International HRM

CHAPTER 9
Why do we have to
conduct performance
management?
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Slide
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• “…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)

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

Business plans

1. Planning 2. Managing 3. Reviewing

• Setting • Ongoing • Periodic appraisal

expectations and performance (annual?)
objectives feedback, coaching • Provide feedback,
• Job or grade level and interim reviews performance
behaviours and rating, and make
competencies formal this

Setting
performance
indicator/ criteria Exit?
Adapted from Brewster et al (2011) p.191
 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

 Aims:
 Review date needs to be
address
 Type of measurement/
responsible person

Pass rates

Sales
Punctuality
targets

Growth
Attendance
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 SCALE 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 to rate the behaviour of staffs.

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

 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.
 Appraisal Methods
BEHAVIORALLY ANCHORED
1. Rating
RATING SCALES
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

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
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

Childcare

School fees

Corporate clothes

Staff discounts
 - 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
 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

 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.”
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)
 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 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. "
 Employers help staff solve urgent needs
 Get payments in advance if needed
 Borrow loans with low interest
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.
 Support employees’ child learning
 Especially, those work in education industry
 Special discount
 Uniform
 Staff’s discount on clothing (buy from their business)

 Corporate identity
 Customer advertising
 Protection purposes
 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
 “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-reward-
total-reward.aspx)
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 Examples Reward Elements Definition

 Leadership Emotional
 Values Alignment
 Organisational
INTRINSIC

reputation
 Lifestyle Engagement
 Work style Factors TOTAL
 Building for
the future
 Quality of
work
 Car allowance Active benefits
 Corporate
discounts
 Retirement Passive benefits
 Health and
TOTAL

REWARD
welfare
EXTRINSIC

 Holidays
PAY AND BENEFITS
 Stock/equity Long-term
 Performance incentives
shares
 Annual bonus Short-term
 Commission incentives/variable
payments pay
 Annual salary Base cash
 Hourly wage

(Murlis & Wright in Perkins; White 2008)