Managing Employee Performance and Reward

1. Managing Employee Performance and Reward Concepts, Practices, Strategies 2nd edition

2. Shaping behaviour and competencies: lecture overview Behaviourally based performance management • Behavioural observation sources • Behavioural assessment error/unreliability • Behavioural rating methods Competency-based performance management • What are ‘competencies’? • Competency analysis • Competency assessment/rating • Results, behaviours or competencies?

3. Inputs: Competencies (individual knowledge, skills and abilities) Activities: Work behaviours (individual) Outcomes: Results (individual, group and organisational) Competency assessment Behavioural appraisal/ assessment Results-based assessment Three approaches to performance measurement and management

4. Behavioural observation sources • ‘360-degree’ (supervisor, peers, subordinates, customers) • ‘180-degree’ (supervisor, peers, customers) SUPERVISOR/S SELF CUSTOMERS (including mystery customers/ shoppers) PEERS (including team members) SUBORDINATES

5. Causes of error/unreliability in behavioural assessment

6. Rating methods: graphic rating scale

7. Rating methods: behavioural anchors 1. Positive anchors only Communication 2. Positive and negative anchorsCommunication

8. Rating methods: behaviourally anchored rating scales

9. Rating methods: behavioural observation scale

10. Rating methods: section of a weighted checklist

11. Combating classification error: section of a forced choice instrument

13. Competency-based performance management • What are ‘competencies’? • Competency analysis • Competency assessment/rating • Assessment validity • Assessment reliability • Results, behaviours or competencies?

14. Skill Knowledge Visible Self-concept Hidden Social role and values Motives Personality traits What are ‘competencies’? Competencies are sets of skills, knowledge, abilities, behavioural characteristics, and other attributes that, in the right combination and for the right set of circumstances, predict superior performance. Flannery, Hofrichter & Platten, 1996 The ‘iceberg’ model (Spencer & Spencer)

15. Self-concept Self-knowledge Self-confidence Managing self/composure Social role/values Communication Influencing/motivating others Persuasiveness Interpersonal awareness/empathy/others orientation (= emotional intelligence) Political acuity Integrity and trust Composure/conflict management Motives Achievement orientation Creativity/innovation Energy and initiative Strategic/business focus (cf. narcissism) Passion Traits Conscientiousness Assertiveness Decisiveness Perseverance/resilience Adaptability Openness to new ideas and experiences Managerial competencies

16. 1. Extraversion 2. Conscientiousness 3. Agreeableness 4. Emotional stability 5. Openness to experience CSO/Salesperson Accountant Pilot Intensive care nurse Research scientist Matching personality traits and roles

17. Competency categories ‘Role’ competencies: Threshold competencies: • Visible • Knowledge and skills needed for job proficiency Differentiating competencies: • Hidden • Needed for high performance in specific jobs, roles or functions • Distinguish between superior performance and standard performance in specific jobs/roles; ‘raise the bar’ competencies • Those competencies necessary for high performance in one role will differ from those necessary in another

18. Competency categories ‘Core’ competencies: • Organisation-wide and common to all roles; e.g. ‘customer focus’, ‘teamworking’, ‘quality commitment’ • Reinforce common set of values and behaviours; ‘organisational glue’ • Used to facilitate strategic alignment and cultural integration • Used to drive organisational/cultural change • Emphasised mainly in recruitment and selection and, to a lesser extent, in performance management

19. 1 Define performance effectiveness criteria and indicators • Measured results • Observed behaviour • Information sources: supervisors, job-holders, subordinates, customers  2 Identify two criterion-referenced samples for cohort comparison • Proficient performers • Exemplary performers  3 Collect data on each sample • Behaviour event interviewing (BEI) • Expert panels or focus groups  4 Identify specific differentiating role competencies and competency levels • Attributes exclusive to those people who perform at an exemplary level • Define competency levels  5 Validate competency model (using further criterion-referenced sample cohorts) • Test the model’s power to predict performance outcomes using a new cohort selected on basis of high profile on differentiating competency model • Compare outcomes for this group with those for a control cohort lacking a high profile on the model  6 Application to human resource management practice • Selection and succession planning • Training and development content and program evaluation • Performance assessment • Performance feedback and development • Succession planning • Competency-related/competency-based pay Competency analysis

20. Competency-based assessment: assessment centres • Structured individual and group work simulation exercises • Behavioural observation techniques • Typically involve six to 12 people, off-site, one to three days • Attendees rated by external experts or by managers who are trained as assessors • Used mainly for manager selection and succession planning • Also used for competency-based career development • Commonly used with psychometric assessment and performance coaching • Used by 5–10% of large Australian organisations

21. Competency-based assessment: assessment centres Typical exercises: • Candidates assessed for management role competencies: organising, planning, problem-solving, decision-making, communication, etc. • ‘In-basket exercise’ (for task competency and stress tolerance) • ‘Leaderless group discussion’ (for teamworking) • Trust-building exercises • Strategy simulations • Individual presentations • Psychometric assessment • Interviews

22. Competency-based assessment: assessment centres Drawbacks: • High cost expertise (e.g. $2,000 to $3,000-plus per assessment) • Labour intensive and time-consuming

23. Competency-based assessment: behaviourally anchored rating scale formid-level manager role

24. Level Your rating: Competency 1. Needs development 2. Effective 3. Highly effective 1 2 3 Problem-solving: Obtain sufficient data to analyse a situation and draw conclusions from which you can develop a plan of action or provide an answer. • Accepts information at face value • Fails to challenge staff’s thinking or processes • Fails to require staff to validate their assumptions or conclusions • Only considers the immediate impact • Assures critical information was considered • Assures information used in the analysis was valid • Assures two or more viable alternatives were considered • Considers the impact on other divisions • Models critical thinking skills consistently • Coaches or rehearses staff’s presentations to management in terms of their logic and processes • Asks questions in ways that allow staff to think through issues and implications Competency-based assessment: behaviourally anchored rating scale for mid-level manager role

25. Level Your rating: Competency 1. Needs development 2. Effective 3. Highly effective 1 2 3 Problem-solving: Obtain sufficient data to analyse a situation and draw conclusions from which you can develop a plan of action or provide an answer. • Misses the point • Fails to seek information • Fails to confirm accuracy of information • States opinion without the facts • Probes for what is relevant • Obtains enough information to understand the point • Summarises and interprets data • Suggests solutions or actions based on data • Begins to grasp the complexities • Knows when the critical information is missing • Points out discrepancies in data Competency-based assessment: behaviourally anchored rating scale foremployee role

26. 1 2 3 4 5 1 2 3 4 5 Makes frequent errors Careless, makes recurrent errors Usually accurate; makes only average number of mistakes Requires little supervision. Is exact and precise most of the time Requires absolute minimum of supervision. Almost always accurate Slow to catch on Requires more than average instruction and explanation Grasps instructions with average ability Usually quick to learn and understand Exceptionally keen and alert Addressing instrument (in)validity Accuracy is the correctness of work duties performed. Alertness is the ability to grasp instructions, to meet changing conditions and to resolve unexpected problems.

27. 1 2 3 4 5 Rigid Average Flexible 1 2 3 4 5 Requires close supervision. Is unreliable Requires prompting sometimes Usually takes care of necessary tasks with reasonable promptness Requires little supervision. Is reliable Requires absolute minimum supervision Addressing instrument (un)reliability How mentally flexible this person is in his/her thoughts and approach to any presented task. Dependability is the ability to do required jobs well with a minimum of supervision.

28. Results, behaviours or competencies? Use results where: • Ends (results) can be more accurately specified and measured than means (e.g. management work; project teams; targeted research work; foreign exchange and equity trading) • Work group performance is more important than individual performance Use behaviours where: • Means (behaviours) can be more easily specified than ends (results) • Work is individualised but routine and it is thus possible to specify a single best sequence of task behaviours plus desired organisational citizenship behaviour (OCB; e.g. routine service work; administrative work) • There is ongoing opportunity to observe individual’s work behaviour (e.g. constant supervision)

29. Results, behaviours or competencies? Use competencies where: • High performance is based on underlying abilities, values and attitudes rather than technical knowledge and skill (e.g. high-discretion service work; emotional labour) • Work is non-routine and discretionary (e.g. managers, knowledge workers) • Individual and group results difficult to quantify/attribute (e.g. knowledge workers; exploratory research; customer service work; teachers; health care workers) • Traditional job assignments have been replaced by broad, fluid and largely self-managing roles • The organisation wishes to change its culture and employees’ values and attitudes (and beliefs) Balance all three where: • Work inputs, activities and outcomes can all be specified/measured to some degree and are all important (e.g. routine work requiring high quality/precision; CSOs/call centres; teaching; general management roles)