A compiled list of all vocab for the second half of the course (chapters 7 to 12)
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Chapter 7Performance Appraisal: The Key to Effective Performance Management
SummativeProvides information with which promotion and salary decisions can be made.
Formative Provides an opportunity for managers and employees to review each employee’s
work-related behaviour, achievements, and contributions to the organization.
Performance factorsRepresent the core knowledge, skills, and abilities that will be used to evaluate
standardsThe quantifiable and measureable criteria that communicate how well, how often,
or how quickly tasks are to be completed.
Criterion deficiency When performance factors that are critical to job success are omitted and not
contamination When performance factors that are not relevant or that are outside of the
employee’s control are identified and assessed.
Graphic rating scaleSimplest and most popular technique for appraising performance. Puts more focus
on the person rather than the behaviour, and are less legally defensible because of
their subjective and ambiguous nature.
method Similar to a bell curve, this technique places predetermined percentages of rates
in performance categories. Though it can be demotivating to those employees
classified as below average, it is used by almost 30 percent of organizations.
Critical incident method The supervisor keeps track of desirable and
undesirable examples and incidents of each
employee’s work-related behaviour. It is useful as a
supplement to other techniques, but not as a
standalone system to base salary decisions upon.
Behaviourally anchored rating scale (BARS)Anchors a quantifiable scale with specific
behavioural examples of good and poor
Behaviour observation scale (BOS)Often paired with the BARS format. It identifies
critical incidents, but instead assesses how
frequently these behaviours were demonstrated.
Management by objectives (MBO)A strucutured, results-based evaluation system
through which employees, in collaboration with
their managers, set performance goals linked to the
organization’s strategic direction. It is a difficult
system to establish, as SMART goals must be
measured, and it is time-consuming to implement.
Balanced scorecardTracks and measures employee performance
against an organization’s strategy and metrics. It is
used by over 50 percent of Fortune 500 companies.
Four key domains are measured (financial, internal
business processes, learning and growth, customer)
and employees can commit to a domain’s objective,
measures, targets, and initiatives.
Technology-based methodsA rapidly growing method of performance
appraisal. The performance appraisal market is the
fastest growing area of human resources software.
Logrolling A possible outcome of peer appraisals, in which all
peers get together to rate each other high.
Upward feedback Giving anonymous evaluations of the performance
of one’s supervisor.
360-degree appraisalAlso known as multisource feedback, performance
feedback is anonymously collected from all around
an employee, including from supervisors, managers,
subordinates, peers, and internal and external
customers. It is one of the most popular forms of
performance evaluation. This can enhance an
employee’s perception of the fairness of the
Halo effectRating an employee on one trait biases the way in
which the person is rated on other traits.
Central tendency When managers tend to avoid high and low ratings
on a rating scale, instead giving marks that
congregate in the middle.
ExtremesIf a manager is too lenient or too strict, the ratings
can all lump at either the high end of the rating
scale or the low end of the scale.
Appraisal biasIndividual differences between employees, such as
age, race, and gender, can affect their rating by a
Recency effectWhen ratings are based on an employee’s most
recent performance only, whether good or bad, and
ignores past performance.
Similar-to-me biasWhen a manager gives higher ratings to employees
with whom they have something in common with.
Unclear standardsLeaves open the possibility for differences in rating
Chapter 8Establishing a Strategic Compensation
Total compensation All forms of pay and benefits given to employees
arising from their employment.
Piecework compensation Ties compensation directly to the amount of
production that a worker produces. Popular as an
incentive pay plan rewarding employees based on
Employment/Labour Standards ActsLaws that set minimum standards regarding pay,
including minimum wage, maximum hours of work,
overtime pay, paid vacation, paid statutory
holidays, termination pay, record keeping of pay
information, and more. Overtime does not need to
be paid to executives, administrative staff, and
professional employees (doctors, engineers, tech
Pay equity actsProvides equal pay for work of equal or comparable
value performed by both men and women. Only
apply to public-sector employees, but to private as
well in Ontario + Quebec.
Procedural justiceThe policies and procedures for determining how
pay is calculated are perceived as fair
Distributive justiceThe rate of pay for a given job is perceived as fair.
Distributive injustice can occur when a high-
performing employee receives the same merit
increase an employee barely meeting performance
Job evaluation Aims to determine a job’s relative worth. This is
done through a formal and systematic comparison
of jobs within a firm relative to each other,
resulting in a job hierarchy.
Compensable factorsFactors that determine the definition of job content,
establish how the jobs compare with each other, and
set the compensation paid for each job. Most often
based upon skill, effort, responsibility, and working
Benchmark job A job commonly found in other organizations and/or
critical to a firm’s operations that is used to anchor
the employer’s pay scale and act as a reference
point around which other jobs are arranged in order
of relative worth.
Ranking method The simplest method of job evaluation, in which
each job is ranked relative to all other jobs, usually
based on overall difficulty.
Classification (or grading) method A simple, widely-used job evaluation method in
which jobs are categorized into groups. These
groups are called classes if they contain similar
jobs, or grades if they contain jobs that are similar
in difficulty but otherwise different.
Grade description A written description of the level of compensable
factors required by jobs in each grade.
Point method Widely used job evaluation method in which one
identifies several compensable factors and defines
several different degrees of each factor. A different
number of points are then assigned for each degree
of each factor, and the overall point value ranks the
jobs. This can be difficult and time-consuming to
develop and effectively train the job evaluation user
Hay System of Job Evaluation A variation of the point method that is used to
evaluate jobs held by professional, managerial, and
executive employees. It contains three compensable
factors to assign numerical values to, including
know-how, problem-solving ability, and
Pay grade Comprises jobs of approximately equal value or
importance as determined by job evaluation.
Wage/salary surveys Play a central role in the pricing of jobs, and
virtually every employers use these surveys.
Wage curveGraphically depicts the pay rates for jobs in each
pay grade relative to the points or rankings
assigned to each by the job evaluation committee.
Pay rates are shown on the vertical axis, while pay
grades are shown on the horizontal axis.