©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

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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

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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

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Valuing Employees at Costco

Can organizations treat their employees very well and still remain competitive?

Competitive pay

Health insurance

401(k) retirement plan

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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

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Sources of Information

Direct communication from coworkers and supervisors

Observations of what actually transpires in the organization

Written documents

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Exhibit 8.1 Determinants of Psychological Contracts

DirectCommunication

ObservationWritten

Documents

Psychological Contract

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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

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Consequences of Broken Contracts

Poor motivation and performance

Negative moods and emotions

Job dissatisfaction

Intent to quit

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Performance Appraisal

Encourage high levels of employee motivation and performance

Provide accurate information to be used in managerial decision making

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Information Provided to Employees

Level of contribution

Accuracy of tasks and direction

Performance appraisals give employees feedback that contributes to intrinsic motivation!

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Information Functions

Developmental purposes

Evaluative,

decision-making purposes

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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

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Factors to Evaluate

Traits

BehaviorsResults

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Methods of Appraisal

Objective:

numerical counts

based on fact

Subjective:

perceptionsbased on traits,behaviors, and

results

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Exhibit 8.4 Graphic Rating Scale

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Exhibit 8.4 Behaviorally Anchored Rating Scale

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Exhibit 8.4 Behavioral Observation Scale

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Who Appraises Performance?

Supervisors

Self-appraisals

Peer appraisals

Subordinate appraisals

Customer/client appraisals

Multiple raters

360-degree appraisal

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Problems and Biases

Stereotypes

Primacy effect

Contrast effect

Halo effect

Similar-to-me effect

Harshness, leniency, and average tendency biases

Knowledge-of-predictor bias

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Merit Pay Plans

Use when

– Individual performance can be accurately assessed

– Employees are highly independent

Distribute by

– Salary increase

– Bonuses

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Individual-Based Merit Pay Plans

Piece-rate

pay

Commission

pay

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Gain-Sharing

Employees receive share of profits or saved expenses

– Encourages camaraderie and team spirit

– Discourages personal motivation

Types

– Scanlon plan

– Profit sharing

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Pay Differentials and Comparable Worth

Gender

Age

Race

Leadership level

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Types of Careers

Steady-state

Linear

Spiral

Transitory

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Exhibit 8.6 Career Stages

Preparation for Work

OrganizationalEntry

Early Career Mid-Career

Late Career

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Contemporary Career Challenges

Ethical Career Management

Career Management That Supports Diversity

Career Management in an Era of Dual-Career Couples