Transcript Designing Work Systems

Promotions and firing policy
Group 2 ;
George Papakyriakopoulos
Selim Kozbe
Chris Haigh
Hazem Aljehairan
Haizhen Wang
Perizat Zholdybekova
April 28, 2009
Jack Welch, CEO of GE Corporation and Six Sigma Guru, 2001:
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“A company that bets its future on its people must remove the
lower 10%...and keep removing it every year”.
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How to interpret this policy in light of
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DEMING’S SYSTEM OF PROFOUND KNOWLEDGE (DSPK)?
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(Ho, S.K. and Galloway, L., 1996)
DSPK has 4 elements: 1st element
1. Appreciation for a system
Behaviours
of employees, shareholders, customers, and suppliers
impact on company’s objectives.
DSPK has 4 elements: 2nd element
2. Knowledge of variations.
Causes
of variations:
-special:
e,g,, change of operator, procedure
-common:
e.g., poor design, inadequate equipment and procedure
DSPK has 4 elements: 3rd element
3. Theory of knowledge
Interpretation
of data from experiment is prediction. Examples and
experience can teach to something only with prediction.
DSPK has 4 elements: 4th element
4. Psychology
Psychological
motivations.
aspect of human interaction: intrinsic and extrinsic
PERFORMANCE MANAGEMENT
HOW TO EVALUATE?
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Compare Employees to Absolute Standards
Performance compared to set goals
 Avoids conflict among workers
 May decrease differentiation
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Compare Employees Relative to Each Other
Ranking allows for comparison of employees but does
not shed light on the distribution of employee
performance.
 Forces a distribution among workers
 May create false distinctions and competition
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WHAT TO EVALUATE?
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Traits Measures
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Behavior-based measures
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Are an assessment of how the employee fits with the
organization’s culture, not what the employee
actually does.
Focus on what an employee does correctly and what
the employee should do differently.
Results-based measures
Focus is on accomplishments or outcomes that can be
measured objectively.
 Problems occur when results measures are difficult to
obtain, outside employee control, or ignore the means
by which the results were obtained.
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TRAIT-BASED APPRAISALS
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Characteristics that are enduring and general
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Competency models vs. Trait-based appraisal
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e.g. “Leadership” “Communication” “Decisiveness”
Are the characteristics really related to performance?
Potential Problems
Focus on person rather than performance
May be ambiguous or arbitrary
 Poor feedback and goal setting
 Poor reliability and validity
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“An employer has no business with a man’s
personality. Employment is a specific contract calling
for specific performance and nothing else. Any
attempt of an employer to go beyond this is
usurpation. It is an abuse of power. An employee
owes no “loyalty,” he owes no “love,” and no “attitudes”
– he owes performance and nothing else.”
Peter Drucker
Management Tasks, Responsibilities, Practices (1974)
BEHAVIOR-BASED APPRAISAL
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Focus on specific behaviors with examples
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Positives
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Simple Behavioral Scale
Behavioral Frequency / Observation Scale (BOS)
Behaviorally Anchored Rating Scales (BARS)
More valid and reliable
Acceptable to employees
Better for development and improvement
Potential Problems
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Difficult and expensive to develop
Needs to match jobs closely to be effective
Emphasizes behaviors (at the expense of others?)
Focuses on behavior rather than results
RESULTS-BASED APPRAISAL
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Focus on results compared to specific goals
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Should be clear and unambiguous
Requires alignment of expectations
May promote gaming of the system
Beware of results at any cost and excessive results
orientation
Time consuming and needs constant updating
“Management by Objectives” or MBO
Linking individual goals with business strategy
 Organizational goals flow down to depts. and
employees
 Focus on planning, action items, and interim reviews
 Objectives negotiated and agreed upon by employees
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BALANCED SCORECARD
“What you measure is what you get”
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Financial vs. operational measures
Short term vs. long-term effectiveness
Specific goals and measures for:
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Shareholder satisfaction
Customer satisfaction
Operational Excellence
Innovation and Learning
Others?
FORCED RANKING SYSTEMS
FORCED RANKING SYSTEMS
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Gained popularity following GE
Up to 20% of companies
Used by:
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Conoco
Capital One
Sun Microsystems
Cisco
EDS
Hallmark Cards
Used and abandoned by:
Ford
 Goodyear
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Microsoft
Hewlett-Packard
Intel
Texas Instruments
Enron
WHEN MANAGERS HAVE DISCRETION:
1.
They tend to give “Above average” ratings.
2.
They prefer to give uniform ratings regardless
of performance.
3.
They tend not to use the ends of the rating
scale.
“A company that bets its future on its people must
remove the lower 10% and keep removing every
year – always raising the bar of performance and
increasing the quality of leadership.”
Jack Welch, former GE CEO
The “Vitality Curve”
“The bottom 10”
“The top 20”
“The Vital 70”
Jack Welch “Jack: Straight From the Gut” 2001
WHY CONDUCT FORCED RAKINGS?
WHY NOT CONDUCT FORCED RANKINGS?
EVOLUTION OF FORD’S POLICY
January, 2000: Ford begins new performance evaluation policy
Top 20,000 managers
 10% of the executives will get A's, 80% will get B's, and 10% will get C's.
 C’s are not eligible for bonuses. Two C's in a row are grounds for
dismissal.
 Quota for C’s later reduced to 5%
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July, 2001: Ford eliminates the "A," "B," and "C" ratings in favor of
"top achiever," "achiever," or "improvement required.” Quotas
dropped for employees to be ranked as "achiever" and "needs
improvement."
April, 2002: Ford revises its performance review system to “focus on
creating bonds between managers and employees”, and will have no
ranking quotas.
THE APPRAISAL INTERVIEW
WHO EVALUATES?
Problems with immediate supervisors conducting
performance evaluations:
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Lacking appropriate information to provide informed
feedback on employee performance.
Insufficient observation of the employee’s day-to-day
work to validly assess performance.
Lack of knowledge about the technical dimensions of
a subordinate’s work.
Lack of training or appreciation for the evaluation
process.
Perceptual errors by supervisors that create bias or
lack of subjectivity in evaluations.
PERCEPTUAL ERRORS OF RATERS
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Halo Effect
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Stereotyping
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Recency Error
PERCEPTUAL ERRORS OF RATERS
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Halo Effect
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Stereotyping
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Rater allows a single trait, outcome or consideration
to influence other measures of performance.
Rater makes performance judgments based on
employee’s personal characteristics rather than the
employee’s actual performance.
Recency Error
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Recent events and behaviors of the employee bias the
rater’s evaluation of the employee’s overall
performance.
PERCEPTUAL ERRORS OF RATERS
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Central Tendency Error
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Leniency or Strictness Errors
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Personal Biases and Organizational Politics
PERCEPTUAL ERRORS OF RATERS
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Central Tendency Error
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Leniency or Strictness Errors
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Evaluator avoids higher and lower ends of
performance assessment rating in favor of placing all
employees at or near the middle of the scales.
Evaluator’s tendency is to rate all employees either
above (leniency) or below (strictness) their actual
performance level.
Personal Biases and Organizational Politics
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Have a significant impact on the ratings employees
receive from their supervisors.
PERFORMANCE APPRAISAL CHALLENGES
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Gender Bias
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Attribution Theory
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Managers tend to give women evaluations that are
less critical and less straightforward.
People tend to overestimate the influence of
individual factors (such as motivation) and
underestimate the influence of environmental factors
when assessing others behavior.
Frame of Reference
CONDUCTING A FAIR APPRAISAL
1.Collect appraisal data
Objective data on job performance
 Critical incidents (good and bad)
 Behavioral observation
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2. Evaluate performance
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Before completing form – think about intended result
Avoid biases
Consider how the message will be viewed by
employee
Consider circumstances beyond employee’s control
Consider past evaluations
CONDUCTING A FAIR APPRAISAL
3. Write the appraisal
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Have courage to address poor performers
Be specific and use examples
Avoid nitpicking
Additional evidence needed for high/low performers
Tied to specific goals
Prioritize development needs
PROVIDING PERFORMANCE FEEDBACK
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Choose a quiet private location.
Describe performance, not personality.
Providing specific examples and quantify whenever possible.
Be honest.
Avoid vague statements or unsubstantiated claims.
Limit plans for change, growth, and development to a few
important items that are achievable.
Keep career discussions separate from performance
feedback.
Create a development plan.
Give the employee a chance to respond.
DEALING WITH POOR PERFORMERS
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Avoiding problems usually makes them worse.
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Approach the employee for mutual benefit – to solve the
problem and maintain the relationship.
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“Why didn’t you tell me this before?”
Threats and punishment increase compliance but....
Good intentions matter.
IDENTIFYING PERFORMANCE GAP
1. Identify a specific gap between performance and
expectations.
Assume an employee says:
“I know you are not happy with something, but I am not sure what I
am doing wrong. What exactly is it that concerns you?”
OR
“I want to make sure that I’m doing the job the way you want it done.
What exactly should I do so that you will say I am doing a good
job?”
THANK YOU!
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Questions?