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©2007 Prentice Hall
Understanding and Managing
OrganizationalBehavior
Fifth Edition
Jennifer M. GeorgeGareth R. Jones
Image from opening case
8 Pay, Careers, and Changing Employment Relationships
8-2 ©2007 Prentice Hall
Learning Objectives
Describe the determinants and types of psychological contacts and what happens when they are broken
Appreciate the two major roles of performance appraisal
Understand the different kinds and methods of performance appraisal
8-3 ©2007 Prentice Hall
Learning Objectives
Appreciate the importance of merit pay and the choices organizations face in using pay to motivate employees
Understand the importance of careers, different kinds of careers, and effective career management
8-4 ©2007 Prentice Hall
Valuing Employees at Costco
Can organizations treat their employees very well and still remain competitive?
Competitive pay
Health insurance
401(k) retirement plan
8-5 ©2007 Prentice Hall
Psychological Contract
An employee’s perception of
– his or her exchange relationship with an organization,
– outcomes the organization has promised to provide to the employee, and
– contributions the employee is obligated to make to the organization
8-6 ©2007 Prentice Hall
Sources of Information
Direct communication from coworkers and supervisors
Observations of what actually transpires in the organization
Written documents
8-7 ©2007 Prentice Hall
Exhibit 8.1 Determinants of Psychological Contracts
DirectCommunication
ObservationWritten
Documents
Psychological Contract
8-8 ©2007 Prentice Hall
Exhibit 8.2 Types of Psychological Contracts
Transactional Contracts:Short term
Narrow and specificLimited promises
and obligations
Relational Contracts:Long term
General and evolvingExtensive and broad promisesand obligations
8-9 ©2007 Prentice Hall
Consequences of Broken Contracts
Poor motivation and performance
Negative moods and emotions
Job dissatisfaction
Intent to quit
8-10 ©2007 Prentice Hall
Performance Appraisal
Encourage high levels of employee motivation and performance
Provide accurate information to be used in managerial decision making
8-11 ©2007 Prentice Hall
Information Provided to Employees
Level of contribution
Accuracy of tasks and direction
Performance appraisals give employees feedback that contributes to intrinsic motivation!
8-12 ©2007 Prentice Hall
Information Functions
Developmental purposes
Evaluative,
decision-making purposes
8-13 ©2007 Prentice Hall
Developing a Performance Appraisal System
Choice 1: The mix of
formal and informal appraisals
Choice 2: What factors to evaluate
Choice 3: Methods of appraisal
Choice 4: Who appraises performance
8-14 ©2007 Prentice Hall
Factors to Evaluate
Traits
BehaviorsResults
8-15 ©2007 Prentice Hall
Methods of Appraisal
Objective:
numerical counts
based on fact
Subjective:
perceptionsbased on traits,behaviors, and
results
8-16 ©2007 Prentice Hall
Exhibit 8.4 Graphic Rating Scale
8-17 ©2007 Prentice Hall
Exhibit 8.4 Behaviorally Anchored Rating Scale
8-18 ©2007 Prentice Hall
Exhibit 8.4 Behavioral Observation Scale
8-19 ©2007 Prentice Hall
Who Appraises Performance?
Supervisors
Self-appraisals
Peer appraisals
Subordinate appraisals
Customer/client appraisals
Multiple raters
360-degree appraisal
8-20 ©2007 Prentice Hall
Problems and Biases
Stereotypes
Primacy effect
Contrast effect
Halo effect
Similar-to-me effect
Harshness, leniency, and average tendency biases
Knowledge-of-predictor bias
8-21 ©2007 Prentice Hall
Merit Pay Plans
Use when
– Individual performance can be accurately assessed
– Employees are highly independent
Distribute by
– Salary increase
– Bonuses
8-22 ©2007 Prentice Hall
Individual-Based Merit Pay Plans
Piece-rate
pay
Commission
pay
8-23 ©2007 Prentice Hall
Gain-Sharing
Employees receive share of profits or saved expenses
– Encourages camaraderie and team spirit
– Discourages personal motivation
Types
– Scanlon plan
– Profit sharing
8-24 ©2007 Prentice Hall
Pay Differentials and Comparable Worth
Gender
Age
Race
Leadership level
8-25 ©2007 Prentice Hall
Types of Careers
Steady-state
Linear
Spiral
Transitory
8-26 ©2007 Prentice Hall
Exhibit 8.6 Career Stages
Preparation for Work
OrganizationalEntry
Early Career Mid-Career
Late Career
8-27 ©2007 Prentice Hall
Contemporary Career Challenges
Ethical Career Management
Career Management That Supports Diversity
Career Management in an Era of Dual-Career Couples