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PartIV:RewardSystems,LegalIssues,andTeamPerformanceManagementChapter10:PerformanceManagement,Rewards,andtheLawChapter11:TeamPerformanceManagementCopyright?2019ChicagoBusinessPress10-1

Chapter10

PerformanceManagement,Rewards,andtheLaw

Copyright?2019ChicagoBusinessPress10-2OverviewDefinitionofRewardSystemsTraditionalandContingentPay(CP)PlansReasonsforIntroducingCPPlansPossibleProblemsAssociatedwithCPPlansSelectingACPPlanPuttingPayinContextCopyright?2019ChicagoBusinessPress10-3Overview(Continued)PerformanceManagementandtheLawSomeLegalPrinciplesAffectingPerformanceManagementLawsAffectingPerformanceManagementCopyright?2019ChicagoBusinessPress10-4DefinitionofRewardSystemsBasePayCostoflivingadjustments(COLA)andContingentPayShort-TermincentivesLong-TermincentivesIncomeProtectionWork-LifeFocusAllowancesIntangibleReturnsCopyright?2019ChicagoBusinessPress10-5CompanySpotlightColoradoBusinessGroupteamedupwithmultiplecompaniestodevelopashort-termincentiverewardsprogramProgramrewardeddoctorsforreducingfutureexpensivetreatmentsbyfocusingonpreventativemeasuresOverall,theprogramusedshort-termincentivesaspartoftheperformancemanagementsystemtomotivatephysicianstofocusontreatmentsthatenhancedpatienthealthonanongoingbasisCopyright?2019ChicagoBusinessPress10-6TraditionalPaySalaryandsalaryincreasesarebasedonPositionSeniorityCopyright?2019ChicagoBusinessPress10-7ContingentPay(CP)Salaryandsalaryincreasesarebasedon:JobperformanceAlsocalled:PayforPerformanceIfnotaddedtobasepay,called:VariablepayCopyright?2019ChicagoBusinessPress10-8ReasonsforIntroducingCP(1)Performancemanagementismoreeffectivewhenrewardsaretiedtoresults.CPPlansforceorganizationsto:ClearlydefineeffectiveperformanceDeterminewhatfactorsarenecessaryCopyright?2019ChicagoBusinessPress10-9ReasonsforIntroducingCP(2)Supervisorsandemployeesarebetterabletounderstandwhatreallymatters.CPplansenhanceemployeemotivationtoaccomplishgoalsthatmatchorganizationalneeds.Copyright?2019ChicagoBusinessPress10-10ReasonsforIntroducingCP(3)CPplanshelptorecruitandretaintopperformers.CPplansprojectsgoodcorporateimage.Copyright?2019ChicagoBusinessPress10-11CPPlansHelpImproveMotivationWhen:Employeesseeclearlinkbetweentheireffortsandresultingperformance.(Expectancy)Employeesseeclearlinkbetweentheirperformancelevelandrewardsreceived.(Instrumentality)Employeesvaluetherewardsavailable.(Valence)motivation=

expectancyxinstrumentalityxvalenceCopyright?2019ChicagoBusinessPress10-12ReasonsWhyCPPlansFailCopyright?2019ChicagoBusinessPress10-13SelectingaCPPlan:IssuestoConsiderCultureoforganizationStrategicdirectionoforganizationCopyright?2019ChicagoBusinessPress10-14CultureofOrganization:TypesofOrganizationsTraditionalTop-downdecisionmakingVerticalcommunicationJobsthatareclearlydefinedInvolvementShareddecisionmakingLateralcommunicationsLooselydefinedrolesCopyright?2019ChicagoBusinessPress10-15CPSystemsforDifferentOrganizationalCulturesTraditionalorganizationsPiecerateSalescommissionsGroupincentivesInvolvementorganizationsProfitsharingSkill-basedpayCopyright?2019ChicagoBusinessPress10-16CPPlansRecommendedforVarious

StrategicBusinessObjectivesCopyright?2019ChicagoBusinessPress10-17CompanySpotlightGooglehaslongusedcontingentpayaspartofitscompensationsystemEmphasizes“fairness”over“equality”Don’tpayeveryonethesame,butmakesurethatpayiscommensuratewithcontributionLeadstocaseswherestarperformersatmorejuniorlevelsmakefarmorethanaverageperformersatmoreseniorlevelsCopyright?2019ChicagoBusinessPress10-18PuttingPayinContextArewardincreasesthechancethat:Specificbehaviorsandresultswillberepeated,orEmployeewillengageinnewbehaviorandproducebetterresults.Copyright?2019ChicagoBusinessPress10-19RewardsCanInclude:PayRecognitionPublicPrivateStatusTimeSabbaticalsTrustandRespectChallengeResponsibilityFreedomRelationshipsCopyright?2019ChicagoBusinessPress10-20Relational(IntangibleRewards)/watch?v=zfnFanLCmp8WhichkindsofrewardsdoesEdwardJonesprovide?Copyright?2019ChicagoBusinessPress10-21HowtoMakeRewardsWorkCopyright?2019ChicagoBusinessPress10-22UsingRecognitionandRelationalIncentivesasRewardsNon-monetaryrewardscanbepowerfuliftheyenhancethechancesthatspecificresultsandbehaviorswillberepeatedCopyright?2019ChicagoBusinessPress10-23UsingRecognitionandRelationalIncentivesasRewards(continued)FormalcommendationsandawardsPublicrecognition,includingpraise,certificateofaccomplishment,andlettersofappreciationStatusindicators,suchasanewandenhancedjobtitle,largerworkarea,improveExtratimeoff,withorwithoutpayMorechallengingworkenvironment,responsibility,andfreedomCopyright?2019ChicagoBusinessPress10-24CompanySpotlightGraniterockusesbothfinancialandnon-financialrewardstorewardperformanceEmployeescanearnbonusesofuptoUS$1,000forperformancethatgoes“aboveandbeyond”normaljobexpectations;andsupervisorsoftenbuylunchforemployeeswhoareputtingforthastrongeffortCompanyholds“recognitiondays”whereemployeesgivepresentationsbeforetheCEO,executivemanagement,andcoworkers;andpublishesstoriesaboutspecialeffortsinaweeklynewsletterCopyright?2019ChicagoBusinessPress10-25LegalIssues:OverviewPerformanceManagementandtheLawSomeLegalPrinciplesAffectingPMLawsAffectingPMCopyright?2019ChicagoBusinessPress10-26PerformanceManagementandtheLawPerformancemanagementsystemsareusuallylegallysoundif…ProceduresarestandardizedSameproceduresareusedwithallemployeesCopyright?2019ChicagoBusinessPress10-27SomeLegalPrinciplesAffectingPM:OverviewEmployment-at-willNegligenceDefamationMisrepresentationAdverseImpactIllegalDiscriminationCopyright?2019ChicagoBusinessPress10-28Employment-at-WillEmploymentrelationshipcanbeendedatanytimeby:EmployerEmployeeExceptions:ImpliedcontractPossibleviolationoflegalrightsCopyright?2019ChicagoBusinessPress10-29NegligenceIforganizationdocumentsdescribeasystemandItisnotimplementedasdescribed,Employeecanchallengeevaluation,chargingnegligence.Copyright?2019ChicagoBusinessPress10-30DefamationDisclosureofperformanceinformationthatisUntrueandUnfavorableCopyright?2019ChicagoBusinessPress10-31MisrepresentationDisclosureofperformanceinformationthatisUntrueandFavorableCopyright?2019ChicagoBusinessPress10-32AdverseImpact/UnintentionalDiscriminationPMsystemhasunintentionalimpactonaprotectedclass.Organizationmustdemonstrate:AspecificKSAisabusinessrequirementforthejobAllaffectedemployeesareevaluatedinthesamewayOrganizationshouldreviewongoingperformancescoredatabyprotectedclasstoimplementcorrectiveactionasnecessary.Copyright?2019ChicagoBusinessPress10-33IllegalDiscriminationorDisparateTreatmentRatersassigndifferentscorestoemployeesbasedonfactorsthatareNOTrelatedtoperformance.Employeesreceivedifferenttreatmentasresultofsuchratings.Employeescanclaimtheywereintentionallyandillegallytreateddifferentlyduetotheirstatus.Copyright?2019ChicagoBusinessPress10-34EmployeeClaimofIllegalDiscriminationDirectevidenceofdiscrimination,orEvidenceregardingthefollowing:MembershipinprotectedclassAdverseemploymentdecisionPerformanceleveldeservedreward/differenttreatmentHowothersweretreated(notinprotectedclass)Copyright?2019ChicagoBusinessPress10-35EmployerResponsetoClaimofIllegalDiscriminationLegitimateandnondiscriminatoryreasonforactionRelatedtoperformance Note:Goodperformancemanagementsystemandsubsequentperformance-relateddecision,usedconsistentlywithallemployees,providedefenseCopyright?2019ChicagoBusinessPress10-36DifferenceBetween

LegalandIllegalDiscriminationLEGALdiscriminationdiscriminatesamongemployeesbasedontheirlevelofperformance.ILLEGALdiscriminationisbasedonvariablesthatshouldnotusuallyberelatedtoperformance.Copyright?2019ChicagoBusinessPress10-37LegalPrinciplesAffectingPerformanceManagement/watch?v=lyDACfix7pA/2018/02/06/uber-gender-pay-gap-study/WhatlegalprinciplesdoesSusanFowlerallegeUberviolated?Fromaperformancemanagementperspective,whatcouldUberhavedonetoavoidthislawsuit?Copyright?2019ChicagoBusinessPress10-38LawsAffectingPMDuringpastfewdecades,severalcountrieshavepassedlawsprohibitingdiscriminationbasedon:RaceorEthnicitySexReligionNationalOriginAgeDisabilitystatusSexualorientationCopyright?2019ChicagoBusinessPress10-39LawsintheUnitedStatesofAmericaEqualPayActof1963CivilRightsActof1964AgeDiscriminationinEmploymentActof1967(asamendedin1986)AmericanswithDisabilitiesActof1990Copyright?2019ChicagoBusinessPress10-40LawsinCanadaCanadianHumanRightsCodeof1985Section15oftheCharterofRightsandFreedoms(1982)FederalEmploymentEquityAct(2004)FederalContractorsProgramCopyright?2019ChicagoBusinessPress10-41LawsinAustraliaTheCrimesAct(1914)RacialDiscriminationAct(1975)SexDiscriminationAct(1984)HumanRightsandEqualOpportunityCommissionAct(1986)DisabilityDiscriminationAct(1992)WorkplaceRelationsAct(1996)EqualOpportunityforWomenintheWorkplaceAct(1999)AgeDiscriminationAct(2004)Copyright?2019ChicagoBusinessPress10-42CharacteristicsofLegallySoundPMSystemsCopyright?2019ChicagoBusinessP

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