Motivate and Reward: Performance Appraisal and Incentive Systems for Business Success

175 Pages·2003·0.73 MB·English

by  Herwig W. Kressler (auth.)

Motivate and Reward
Performance Appraisal and
Incentive Systems for Business Success
Herwig W. Kressler
Translated by Simon Pearce
Motivate and Reward

Motivate and Reward
Performance Appraisal and Incentive
Systems for Business Success
Herwig W.Kressler
Translated by Simon Pearce
© Herwig W.Kressler 2003
English language translation © Simon Pearce 2003
Softcover reprint of the hardcover 1st edition 2003 978-1-4039-0378-5
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First published 2003 by
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PALGRAVE MACMILLAN is the global academic imprint of the
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ISBN 978-1-349-50901-0 ISBN 978-1-4039-3771-1 (eBook)
DOI 10.1057/9781403937711
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A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Kressler,Herwig.
[Leistungsbeurteilung und Anreizsysteme.English]
Motivate and reward / Herwig Kressler;translated by Simon Pearce.
p.cm.
Includes bibliographical references and index.
1. Employee motivation.2. Performance--Evaluation.3. Incentive
awards. I.Title.
HF5549.5.M63 K74 2003
658.3'14--dc21
2002193096
Editing and origination by Curran Publishing Services,Norwich
10 9 8 7 6 5 4 3 2 1
12 11 10 09 08 07 06 05 04 03
C
ONTENTS
List of figures ix
Introduction x
Part I Motivation 1
Motives – Desires – Motivational Factors 1
Motivation to Work 3
Motivation and Frustration 4
Motivation is Highly Personal 6
Theories,Hypotheses and Concepts of Motivation to Work 8
‘Scientific Management’ 9
Trust in Technology and Utilitarianism 9
The ‘Discovery’of the Motivation to Work 11
Further Developments 13
Motivation Theories:an Overview 14
Maslow 15
McGregor 17
Argyris 19
Herzberg 20
McClelland 23
Vroom 25
Locke,Latham 27
Equivalence and Dissonance 28
‘Sixteen Basic Desires’ 29
Eight Points for Reflection 30
Conclusion:Significant Elements of Motivation 32
Tools of Management 34
Evaluation and Pay 34
Management by Objectives:Target Agreement 34
Openness and Transparency 37
Information and Communication 38
Job Design 39
Development and Training 40
Motivation and Incentive 41
v
vi Contents
Part II Evaluation of Performance and Potential 45
Chapter 2 Performance Appraisal 47
Sense and Purpose 47
Evaluation in Business 48
‘Functional’‘Top-down’Evaluation 49
‘Bottom-up’Evaluation 49
The ‘360-Degree’Evaluation 50
The Why and Wherefore of Functional Evaluation 52
Structure,Culture and Style 53
Perception 55
Features of Performance Evaluation 57
Informal or Institutionalized 58
Open or Secret 58
Character-based 58
Task-based 59
Target-based 60
Result-based 60
Aims of Performance Evaluation 61
The Evaluation Review 63
The Working Relationship 66
Selective Communication and Perception 67
The Evaluation Scale 68
The Role of the Immediately Higher Management Level 69
Comparisons between Business Areas 70
Bureaucracy 70
Fairness and Objectivity 70
Possibilities of Appeal 71
Evaluation Routine 71
Participation,File Access,Data Protection 72
Developing and Applying the System 72
Instead of a Summary 73
Six Steps towards Efficient Evaluation 73
Amusing Aside:Quotations from Evaluations 73
Guide to Managers’and Subordinates’
Performance Review 75
Chapter 3 Evaluation of Potential 77
Performance and Potential are not Identical 77
Selection Criteria 78
Contents vii
What is Potential? 79
The Three Pillars of the Development of Potential 80
Motivation and Behaviour 80
Knowledge and Abilities 81
Organization and Discipline 82
Potential and Ambition 85
Potential as a Contribution 88
Criteria of Potential 89
‘Predictor Qualities’ 89
Competencies 94
Heroes,Prophets and Magicians 96
Potential:For What? 97
Performance and Potential 98
Chapter 4 Evaluation in Practice 100
A Real-life Example 100
Optima’s Evaluation Principles 100
Optima:Annual Performance Appraisal 103
Explanation of Optima’s Evaluation Principles 108
Explanation of the Annual Performance
Evaluation in Optima 109
Main Points of the Evaluation Process in Optima 109
Part III Reward Strategies and Incentive Systems 111
Chapter 5 Structural Conditions for Reward 113
Overview 113
Professionalism and Emotion in Rewards 114
Components of Reward 115
Efficiency of the Reward Components 118
The Emergence of Global Reward Strategies 121
Future Developments 123
A New Reward Model 126
Chapter 6 Incentives 131
Bonus,Incentive Systems,Result-related Pay 131
Variable Pay 131
Incentive is not Automatically Motivation 132
Incentives:What they Can and Cannot Do 133
Incentives in Practice 136
viii Contents
Incentive Bonus Systems:Four Examples 138
Short Term (on an Annual Basis) 138
Longer Term (Several Years) 140
Target-setting 142
Chapter 7 Financial Participation 144
Background 144
Development 145
Profit Sharing 145
Equity Participation 146
Costs 149
Communication 150
Share Options 151
Executive Share Options 152
And Without Shares? 156
Chapter 8 Conclusion 157
Bibliography 159
Index 161
L F
IST OF IGURES
1.1 The KITA* model 7
1.2 Maslow’s hierarchy of needs 16
1.3 In the town of Ch...there lived the famous
archer Francis T... 36
3.1 Ambition and potential 86
3.2 Potential and performance 99
5.1 Stick and carrot 116
ix