Organizational Behaviour: Performance Management in Practice

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Add to Wish List. Close Preview. Toggle navigation Additional Book Information. Description Table of Contents Author s Bio. Summary This book offers a fresh and comprehensive approach to the essentials that constitute the discipline of organizational behaviour with a strong emphasis on the application of organizational behaviour and performance management in practice. Stress: Leading and Managing for the Future. Request an e-inspection copy. Share this Title. Recommend to Librarian.

Shopping Cart Summary. To address this issue, we carried out a survey on employees working in large, multinational firms operating in digitalized sectors or industries with the potential to become digitalized. We collected data on the main characteristics of the performance appraisal systems adopted by the firm where respondents work, as perceived by employees themselves.

Then, we employed logit analysis to test the relationship between data on performance appraisal systems and data on the effectiveness of performance appraisal as a booster of IWB. Our results reveal that, as compared to informal feedback, formal performance appraisal is more likely to reduce the perception that performance appraisal promotes individual innovation and creativity at work. However, performance assessment focused on the new competences developed by the employees has a perceived positive impact even stronger than result-oriented appraisal.

Taken together, these results contribute to advance our understanding of how organizations should evaluate employees in the digitalization era. Thus, employees at all levels of the organization can help to attain organizational success through their innovative work behavior IWB , intended as individual extra-role, proactive behavior aimed at generating, disseminating and implementing new ideas in the workplace Parker et al.

Original Research ARTICLE

Indeed, several studies on leadership and digitalization e. This in turn seems to call for a different approach to performance appraisal and management, more focused on fostering individual innovation instead of holding employees accountable for prescribed behavior. Thus, in accordance with the signaling theory of HRM and the process-based approach to HRM Bowen and Ostroff, ; Sanders and Yang, , it may be argued that performance appraisal, as perceived by employees, might act as an important signal in digitally transforming organizations subject to an increased pressure for innovation, signaling to employees the importance their companies place on innovative behavior and results and thus promoting individual creativity and innovation at work.

Nevertheless, to the best of our knowledge extant empirical research has neglected to investigate how traditional performance appraisal, as perceived by the employees themselves may promote individual IWB, and thus support organizations to meet the demand for creativity and innovation in the digitalization era. In fact, although a growing body of research has recently emerged within the process-based approach to HRM, particularly focusing on the perceived relationships between HRM practices and IWB Bednall et al.

Only some scholars have suggested that under conditions of digital work leaders and performance management systems should display a higher output orientation i.

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In order to address such research question, we carried out a survey on employees working in large, multinational firms located in Italy and operating in digitalized sectors or in industries with the potential to become digitalized McKinsey Global Institute, In order to investigate whether and how performance appraisal may enhance IWB, we built on the HRM studies which adopt a process-based approach Bowen and Ostroff, ; Sanders and Yang, This approach suggests interpreting HRM practices as messages that organizations send to their leaders and employees to inform about which results and behavior e.

In accordance to this signaling perspective, HRM practices are able to elicit the desired behavior and attitudes particularly when employees perceive HRM practices as understandable i. More specifically, a first characteristic of performance appraisal which may have a potential signaling effect in terms of promotion of IWB, is the formality of the appraisal system, i.

There are indeed some studies showing a weak positive or even a negative relationship between formal HRM practices as perceived by the employees and IWB Bednall et al.

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Organizational Behaviour: Performance Management in Practice, 1st Edition (e-Book) - Routledge

However, there is also evidence of a positive relationship between formal appraisal and the generation and use of new ideas at work Shipton et al. A second important characteristic of performance appraisal regards the appraisal criteria. About this, useful insights are provided by studies which underlined the positive influence of job autonomy on IWB Criscuolo et al.


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These studies in fact suggest that performance appraisal focused on the outcomes achieved by employees as compared to performance targets rather than on the extent to which they conform to the behavior that has proven to be effective in the past is more likely to foster IWB.

Drawing on this literature, it is reasonable to expect that employees will be more likely to perceive performance appraisal as a practice intended to promote IWB when it is result-oriented, i. On the other hand, there are several studies investigating the impact of pay-for-performance schemes which have found no or even a negative relationship to IWB Shipton et al.

Since performance-related pay is frequently associated to result-oriented performance appraisal like for instance MBO , these studies seem to question the existence of a positive relationship between this kind of appraisal and IWB. As a result, scholars suggested, but did not test empirically, that organizations wishing to encourage IWB should design appraisal systems focused on knowledge, skills and competences as a key to creativity and innovation Sanders et al.

Moreover, the predefinition of skills becomes usual when tasks uncertainty increases Mintzberg, , preventing leaders from defining rules and procedures that strictly predetermine how to execute tasks and leaving employees some leeway to decide how to perform work. Consequently, it is likely that employees perceive exhibited skill-oriented appraisal as a practice aimed at encouraging their IWB. Drawing on the above mixed empirical evidence, we formulate our second hypothesis as follows:. Regarding this, research, particularly in the field of participative leadership, identified that the involvement of employees themselves in setting the goals they are expected to achieve in their work has positive influence on IWB de Jong and Den Hartog, Consistently, we formulate our third hypothesis as follows:.

We collected data between December and the end of January by administering an on-line survey to a sample of Italian employees. We used a non-probabilistic sampling method, namely convenience sampling. We collected usable questionnaires. Table 1 shows the percentage distribution of respondents depending on the main characteristics of the companies where they work, i. This is remarkable since literature has identified the large size of the business as a key determinant of the decision to adopt complex HRM practices, including performance appraisal Bayo-Moriones et al. Table 2 presents the percentage distribution of answers concerning the main characteristics of the performance appraisal systems used in the companies where respondents work, i.

Table 2. Characteristics of the performance appraisal systems used in the companies where the respondents work. Respondents were asked whether and how performance appraisal affects the generation and implementation of creative ideas in the workplace, with the following possible answers: yes, positively; yes, negatively; no influence.

We used Stata Then, to test the hypotheses about main and moderating effects, also checking the influence of the control variables, we conducted logit analysis Cameron and Trivedi, We calculated the variance inflation factor VIF of each regressor in order to check for multi-collinearity Cohen et al. In addition, given the S-shaped curve fitted by logistic regression models, we calculated the average marginal effect of each regression in order to estimate its influence on the dependent variable.

More specifically, the mean ranks show that more employees in manufacturing perceive performance appraisal as a booster of IWB, are subject to a performance appraisal focused on results and are involved in setting goals than in other sectors. Similarly, the Kruskal—Wallis test shows statistically significant differences regarding the perception that performance appraisal boosts IWB and the formality of the appraisal process between employees in digitalized sectors, those in sectors with the potential to become digitalized and employees in lagging sectors see Table 4.

Table 4. Moreover, more employees in digitalized sectors are subject to formal performance appraisal than in lagging sectors. Table 5.


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  7. The mean values, standard deviations and correlations between all variables are presented in Table 6. Table 7 shows the results of the logistic regression models, specifically the average marginal effect of each regressor. The mean values of the VIF, which are considerably lower than 10, confirm that there is not multi-collinearity between the regressors included in the models presented. Model 1 presents the basic logistic regression model, which only includes the control variables.

    Job position i.

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    Moreover, this result holds on also in all subsequent models we estimated to test our hypotheses. In Model 2, in order to test the main effects of the characteristics of performance appraisal on the dependent variable, we included, in addition to control variables, formal performance appraisal and the three performance appraisal criteria. Therefore, Hypothesis 1 is not supported.

    Thus, both hypothesis 2a and 2b are supported. Focusing on new competence-oriented appraisal, the positive effect becomes even stronger. This provides support for hypothesis 2c. Finally, Models 4 shows that the interaction terms are not statistically significant.

    Performance Management

    Thus, hypotheses 3a, 3b, and 3c are not supported. The study draws on signaling theory and process-based approach to HRM Bowen and Ostroff, to investigate which specific characteristics of performance appraisal are more likely to be perceived as promoting the generation and implementation of creative ideas at the workplace. Our findings provide empirical evidence that some specific characteristics of performance appraisal namely, the formality of the process and appraisal criteria, i.

    In contrast with our expectations, this finding suggests that formality does not necessarily lead to a greater transparency and understandability, and thus to a better signaling effect, of the performance appraisal process. A possible explanation is provided by DeNisi and Sonesh who suggest that formality may result in an overemphasis on rating scales, appraisal form and other mechanisms aimed at reducing individual biases and improving rating accuracy, thus making it difficult to understand what is actually to be evaluated.

    The process is very much cyclical and continuous in nature. A performance management system includes the following actions. Developing clear job descriptions and employee performance plans which includes the key result areas KRA' and performance indicators.