{"id":847,"date":"2015-04-24T18:33:15","date_gmt":"2015-04-24T18:33:15","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterybusiness1xngcxmaster\/?post_type=chapter&#038;p=847"},"modified":"2015-10-06T14:33:07","modified_gmt":"2015-10-06T14:33:07","slug":"reading-performance-appraisal","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/chapter\/reading-performance-appraisal\/","title":{"raw":"Reading: Performance Appraisal","rendered":"Reading: Performance Appraisal"},"content":{"raw":"<h2 class=\"im_title im_editable im_block\">Performance Appraisal<\/h2>\r\n<p class=\"im_title im_editable im_block\">Employees generally want their managers to tell them three things: what they should be doing, how well they\u2019re doing it, and how they can improve their performance. Good managers address these issues on an ongoing basis. On a semiannual or annual basis, they also conduct formal <span class=\"im_margin_term\"><span class=\"im_glossterm\">performance appraisals<\/span><\/span> to discuss and evaluate employees\u2019 work performance.<\/p>\r\n\r\n<div id=\"collins-ch07_s05_s01\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">The Basic Three-Step Process<\/h2>\r\nAppraisal systems vary both by organization and by the level of the employee being evaluated, but as you can see in Figure 1, \"How to Do a Performance Appraisal,\" below, it\u2019s generally a three-step process:\r\n<ol id=\"collins-ch07_s05_s01_l01\" class=\"im_orderedlist im_editable im_block\">\r\n\t<li>Before managers can measure performance, they must set goals and performance expectations and specify the criteria (such as quality of work, quantity of work, dependability, initiative) that they\u2019ll use to measure performance.<\/li>\r\n\t<li>At the end of a specified time period, managers complete written evaluations that rate employee performance according to the predetermined criteria.<\/li>\r\n\t<li>Managers then meet with each employee to discuss the evaluation. Jointly, they suggest ways in which the employee can improve performance, which might include further training and development.<\/li>\r\n<\/ol>\r\n<div id=\"collins-ch07_s05_s01_f01\" class=\"im_figure im_large im_editable im_block\">\r\n\r\n[caption id=\"\" align=\"aligncenter\" width=\"500\"]<a href=\"https:\/\/textimgs.s3.amazonaws.com\/introbus\/section_11\/35014c3f086669e0781c43cd60ec3878.jpg\" target=\"_blank\"><img src=\"https:\/\/courses.candelalearning.com\/introbusiness2xmaster\/wp-content\/uploads\/sites\/182\/2014\/08\/sm_35014c3f086669e0781c43cd60ec3878.jpg\" alt=\"Step one: Set goals and performance expectations and specify the criteria that will be used to measure performance. Step two: Complete a written evaluation that rates performance according to the stipulated criteria. Step three: Meet with the employee to discuss the evaluation and suggest means of improving performance.\" width=\"500\" height=\"307\" \/><\/a> Figure 1.\u00a0How to Conduct a Performance Appraisal[\/caption]\r\n\r\n<\/div>\r\nIt sounds fairly simple, but why do so many managers report that, except for firing people, giving performance appraisals is their least favorite task?\u00a0To get some perspective on this question, we\u2019ll look at performance appraisals from both sides, explaining the benefits and identifying potential problems with some of the most common practices.\r\n\r\nAmong other benefits, formal appraisals provide the following:\r\n<ul id=\"collins-ch07_s05_s01_l02\" class=\"im_itemizedlist im_editable im_block\">\r\n\t<li>An opportunity for managers and employees to discuss an employee\u2019s performance and to set future goals and performance expectations<\/li>\r\n\t<li>A chance to identify and discuss appropriate training and career-development opportunities for an employee<\/li>\r\n\t<li>Formal documentation of the evaluation that can be used for salary, promotion, demotion, or dismissal purposes<\/li>\r\n<\/ul>\r\nAs for disadvantages, most stem from the fact that appraisals are often used to determine salaries for the upcoming year. Consequently, meetings to discuss performance tend to take on an entirely different dimension: the manager appears judgmental (rather than supportive), and the employee gets defensive. It\u2019s the adversarial atmosphere that makes many managers not only uncomfortable with the task but also unlikely to give honest feedback. (They tend to give higher marks in order to avoid delving into critical evaluations.) HR professionals disagree about whether performance appraisals should be linked to pay increases. Some experts argue that the connection eliminates the manager\u2019s opportunity to use the appraisal to improve an employee\u2019s performance. Others maintain that it increases employee satisfaction with the process and distributes raises on the basis of effort and results.\r\n\r\n<\/div>\r\n<div id=\"collins-ch07_s05_s02\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">360-Degree and Upward Feedback<\/h2>\r\nInstead of being evaluated by one person, how would you like to be evaluated by several people\u2014not only those above you in the organization but those below and beside you? The approach is called <em class=\"im_emphasis\">360-degree feedback<\/em>, and the purpose is to ensure that employees (mostly managers) get feedback from all directions\u2014from supervisors, reporting subordinates, coworkers, and even customers. If it\u2019s conducted correctly, this technique furnishes managers with a range of insights into their performance in a number of roles.\r\n\r\nSome experts, however, regard the 360-degree approach as too cumbersome. An alternative technique, called <em class=\"im_emphasis\">upward feedback<\/em>, requires only the manager\u2019s subordinates to provide feedback. Computer maker Dell uses this approach as part of its manager-development plan. Every six months, forty thousand Dell employees complete a survey in which they rate their supervisors on a number of dimensions, such as practicing ethical business principles and providing support in balancing work and personal life. Like most companies using this technique, Dell uses survey results for development purposes only, not as direct input into decisions on pay increases or promotions.\r\n\r\n<\/div>\r\n<div id=\"collins-ch07_s05_s03\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Retaining Valuable Employees<\/h2>\r\nWhen a valued employee quits, the loss to the employer can be serious. Not only will the firm incur substantial costs to recruit and train a replacement, but it also may suffer temporary declines in productivity and lower morale among remaining employees who have to take on heavier workloads. Given the negative impact of <span class=\"im_margin_term\"><span class=\"im_glossterm\">turnover<\/span><\/span>\u2014the permanent separation of an employee from a company\u2014most organizations do whatever they can to retain qualified employees. Compensation plays a key role in this effort: companies that don\u2019t offer competitive compensation packages (including benefits) tend to lose employees. But other factors come into play, some of which we discussed earlier, such as training and development, as well as helping employees achieve a satisfying work\/nonwork balance. In the following sections, we\u2019ll look at a few other strategies for reducing turnover and increasing productivity.\r\n<div id=\"collins-ch07_s05_s03_s01\" class=\"im_section\">\r\n<h3 class=\"im_title im_editable im_block\">Creating a Positive Work Environment<\/h3>\r\nEmployees who are happy at work are more productive, provide better customer service, and are more likely to stay with the company. A study conducted by Sears, for instance, found a positive relationship between customer satisfaction and employee attitudes on ten different issues: a 5 percent improvement in employee attitudes results in a 1.3 percent increase in customer satisfaction and a 0.5 percent increase in revenue.\r\n\r\n<\/div>\r\n<div id=\"collins-ch07_s05_s03_s02\" class=\"im_section\">\r\n<h3 class=\"im_title im_editable im_block\">The Employee-Friendly Workplace<\/h3>\r\nWhat sort of things improve employee attitudes? The twelve thousand employees of software maker SAS Institute fall into the category of \u201chappy workers.\u201d They choose the furniture and equipment in their own (private) offices; eat subsidized meals at one of three on-site restaurants; enjoy free soft drinks, fresh fruit on Mondays, M&amp;M\u2019s on Wednesdays, and a healthy breakfast snack on Fridays in convenient break rooms; and swim and work out at a seventy-seven-thousand-square-foot fitness center. They set their own work hours, and they\u2019re encouraged to stay home with sick children. They also have job security: no one\u2019s ever been laid off because of an economic downturn. The employee-friendly work environment helps SAS employees focus on their jobs and contribute to the attainment of company goals.\u00a0Not surprisingly, it also results in very low 3 percent turnover.\r\n\r\n<\/div>\r\n<div id=\"collins-ch07_s05_s03_s03\" class=\"im_section\">\r\n<h3 class=\"im_title im_editable im_block\">Recognizing Employee Contributions<\/h3>\r\nThanking people for work done well is a powerful motivator. People who feel appreciated are more likely to stay with a company than those who don\u2019t.<span id=\"fwk-collins-fn07_055\" class=\"im_footnote\">Robert McGarvey, \u201cA Tidal Wave of Turnover,\u201d <em class=\"im_emphasis\">American Way<\/em>, December 15, 2004, 32\u201336.<\/span> While personal thank-yous are always helpful, many companies also have formal programs for identifying and rewarding good performers. The Container Store, a national storage and container retailer, rewards employee accomplishments in a variety of ways. Recently, for example, twelve employees chosen by coworkers were rewarded with a Colorado vacation with the company\u2019s owners, and the seven winners of a sales contest got a trip to visit an important supplier\u2014in Sweden.\u00a0The company is known for its supportive environment and has frequently been selected as one of the top U.S. companies to work for.\r\n\r\n<\/div>\r\n<div id=\"collins-ch07_s05_s03_s04\" class=\"im_section\">\r\n<h3 class=\"im_title im_editable im_block\">Involving Employees in Decision Making<\/h3>\r\nCompanies have found that involving employees in decisions saves money, makes workers feel better about their jobs, and reduces turnover. Some have found that it pays to take their advice. When General Motors asked workers for ideas on improving manufacturing operations, management was deluged with more than forty-four thousand suggestions during one quarter. Implementing a few of them cut production time on certain vehicles by 15 percent and resulted in sizable savings (<span id=\"fwk-collins-fn07_057\" class=\"im_footnote\">Freda Turner, \u201c<a href=\"http:\/\/www.webpronews.com\/an-effective-employee-suggestion-program-has-a-multiplier-effect-2003-03\" target=\"_blank\">An Effective Employee Suggestion Program Has a Multiplier Effect<\/a>,\u201d WebPro News, March 4, 2003,\u00a0accessed October 11, 2011).<\/span>\r\n\r\nSimilarly, in 2001, Edward Jones, a personal investment company, faced a difficult situation during the stock-market downturn. Costs had to be cut, and laying off employees was one option. Instead, however, the company turned to its workforce for solutions. As a group, employees identified cost savings of more than $38 million. At the same time, the company convinced experienced employees to stay with it by assuring them that they\u2019d have a role in managing it.\r\n\r\n<\/div>\r\n<\/div>\r\n<div id=\"collins-ch07_s05_s04\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Why People Quit<\/h2>\r\nAs important as such initiatives can be, one bad boss can spoil everything. The way a person is treated by his or her boss may be the primary factor in determining whether an employee stays or goes. People who have quit their jobs cite the following behavior by superiors:\r\n<ul id=\"collins-ch07_s05_s04_l01\" class=\"im_itemizedlist im_editable im_block\">\r\n\t<li>Making unreasonable work demands<\/li>\r\n\t<li>Refusing to value their opinions<\/li>\r\n\t<li>Failing to be clear about what\u2019s expected of subordinates<\/li>\r\n\t<li>Rejecting work unnecessarily<\/li>\r\n\t<li>Showing favoritism in compensation, rewards, or promotions<\/li>\r\n<\/ul>\r\nHolding managers accountable for excessive turnover can help alleviate the \u201cbad-boss\u201d problem, at least in the long run. In any case, whenever an employee quits, it\u2019s a good idea for someone\u2014someone other than the individual\u2019s immediate supervisor\u2014to conduct an exit interview to find out why. Knowing why people are quitting gives an organization the opportunity to correct problems that are causing high turnover rates.\r\n\r\n<\/div>\r\n<div id=\"collins-ch07_s05_s05\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Involuntary Termination<\/h2>\r\nBefore we leave this section, we should say a word or two about <em class=\"im_emphasis\">termination<\/em>\u2014getting fired. Though turnover\u2014voluntary separations\u2014can create problems for employers, they\u2019re not nearly as devastating as the effects of involuntary termination on employees. Losing your job is what psychologists call a \u201csignificant life change,\u201d and it\u2019s high on the list of \u201cstressful life events\u201d regardless of the circumstances. Sometimes, employers lay off workers because revenues are down and they must resort to <span class=\"im_margin_term\"><span class=\"im_glossterm\">downsizing<\/span><\/span>\u2014to cutting costs by eliminating jobs. Sometimes a particular job is being phased out, and sometimes an employee has simply failed to meet performance requirements.\r\n<div id=\"collins-ch07_s05_s05_s01\" class=\"im_section\">\r\n<h2 class=\"im_title im_editable im_block\">Employment at Will<\/h2>\r\nIs it possible for you to get fired even if you\u2019re doing a good job and there\u2019s no economic justification for your being laid off? In some cases, yes\u2014especially if you\u2019re not working under a contract. Without a formal contract, you\u2019re considered to be <em class=\"im_emphasis\">employed at will<\/em>, which means that both you and your employer have the right to terminate the employment relationship at any time. <em class=\"im_emphasis\">You<\/em> can quit whenever you want (which is good for you), but your <em class=\"im_emphasis\">employer<\/em> can fire you whenever he or she wants (which is obviously bad for you).\r\n\r\nFortunately for you, over the past several decades, the courts have undercut employers\u2019 rights under the <span class=\"im_margin_term\"><span class=\"im_glossterm\">employment-at-will<\/span><\/span> doctrine. By\u00a0and large, management can no longer fire employees at will: usually, employers must show just cause for termination, and in some cases, they must furnish written documentation to substantiate the reasons for terminating an employee. If it\u2019s a case of poor performance, the employee is generally warned in advance that his or her current level of performance could result in termination. As a rule, managers give employees who have been warned a reasonable opportunity to improve performance. When termination is unavoidable, it should be handled in a private conversation, with the manager explaining precisely why the action is being taken.\r\n<div id=\"collins-ch07_s05_s05_s01_n01\" class=\"im_key_takeaways im_editable im_block\">\r\n<div class=\"keytakeaways\">\r\n<h3>KEY TAKEAWAYS<\/h3>\r\n<ul id=\"collins-ch07_s05_s05_s01_l01\" class=\"im_itemizedlist\">\r\n\t<li>Managers conduct <strong class=\"im_emphasis im_bold\">performance appraisals<\/strong> to evaluate work performance, usually following a three-step process:\r\n<ul id=\"collins-ch07_s05_s05_s01_l02\" class=\"im_orderedlist\">\r\n\t<li>Setting goals and performance expectations and specifying the criteria for measuring performance<\/li>\r\n\t<li>Completing written evaluations to rate performance according to predetermined criteria<\/li>\r\n\t<li>Meeting with employees to discuss evaluations and ways to improve performance<\/li>\r\n<\/ul>\r\n<\/li>\r\n\t<li><strong class=\"im_emphasis im_bold\">Turnover<\/strong>\u2014the permanent separation of an employee from a company\u2014has a negative effect on an organization.<\/li>\r\n\t<li>In addition to offering competitive compensation, companies may take a variety of steps to retain qualified employees:\r\n<ul id=\"collins-ch07_s05_s05_s01_l03\" class=\"im_orderedlist\">\r\n\t<li>Providing appropriate training and development<\/li>\r\n\t<li>Helping employees achieve a satisfying work\/nonwork balance in their lives<\/li>\r\n\t<li>Creating a positive work environment<\/li>\r\n\t<li>Recognizing employee efforts<\/li>\r\n\t<li>Involving employees in decision making<\/li>\r\n<\/ul>\r\n<\/li>\r\n\t<li>On the other hand, employers may have to terminate the employment of (that is, fire) some workers.\r\n<ul id=\"collins-ch07_s05_s05_s01_l04\" class=\"im_orderedlist\">\r\n\t<li>They may lay off workers because revenues are down and they have to <strong class=\"im_emphasis im_bold\">downsize<\/strong>\u2014to cut costs by eliminating jobs.<\/li>\r\n\t<li>Sometimes a job is phased out, and sometimes an employee simply fails to meet performance requirements.<\/li>\r\n<\/ul>\r\n<\/li>\r\n\t<li>If there\u2019s no written employment contract, the employment relationship falls under the principle of <strong class=\"im_emphasis im_bold\">employment-at-will<\/strong>, by which an employer can end it at any time. Usually, however, the employer must show just cause.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n&nbsp;\r\n<h2>Check Your Understanding<\/h2>\r\nAnswer the question(s) below to see how well you understand the topics covered in this section. This short quiz does <strong>not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.\r\n\r\nUse this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/236\r\n<div id=\"collins-ch07_s05_s05\" class=\"im_section\">\r\n<div id=\"collins-ch07_s05_s05_s01\" class=\"im_section\">\r\n<div id=\"collins-ch07_s05_s05_s01_n02\" class=\"im_exercises im_editable im_block\"><\/div>\r\n<\/div>\r\n<\/div>","rendered":"<h2 class=\"im_title im_editable im_block\">Performance Appraisal<\/h2>\n<p class=\"im_title im_editable im_block\">Employees generally want their managers to tell them three things: what they should be doing, how well they\u2019re doing it, and how they can improve their performance. Good managers address these issues on an ongoing basis. On a semiannual or annual basis, they also conduct formal <span class=\"im_margin_term\"><span class=\"im_glossterm\">performance appraisals<\/span><\/span> to discuss and evaluate employees\u2019 work performance.<\/p>\n<div id=\"collins-ch07_s05_s01\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">The Basic Three-Step Process<\/h2>\n<p>Appraisal systems vary both by organization and by the level of the employee being evaluated, but as you can see in Figure 1, &#8220;How to Do a Performance Appraisal,&#8221; below, it\u2019s generally a three-step process:<\/p>\n<ol id=\"collins-ch07_s05_s01_l01\" class=\"im_orderedlist im_editable im_block\">\n<li>Before managers can measure performance, they must set goals and performance expectations and specify the criteria (such as quality of work, quantity of work, dependability, initiative) that they\u2019ll use to measure performance.<\/li>\n<li>At the end of a specified time period, managers complete written evaluations that rate employee performance according to the predetermined criteria.<\/li>\n<li>Managers then meet with each employee to discuss the evaluation. Jointly, they suggest ways in which the employee can improve performance, which might include further training and development.<\/li>\n<\/ol>\n<div id=\"collins-ch07_s05_s01_f01\" class=\"im_figure im_large im_editable im_block\">\n<div style=\"width: 510px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/textimgs.s3.amazonaws.com\/introbus\/section_11\/35014c3f086669e0781c43cd60ec3878.jpg\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/courses.candelalearning.com\/introbusiness2xmaster\/wp-content\/uploads\/sites\/182\/2014\/08\/sm_35014c3f086669e0781c43cd60ec3878.jpg\" alt=\"Step one: Set goals and performance expectations and specify the criteria that will be used to measure performance. Step two: Complete a written evaluation that rates performance according to the stipulated criteria. Step three: Meet with the employee to discuss the evaluation and suggest means of improving performance.\" width=\"500\" height=\"307\" \/><\/a><\/p>\n<p class=\"wp-caption-text\">Figure 1.\u00a0How to Conduct a Performance Appraisal<\/p>\n<\/div>\n<\/div>\n<p>It sounds fairly simple, but why do so many managers report that, except for firing people, giving performance appraisals is their least favorite task?\u00a0To get some perspective on this question, we\u2019ll look at performance appraisals from both sides, explaining the benefits and identifying potential problems with some of the most common practices.<\/p>\n<p>Among other benefits, formal appraisals provide the following:<\/p>\n<ul id=\"collins-ch07_s05_s01_l02\" class=\"im_itemizedlist im_editable im_block\">\n<li>An opportunity for managers and employees to discuss an employee\u2019s performance and to set future goals and performance expectations<\/li>\n<li>A chance to identify and discuss appropriate training and career-development opportunities for an employee<\/li>\n<li>Formal documentation of the evaluation that can be used for salary, promotion, demotion, or dismissal purposes<\/li>\n<\/ul>\n<p>As for disadvantages, most stem from the fact that appraisals are often used to determine salaries for the upcoming year. Consequently, meetings to discuss performance tend to take on an entirely different dimension: the manager appears judgmental (rather than supportive), and the employee gets defensive. It\u2019s the adversarial atmosphere that makes many managers not only uncomfortable with the task but also unlikely to give honest feedback. (They tend to give higher marks in order to avoid delving into critical evaluations.) HR professionals disagree about whether performance appraisals should be linked to pay increases. Some experts argue that the connection eliminates the manager\u2019s opportunity to use the appraisal to improve an employee\u2019s performance. Others maintain that it increases employee satisfaction with the process and distributes raises on the basis of effort and results.<\/p>\n<\/div>\n<div id=\"collins-ch07_s05_s02\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">360-Degree and Upward Feedback<\/h2>\n<p>Instead of being evaluated by one person, how would you like to be evaluated by several people\u2014not only those above you in the organization but those below and beside you? The approach is called <em class=\"im_emphasis\">360-degree feedback<\/em>, and the purpose is to ensure that employees (mostly managers) get feedback from all directions\u2014from supervisors, reporting subordinates, coworkers, and even customers. If it\u2019s conducted correctly, this technique furnishes managers with a range of insights into their performance in a number of roles.<\/p>\n<p>Some experts, however, regard the 360-degree approach as too cumbersome. An alternative technique, called <em class=\"im_emphasis\">upward feedback<\/em>, requires only the manager\u2019s subordinates to provide feedback. Computer maker Dell uses this approach as part of its manager-development plan. Every six months, forty thousand Dell employees complete a survey in which they rate their supervisors on a number of dimensions, such as practicing ethical business principles and providing support in balancing work and personal life. Like most companies using this technique, Dell uses survey results for development purposes only, not as direct input into decisions on pay increases or promotions.<\/p>\n<\/div>\n<div id=\"collins-ch07_s05_s03\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Retaining Valuable Employees<\/h2>\n<p>When a valued employee quits, the loss to the employer can be serious. Not only will the firm incur substantial costs to recruit and train a replacement, but it also may suffer temporary declines in productivity and lower morale among remaining employees who have to take on heavier workloads. Given the negative impact of <span class=\"im_margin_term\"><span class=\"im_glossterm\">turnover<\/span><\/span>\u2014the permanent separation of an employee from a company\u2014most organizations do whatever they can to retain qualified employees. Compensation plays a key role in this effort: companies that don\u2019t offer competitive compensation packages (including benefits) tend to lose employees. But other factors come into play, some of which we discussed earlier, such as training and development, as well as helping employees achieve a satisfying work\/nonwork balance. In the following sections, we\u2019ll look at a few other strategies for reducing turnover and increasing productivity.<\/p>\n<div id=\"collins-ch07_s05_s03_s01\" class=\"im_section\">\n<h3 class=\"im_title im_editable im_block\">Creating a Positive Work Environment<\/h3>\n<p>Employees who are happy at work are more productive, provide better customer service, and are more likely to stay with the company. A study conducted by Sears, for instance, found a positive relationship between customer satisfaction and employee attitudes on ten different issues: a 5 percent improvement in employee attitudes results in a 1.3 percent increase in customer satisfaction and a 0.5 percent increase in revenue.<\/p>\n<\/div>\n<div id=\"collins-ch07_s05_s03_s02\" class=\"im_section\">\n<h3 class=\"im_title im_editable im_block\">The Employee-Friendly Workplace<\/h3>\n<p>What sort of things improve employee attitudes? The twelve thousand employees of software maker SAS Institute fall into the category of \u201chappy workers.\u201d They choose the furniture and equipment in their own (private) offices; eat subsidized meals at one of three on-site restaurants; enjoy free soft drinks, fresh fruit on Mondays, M&amp;M\u2019s on Wednesdays, and a healthy breakfast snack on Fridays in convenient break rooms; and swim and work out at a seventy-seven-thousand-square-foot fitness center. They set their own work hours, and they\u2019re encouraged to stay home with sick children. They also have job security: no one\u2019s ever been laid off because of an economic downturn. The employee-friendly work environment helps SAS employees focus on their jobs and contribute to the attainment of company goals.\u00a0Not surprisingly, it also results in very low 3 percent turnover.<\/p>\n<\/div>\n<div id=\"collins-ch07_s05_s03_s03\" class=\"im_section\">\n<h3 class=\"im_title im_editable im_block\">Recognizing Employee Contributions<\/h3>\n<p>Thanking people for work done well is a powerful motivator. People who feel appreciated are more likely to stay with a company than those who don\u2019t.<span id=\"fwk-collins-fn07_055\" class=\"im_footnote\">Robert McGarvey, \u201cA Tidal Wave of Turnover,\u201d <em class=\"im_emphasis\">American Way<\/em>, December 15, 2004, 32\u201336.<\/span> While personal thank-yous are always helpful, many companies also have formal programs for identifying and rewarding good performers. The Container Store, a national storage and container retailer, rewards employee accomplishments in a variety of ways. Recently, for example, twelve employees chosen by coworkers were rewarded with a Colorado vacation with the company\u2019s owners, and the seven winners of a sales contest got a trip to visit an important supplier\u2014in Sweden.\u00a0The company is known for its supportive environment and has frequently been selected as one of the top U.S. companies to work for.<\/p>\n<\/div>\n<div id=\"collins-ch07_s05_s03_s04\" class=\"im_section\">\n<h3 class=\"im_title im_editable im_block\">Involving Employees in Decision Making<\/h3>\n<p>Companies have found that involving employees in decisions saves money, makes workers feel better about their jobs, and reduces turnover. Some have found that it pays to take their advice. When General Motors asked workers for ideas on improving manufacturing operations, management was deluged with more than forty-four thousand suggestions during one quarter. Implementing a few of them cut production time on certain vehicles by 15 percent and resulted in sizable savings (<span id=\"fwk-collins-fn07_057\" class=\"im_footnote\">Freda Turner, \u201c<a href=\"http:\/\/www.webpronews.com\/an-effective-employee-suggestion-program-has-a-multiplier-effect-2003-03\" target=\"_blank\">An Effective Employee Suggestion Program Has a Multiplier Effect<\/a>,\u201d WebPro News, March 4, 2003,\u00a0accessed October 11, 2011).<\/span><\/p>\n<p>Similarly, in 2001, Edward Jones, a personal investment company, faced a difficult situation during the stock-market downturn. Costs had to be cut, and laying off employees was one option. Instead, however, the company turned to its workforce for solutions. As a group, employees identified cost savings of more than $38 million. At the same time, the company convinced experienced employees to stay with it by assuring them that they\u2019d have a role in managing it.<\/p>\n<\/div>\n<\/div>\n<div id=\"collins-ch07_s05_s04\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Why People Quit<\/h2>\n<p>As important as such initiatives can be, one bad boss can spoil everything. The way a person is treated by his or her boss may be the primary factor in determining whether an employee stays or goes. People who have quit their jobs cite the following behavior by superiors:<\/p>\n<ul id=\"collins-ch07_s05_s04_l01\" class=\"im_itemizedlist im_editable im_block\">\n<li>Making unreasonable work demands<\/li>\n<li>Refusing to value their opinions<\/li>\n<li>Failing to be clear about what\u2019s expected of subordinates<\/li>\n<li>Rejecting work unnecessarily<\/li>\n<li>Showing favoritism in compensation, rewards, or promotions<\/li>\n<\/ul>\n<p>Holding managers accountable for excessive turnover can help alleviate the \u201cbad-boss\u201d problem, at least in the long run. In any case, whenever an employee quits, it\u2019s a good idea for someone\u2014someone other than the individual\u2019s immediate supervisor\u2014to conduct an exit interview to find out why. Knowing why people are quitting gives an organization the opportunity to correct problems that are causing high turnover rates.<\/p>\n<\/div>\n<div id=\"collins-ch07_s05_s05\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Involuntary Termination<\/h2>\n<p>Before we leave this section, we should say a word or two about <em class=\"im_emphasis\">termination<\/em>\u2014getting fired. Though turnover\u2014voluntary separations\u2014can create problems for employers, they\u2019re not nearly as devastating as the effects of involuntary termination on employees. Losing your job is what psychologists call a \u201csignificant life change,\u201d and it\u2019s high on the list of \u201cstressful life events\u201d regardless of the circumstances. Sometimes, employers lay off workers because revenues are down and they must resort to <span class=\"im_margin_term\"><span class=\"im_glossterm\">downsizing<\/span><\/span>\u2014to cutting costs by eliminating jobs. Sometimes a particular job is being phased out, and sometimes an employee has simply failed to meet performance requirements.<\/p>\n<div id=\"collins-ch07_s05_s05_s01\" class=\"im_section\">\n<h2 class=\"im_title im_editable im_block\">Employment at Will<\/h2>\n<p>Is it possible for you to get fired even if you\u2019re doing a good job and there\u2019s no economic justification for your being laid off? In some cases, yes\u2014especially if you\u2019re not working under a contract. Without a formal contract, you\u2019re considered to be <em class=\"im_emphasis\">employed at will<\/em>, which means that both you and your employer have the right to terminate the employment relationship at any time. <em class=\"im_emphasis\">You<\/em> can quit whenever you want (which is good for you), but your <em class=\"im_emphasis\">employer<\/em> can fire you whenever he or she wants (which is obviously bad for you).<\/p>\n<p>Fortunately for you, over the past several decades, the courts have undercut employers\u2019 rights under the <span class=\"im_margin_term\"><span class=\"im_glossterm\">employment-at-will<\/span><\/span> doctrine. By\u00a0and large, management can no longer fire employees at will: usually, employers must show just cause for termination, and in some cases, they must furnish written documentation to substantiate the reasons for terminating an employee. If it\u2019s a case of poor performance, the employee is generally warned in advance that his or her current level of performance could result in termination. As a rule, managers give employees who have been warned a reasonable opportunity to improve performance. When termination is unavoidable, it should be handled in a private conversation, with the manager explaining precisely why the action is being taken.<\/p>\n<div id=\"collins-ch07_s05_s05_s01_n01\" class=\"im_key_takeaways im_editable im_block\">\n<div class=\"keytakeaways\">\n<h3>KEY TAKEAWAYS<\/h3>\n<ul id=\"collins-ch07_s05_s05_s01_l01\" class=\"im_itemizedlist\">\n<li>Managers conduct <strong class=\"im_emphasis im_bold\">performance appraisals<\/strong> to evaluate work performance, usually following a three-step process:\n<ul id=\"collins-ch07_s05_s05_s01_l02\" class=\"im_orderedlist\">\n<li>Setting goals and performance expectations and specifying the criteria for measuring performance<\/li>\n<li>Completing written evaluations to rate performance according to predetermined criteria<\/li>\n<li>Meeting with employees to discuss evaluations and ways to improve performance<\/li>\n<\/ul>\n<\/li>\n<li><strong class=\"im_emphasis im_bold\">Turnover<\/strong>\u2014the permanent separation of an employee from a company\u2014has a negative effect on an organization.<\/li>\n<li>In addition to offering competitive compensation, companies may take a variety of steps to retain qualified employees:\n<ul id=\"collins-ch07_s05_s05_s01_l03\" class=\"im_orderedlist\">\n<li>Providing appropriate training and development<\/li>\n<li>Helping employees achieve a satisfying work\/nonwork balance in their lives<\/li>\n<li>Creating a positive work environment<\/li>\n<li>Recognizing employee efforts<\/li>\n<li>Involving employees in decision making<\/li>\n<\/ul>\n<\/li>\n<li>On the other hand, employers may have to terminate the employment of (that is, fire) some workers.\n<ul id=\"collins-ch07_s05_s05_s01_l04\" class=\"im_orderedlist\">\n<li>They may lay off workers because revenues are down and they have to <strong class=\"im_emphasis im_bold\">downsize<\/strong>\u2014to cut costs by eliminating jobs.<\/li>\n<li>Sometimes a job is phased out, and sometimes an employee simply fails to meet performance requirements.<\/li>\n<\/ul>\n<\/li>\n<li>If there\u2019s no written employment contract, the employment relationship falls under the principle of <strong class=\"im_emphasis im_bold\">employment-at-will<\/strong>, by which an employer can end it at any time. Usually, however, the employer must show just cause.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<h2>Check Your Understanding<\/h2>\n<p>Answer the question(s) below to see how well you understand the topics covered in this section. This short quiz does <strong>not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.<\/p>\n<p>Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.<\/p>\n<p>\t<iframe id=\"lumen_assessment_236\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=236&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_236\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<div id=\"collins-ch07_s05_s05\" class=\"im_section\">\n<div id=\"collins-ch07_s05_s05_s01\" class=\"im_section\">\n<div id=\"collins-ch07_s05_s05_s01_n02\" class=\"im_exercises im_editable im_block\"><\/div>\n<\/div>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-847\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>An Introduction to Business. <strong>Authored by<\/strong>: Anonymous. <strong>Provided by<\/strong>: Anonymous. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/2012books.lardbucket.org\/books\/an-introduction-to-business-v2.0\/s11-05-performance-appraisal.html\">http:\/\/2012books.lardbucket.org\/books\/an-introduction-to-business-v2.0\/s11-05-performance-appraisal.html<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\/\">CC BY-NC-SA: Attribution-NonCommercial-ShareAlike<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":78,"menu_order":14,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"An Introduction to Business\",\"author\":\"Anonymous\",\"organization\":\"Anonymous\",\"url\":\"http:\/\/2012books.lardbucket.org\/books\/an-introduction-to-business-v2.0\/s11-05-performance-appraisal.html\",\"project\":\"\",\"license\":\"cc-by-nc-sa\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"8fef5941-e2ed-42f3-a2bf-dc18902f8725","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-847","chapter","type-chapter","status-publish","hentry"],"part":93,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/pressbooks\/v2\/chapters\/847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/wp\/v2\/users\/78"}],"version-history":[{"count":13,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/pressbooks\/v2\/chapters\/847\/revisions"}],"predecessor-version":[{"id":5817,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/pressbooks\/v2\/chapters\/847\/revisions\/5817"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/pressbooks\/v2\/parts\/93"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/pressbooks\/v2\/chapters\/847\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/wp\/v2\/media?parent=847"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/pressbooks\/v2\/chapter-type?post=847"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/wp\/v2\/contributor?post=847"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusinessx51xmaster\/wp-json\/wp\/v2\/license?post=847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}