The Dark Side of Pay-for-Performance Programs

Perform better, get paid more, is the basic tenant of pay-for-performance (PFP). One type of PFP strategy is bonuses, which are easy to hand out and motivate employees to accomplish short-term goals. PFP can be used at all levels of the organization, from CEOs to managers to entry-level workers. Want that project done by the end of the month? An extra monetary incentive won’t hurt! Or will it?

Although the concept is simple, the positive and negative outcomes of this compensation system are much more complex. One team of researchers (Pohler & Schmidt, 2016) investigated how giving managers bonuses for better performance leads to employee turnover.


Getting Credit for Speaking Up: Sub-Conscious Bias and Employee Voice

Publication: Journal of Applied Psychology
Article: Who gets credit for input? Demographic and structural status cues in voice recognition.
Reviewed by: Lia Engelsted

Employee voice refers to the feedback provided by employees to improve organizational functioning. You might also think of it simply as “speaking up.” Not only is it critical for organizational improvement and success, but the extent to which employees speak up can affect the way they are evaluated by their managers. In a fair workplace, the employees who speak up the most would get the most credit. However, not all employees are recognized for their input equally.


Workplace Blues: Employees feel stressed, underpaid, and unheard

Publication: American Psychological Association Press release (2013)
Article: APA Survey Finds US Employers Unresponsive to Employee Needs
Reviewed by: Scott Charles Sitrin

Employees reported chronic work stress, low wages, insufficient opportunities for advancement, and workloads that interfere with family life.

Here are some findings from APA’s Well-Being Survey of 1,501 adults:


With OCBs and Justice For All (IO Psychology)

Topic: Organizational Justice, Teams, Citizenship Behavior, Performance Appraisal
Publication: Journal of Applied Psychology (NOV 2012)
Article: Examining Retaliatory Responses to Justice Violations and Recovery
Attempts in Teams
Authors: J.S. Christian, M.S. Christian, A.S. Garza, A.P.J. Ellis
Reviewed By: Ben Sher

Should managers deal fairly with their employees? Well yes, of course, if they are concerned about being nice people or perhaps want to be told the correct location of the
holiday party. But what if managers are only concerned with bottom-line organizational effectiveness, profit, and ruthless getting-ahead in life? For these types, research by
Christian, et al. (2012) has shown that treating employees unfairly can lead to certain negative workplace outcomes.


Mixed Messages: Gender Differences in Performance and Promotability Ratings (IO Psychology)

Topic: Gender, Performance Appraisal
Publication: Journal of Management (MAR 2012)
Article: A Meta-Analysis of Gender Group Differences for Measures of Job Performance in Field Studies
Authors: Roth, P. L., Purvis, K. L., & Bobko, P.
Reviewed By: Thaddeus Rada

In human resource management, we are often concerned with group-based differences in the measurement of performance, satisfaction, and other variables (for legal and ethical reasons). Previous meta-analytic studies (studies that look at data/findings across multiple studies) have examined the role of certain group characteristics, such as ethnicity, on performance, but gender differences have not been studied as frequently. In addition, as the authors of the current article note, previous meta-analyses that have assessed gender differences in performance have generally utilized various proxies for performance (e.g., absenteeism, satisfaction ) rather than actual performance measures (e.g., supervisor ratings). The goal, then, of this meta-analysis, was to examine gender differences on these realistic performance indices in field samples.


When Normal Performance Isn’t Normal Performance

Topic: Performance, Performance Appraisal
Publication: Personnel Psychology
Article: The best and the rest: Revisiting the norm of normality of individual
Authors: O’Boyle Jr., E., & Aguinis, H.
Reviewer: Neil Morelli

The gloves are off because O’Boyle and Aguinis have just challenged a perennial assumption of the performance literature. What kind of challenge you say? The authors advocate that the distribution of individual performance does not follow a normal, or Gaussian distribution, but rather a power, or Paretian distribution. On the surface this challenge may seem academic, but if true this conclusion could have serious implications for how performance, and the methods and tools used to assess it, are conceptualized and valued.


Performance ratings are dynamic… now how do we rate them?

Topic: Performance Appraisal, Performance
Publication: Journal of Applied Psychology (2010)
Article: Understanding performance ratings: Dynamic performance, attributions, and rating purpose.
Authors: Jochen Reb and Gary Greguras
Reviewed By: Allison Gabriel

We all know that performance ratings are critical for employees; they determine promotions, raises, future developmental opportunities, and so forth. What makes ratings difficult lies in the fact that employees’ performance is dynamic and can change quite radically. Think about your own performance: how you perform this week, or even this day, may not be the same as it was a month ago. This presents quite the dilemma for raters (aka, supervisors): how do you combine multiple, changing aspects of work performance to get an accurate rating?


Customer Satisfaction Surveys: A Measure of Race and Gender. A Measure of Performance? Not So Much

Topic: FairnessDiversityPerformance Appraisal

Publication: Academy of Management Journal

Article: An examination of whether and how racial and gender biases influence customer satisfaction

Authors: D. R. Hekman, K. Aquino, B. P. Owens, T. R. Mitchell, P. Schilpzand, & K. Leavitt

Reviewed By: Katie Bachman

There’s this great line in the 1980 movie, 9 to 5, when Jane Fonda says to Dabney Coleman: “You’re a sexist, egotistical, lying, hypocritical bigot” and he replies: “So I have a few faults; who doesn’t?” Keep that in mind when you think about the Average Joe on the street, filling out a survey. Untrained raters don’t rate accurately—that’s why they need training! Customer satisfaction surveys are the epitome of using untrained raters to measure employee performance.


Performance Appraisals and How They Go Wrong

Topic: Performance Appraisals
Publication: Journal of Applied Psychology (May, 2010)
Article: The roles of rater goals and ratee performance levels in the distortion of performance ratings.
Authors: X. M. Wang, K. F. E. Wong, J. Y. Y. Kwong
Reviewed By: Rachel Marsh

Performance appraisals play a critical role in an employee’s work experience.  But considering that appraisals are performed by supervisors who might have ulterior motives, it’s worth exploring how these motives affect performance appraisals?


Is it Fair to Include “Citizenship” in Performance Appraisals?

Topic: Citizenship Behavior, Performance Appraisal
Publication: Journal of Business and Psychology (DEC 2009)
Article: Organizational citizenship behavior in performance evaluations: Distributive justice or injustice
Authors: S.K., Johnson, C.L. Holladay, & M.A. Quinones
Reviewed By: Benjamin Granger

Organizational Citizenship Behaviors (OCBs) are volitional work behaviors that go above and beyond the call of duty and are intended to benefit the organization and/or its members.  Though OCBs are not  formally required of employees (e.g., don’t show up in the job description), they are highly valued by organizations. Thus, supervisors (and peers) often consider employees’ OCBs in formal performance appraisals.  But, how do employees feel about this?  In other words, since OCBs are not absolutely required of employees, do employees find this practice fair?