Unit-Level Performance Appraisal System

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Reward System

"Performance appraisal is an organizational system comprising deliberate processes for determining staff accomplishments to improve staff effectiveness."

Winston & Creamer, 1997

Reward systems can be a vital aspect of any organization. They can actively engage and renew the overall sense of community and mission of an organization. A properly administered system of rewards can provide incentive for quality workmanship and staff performance. Likewise, a poorly administered reward system can lead to low morale, unproductive performance, and even lead to a high percentage of staff turnover. A reward system is successful when the staff interprets its policies as evenhanded, consistent, and relevant. (Wilson, 2004)

UUSA

Currently the UUSA’s reward system is comprised of:
· An annual merit-based/percentage salary increase;
· Personal praise by the director; and
· Funding for conference travel, and external development opportunities, as determined by the director (D. Ostroth, personal communication, April 19, 2004)

The Director expressed that minimal state and university budget appropriations have an adverse affect on the merit based salary reward. For example, when only a 2-4% increase is available for staff salaries and pay increases are rewarded on merit, little differentiation can be demonstrated between high and low levels of performance. Therefore, these salary-based rewards provide little incentive for higher performance. The non-salary rewards are solely based on the judgment of the director with no direction from formalized policy. The director stressed concern over this style of reward allocation, citing that subjective reward distribution can lead to accusations of manger preference and general inequity. (D. Ostroth, personal communication, April 19, 2004)

Recommendations

Similar organizations within public institutions can benefit by developing formalized systems of non-salary based reward distribution/allocation. Many institutions currently maintain policies on non-salary based rewards and their allocation and description. Such as Virginia Polytechnic Institute & State University’s Personnel Services. Some rewards mentioned in this policy include flexible work hours, recognition leave, and non-monetary items.

When non-salary based reward polices do not exist or have a lenient description, we recommend that divisions gather staff members’ suggestions of rewards and compile them for future use. This database of non-salary rewards should be continually refreshed as staff members change responsibilities and to account for staff turnover.

Application & Rationale

During each step of the phased performance appraisal the staff member and supervisor agree to goals/objectives, achievements, and discuss any needed revisions. In addition to this review process the staff member and supervisor will develop/review personalized non-salary based rewards that correlate to specific objectives. For example, a single parent may choose flexible work hours as a reward/incentive. Allowing the staff member to select their own type of reward ensures a high level of “buy-in” or that a high level of personal value is attached to the reward.

Some supervisors may be alarmed to consider staff members choosing their own rewards, arguing that the staff member would become myopic and perform to the specific objective and not for the broad good of the organization. However, the four-part phased performance appraisal process protects against this. The frequent meetings between staff member and supervisor provide the supervisor with the ability to guide a staff member’s performance.

Our recommendations are based on the following premises:
The lack of adequate funding available to properly support salary-based rewards compels organizations to create non-salary based rewards.

Individualized rewards grounded in policy actually generate equity among staff members and help supervisors to properly evaluate the performance of a unit. As a result of individualizing rewards within a policy scaffold, staff members are not evaluated under the same criteria, yet the process of reward allocation is equal for all staff members. When reward allocation is equalized among all parties, questions over quality or value of rewards shifts to performance of the staff member, which has been well documented throughout the year.

In addition to individualizing rewards for the purpose of generating staff equity, individualization also provides for a more accurate representation of the overall staff performance. A phenomena known as the Contrast Effect occurs when individuals are evaluated within the context of a group. “Research indicates…that the greater the proportion of unsatisfactory performing subordinates in a group, the more favorable the subjective evaluations of satisfactory performers.” (Ivancevich, 1983, p. 465-466) The Contrast Effect can bestow a false sense of high or low performance on a group or individual. It can also divide an organization as a result of the appraisal process. Therefore, group evaluation must be a composite view of individual performance.

References

Ivancevich, J. M. (1983). Contrast effects in performance evaluation and reward practices. The Academy of Management Journal, 26(3), 465-476

Wilson, T. B. (2004) Innovative reward systems for the changing workplace. (2nd ed.). New York: McGraw-Hill.

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Updated: 2008