2010; p.6)

 Bonuses

Company vehicles

Loans/ advance

CONTENTS Childcare

School fees

Corporate clothes

Staff discounts
PAYMENT SCHEMES

- Added to base pay and Refers to additions to

related to performance. base or performance pay
- The irreducible such as health and life
minimum rate of pay for a - Based on the insurance, pension plans
job problematic assumption and other benefits.
that pay alone (or mainly)
- Simple to calculate
motivates workers.

Performance-related
Base pay Pay (PRP) or merit pay
Indirect pay
BONUSES
 Belonged to PRP

 A monetary incentives given to employees who

meet or perform beyond job expectations
 Cash, or

 Stock option

 Extra & not part of the payment

BONUSES – STOCK OPTION
APPLE AWARDS TIM COOK 1,000,000 SHARES
OF STOCK AS CEO BONUS - 2011

Stock worth $383

million in August,
2011

“50% of the restricted stock units are scheduled to vest on

each of August 24, 2016 and August 24, 2021, subject to Mr.
Cook's continued employment with Apple through each such
date.”
DISCUSSION: PROS & CONS OF EMPLOYEE
BONUSES
DISCUSSION: PROS & CONS OF EMPLOYEE
BONUSES

Pros

• Drive high levels of productivity during a short

period of time
• Motivate further improvement
• Attract top talents
• More attractive than non-monetary incentives
• Easily conducted

Cons

• The motivational effects can quickly disappear

once the employee receives the reward
• Create resentful working culture
• Demands keep increasing
• Mismatch in levels of bonuses (Vroom’s expectancy
theory)
COMPANY VEHICLE
Toyota Rewards Employee’s Loyalty with 10-
Millionth U.S. -Built Camry Gift
“It’s highly appropriate that
our 10 millionth vehicle goes
to one of the team members
who made this milestone
possible. Our team members
are the heart and soul of this
company, and they make all
of our successes possible”

Toyota Motor Manufacturing

Kentucky (TMMK) Plant
President Wil James. 
COMPANY VEHICLE

Company Car Program

"Our company car program provides
eligible employees with a company
car for both business and personal
use. If eligible, employees can
choose from a variety of vehicles,
depending on their level within the
company. The program covers the
cost of insurance, maintenance and
repair. "
LOAN/ADVANCES
 Employers help staff solve urgent needs
 Get payments in advance if needed
 Borrow loans with low interest
 CHILD CARE
The #1 Way to Get More Women Workers
CONS: CHILDCARE SERVICE

GET REAL ABOUT WHAT EMPLOYERS CAN DO

Logistics

• Child care facility on-site need to meet a safety rules

and regulations.
• Qualified employees who have clean backgrounds are
needed.
• Time consuming for planning and facilitating kitchen,
playground, and healthcare centers at work

Workday Interruptions

• Could be counterproductive.
• Parents might walk down the hall a couple of times per
day to check-in on their children and make sure they
are doing well.
SCHOOL FEES
 Support employees’ child learning

 Especially, those work in education industry

 Special discount
CORPORATE CLOTHES
 Uniform

 Staff’s discount on clothing (buy from their business)

 Objectives
 Corporate identity
 Customer advertising
 Protection purposes
 STAFF DISCOUNTS

 70-80% discount for  80% discount for airline

hotel rooms & other ticket
services at all Marriott  60% discount for
Free airline ticket
chains all over the world cooperative hotels

35% discount for ticket  20% discount for

hardware 50% discount for all
 10% discount for others purchases
TOTAL REWARD
“The concept of total reward encompasses all aspects of work
that are valued by employees, including elements such as
learning and development opportunities and/or an attractive
working environment, in addition to the wider pay and benefits
package.”

CIPD (2014) Strategic reward and Total reward factsheet (

http://www.cipd.co.uk/hr-resources/factsheets/strategic-rewa
rd-total-reward.aspx
)
EXTRINSIC & INTRINSIC
REWARDS

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TOTAL REWARD

(Murlis & Wright in Perkins; White 2008)