Pay, Careers, and Changing Employment Relationships

Understanding and Managing

Organizational Behavior

Chapter 8

Sixth EditionJennifer M. George & Gareth R. Jones

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 8-1

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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Changing Employment in Tough Economic Times

How do tough economic times change the

nature of the employment relation?

Employees reluctant to change jobs

Employees acquire more workload

Employees scared of losing job

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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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Determinants of Psychological Contracts

DirectCommunication

ObservationWritten

Documents

Psychological Contract

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Exhibit 8.1

Types of Psychological Contracts

Transactional Contracts: Short term

Narrow and specific Limited promises

and obligations

Relational Contracts: Long term

General and evolving Extensive and broad promisesand obligations

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Exhibit 8.2

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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Level of contributionAccuracy of tasks and direction

Performance appraisals give employees feedback that contributes tointrinsic motivation!

Information Provided to Employees

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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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Exhibit 8.3

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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Graphic Rating Scale

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Exhibit 8.4a

Behaviorally Anchored Rating Scale

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Exhibit 8.4b

Behavioral Observation Scale

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Exhibit 8.4c

Who Appraises Performance?

SupervisorsSelf-appraisalsPeer appraisals

Subordinate appraisals

Customer/client appraisals

Multiple raters

360-degree appraisal

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Problems and Biases

Harshness, leniency, and average tendency biases

Knowledge-of-predictor bias

StereotypesPrimacy effectContrast effectHalo effectSimilar-to-me effect

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OB Today: Acknowledging High Performers During a Recession

• Giving gift cards for high performers shows

them that they are appreciated.

• Sending Thank You e-mails to show graditute.

• Giving employees more flexible working

conditions.

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 21

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 Plans

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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Career Stages

Preparation for Work

OrganizationalEntry

Early Career Mid-Career

Late Career

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Exhibit 8.6

Contemporary Career Challenges

• Ethical career management

• Career management that supports

diversity

• Career management in an era of dual-

career couples

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