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LEARNING AND PERFORMANCE MANAGEMENT
CHAPTER SCAN
This chapter is the second chapter on learning and behavior, and examines external influences on
behavior and their relationship to performance. Learning in organizations is facilitated through
reward, punishment, and extinction. In addition, Bandura's social learning theory describes how
individuals model their behavior after others. The challenge in examining the performance of an
individual lies in finding accurate measurement tools. Goal-setting programs provide one avenue
for the link between effort and achievement. Strategies for rewarding behavior and dealing with
poor behavior are provided.
LEARNING OBJECTIVES
After reading this chapter, you should be able to do the following:
1. Define learning, reinforcement, punishment, extinction, and goal setting.
2. Distinguish between classical and operant conditioning.
3. Explain the use of positive and negative consequences of behavior in strategies of
reinforcement and punishment.
4. Identify the purposes of goal setting and five characteristics of effective goals.
5. Describe effective strategies for giving and receiving performance feedback.
6. Compare individual and team-oriented reward systems.
7. Describe strategies for correcting poor performance.
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KEY TERMS
Chapter 6 introduces the following key terms:
learning
classical conditioning
operant conditioning
positive consequences
negative consequences
reinforcement
punishment
extinction
task-specific self-efficacy
goal setting
management by objectives (MBO)
performance appraisal
consensus
distinctiveness
consistency
mentoring
THE CHAPTER SUMMARIZED
I.
THINKING AHEAD: Breaking the Compensation Paradigm
II.
LEARNING IN ORGANIZATIONS
This chapter also addresses motivation and behavior, but differs from the previous chapter in
that this chapter focuses on the external causes of behavior.
Learning and motivation are related because learning changes behavior as it is acquired through
experience. Henry Ford once said, "anyone who stops learning is old, whether at twenty or
eighty. Anyone who keeps learning stays young. The greatest thing in life is to keep your mind
young."
A.
Classical Conditioning
The first theory of learning developed in the early 1900s. Classical conditioning is
pairing an unconditioned (natural) stimulus with a conditioned (learned) stimulus to elicit
an unconditional (natural) response. Most students have heard of Pavlov's research with
dogs. They may not be aware that the collaborative efforts between the Russian scientist
and Walter Cannon lead to the application of the ideas in the United States.
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B.
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Operant Conditioning
The second class of learning uses positive or negative consequences for modification of
behavior. Operant conditioning is based on the notion that behavior is a function of its
consequences.
C.
The Strategies of Reinforcement, Punishment, and Extinction
1.
Reinforcement
Both positive and negative consequences are related to reinforcement. Positive
consequences are results that individuals find attractive or pleasurable. In
contrast, negative consequences are results that individuals find unattractive or
aversive. Positive reinforcement results from applying positive consequences
when desired behavior occurs. Negative reinforcement results from withholding
negative consequences when desired behavior occurs. Schedules for
reinforcement are either continuous or intermittent. Intermittent schedules can be
fixed or variable ratio, or fixed or variable interval.
2.
Punishment
There are two approaches to punishment, or the elimination of undesirable
behavior. Either applying negative consequences or withholding positive
consequences can result in similar outcomes.
3.
Extinction
Extinction is the attempt to weaken an undesirable behavior by attaching no
consequences to it. Extinction is most successful when combined with
positive reinforcement of desired behavior.
D.
Bandura’s Social Learning Theory
Bandura’s social learning theory adds a component of interaction as a learning approach.
This theory states that people learn by modeling their behavior through the observation of
others. Bandura’s theory also emphasizes the importance of task-specific self-efficacy,
or the belief in one’s ability to satisfactorily perform a particular task, as a positive force
for learning.
E.
Learning and Personality Differences
Not all approaches are appropriate for all personalities. For example, introverts perform
better with quiet, concentrated periods of time, while extraverted individuals need to
express themselves and exchange ideas with others. Preferences for information
gathering and decision making differ with personality as well.
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III.
GOAL SETTING AT WORK
The process of establishing desired results that guide and direct behavior is goal setting.
A.
Characteristics of Effective Goals
To be effective, goals should be specific, measurable, challenging, realistic, and timebound.
B.
Increasing Work Motivation and Task Performance
Goals can be used to increase performance, as studies indicate that challenging goals
result in higher performance. The three behavioral aspects of enhancing performance
motivation through goal setting are employee participation, supervisory commitment, and
useful performance feedback.
C.
Reducing Role Stress of Conflicting and Confusing Expectations
Goal setting reduces stress by clarifying the taskrole expectations. This may be
attributable to improved communication between supervisors and employees.
D.
Improving the Accuracy and Validity of Performance Evaluation
The third major function of goal setting is to improve the accuracy and validity of
performance evaluation. One of the best known methods is management by objectives,
(MBO), which is a goal-setting program based on interaction and negotiation between
employees and managers.
IV.
PERFORMANCE: A KEY CONSTRUCT
Performance is closely associated with the concept of task accomplishment. Good
performance depends on both effort and outcomes.
A.
Defining Performance
Employees must understand exactly what is expected of them if they are to perform well.
Consequently, organizations must first accurately define what they mean by “good
performance”, set standards for that performance, and communicate that information
clearly to employees. Performance appraisal is the evaluation of a person's
performance.
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B.
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Measuring Performance
In an optimal situation, the measurements of performance assess actual performance.
This is difficult because of our level of refinement of performance appraisal tools.
Performance appraisal systems should include analyses of the reliability and validity of
the instrument chosen for measurement.
C.
Performance Feedback: A Communication Challenge
Communicating useful performance feedback that employees will accept and learn from
poses a difficult challenge for nearly all managers. Focusing on specific statements and
changeable behaviors enhances the likelihood of constructive feedback experiences for
both supervisor and employees.
C.
Developing People and Enhancing Careers
The most important aspect of performance appraisal is the continual development of
employees. Unfortunately, too many appraisals are used singularly for salary decisions,
and only provided once a year, begrudgingly. Dr. Deming, a leader in the quality
movement, advocated the elimination of performance feedback, in part because of our
misuse of the concept.
D.
Key Characteristics of an Effective Appraisal System
There are five characteristics related to effectiveness of performance appraisal – validity,
reliability, responsiveness, flexibility, and equitability.
V.
REWARDING PERFORMANCE
A.
A Key Organizational Decision Process
Individuals observe closely how others are treated in reward and punishment decisions.
These decisions affect the organizational culture, as well as the motivation and
performance of others.
B.
Individual versus Team Reward Systems
Many organizations are conscious of the competition between individual rewards and
group efforts. Individual incentives can improve motivation and performance, but may
generate excessive or unwanted internal competition. Team reward systems solve
problems caused by individual competitive behavior, but often do not account for
individual contributions.
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C.
The Power of Earning
When there is little relationship between performance and rewards, people often begin to
believe they are entitled to rewards regardless of how they perform, which illustrates the
concept of entitlement.
VI.
CORRECTING POOR PERFORMANCE
If poor performance is not attributable to work design or organizational process problems, then
attention should be focused on the employee. The problem may lie in (1) some aspect of the
person's relationship to the organization or supervisor, (2) some area of the employee's personal
life, or (3) a training or developmental deficiency.
A.
Attribution and Performance Management
Attribution is related to performance measurement because supervisors attribute behavior
and performance to either internal or external causes. Kelley proposed that individuals
make attributions based on information gathered in the form of three informational cues:
consensus, distinctiveness, and consistency. Consensus is the extent to which peers in
the same situation behave the same way. Distinctiveness is the degree to which the
person behaves the same way in other situations. Consistency refers to the frequency of
a particular behavior over time.
B.
Coaching, Counseling, and Mentoring
Important supervisory responsibilities include mentoring, coaching and counseling.
Mentoring is a relationship that encourages development and career enhancement for
people moving through the career cycle. Chapter 17 addresses mentoring in greater
detail.
VII.
MANAGERIAL IMPLICATIONS: PERFORMANCE MANAGEMENT IS A KEY
TASK
VIII.
LOOKING BACK: Does Employee Ownership Really Pay Off?
CHAPTER SUMMARY




Learning is a change in behavior acquired through experience.
The operant conditioning approach to learning states that behavior is a function of positive
and negative consequences.
Reinforcement is used to develop desirable behavior; punishment and extinction are used to
decrease undesirable behavior.
Bandura's social learning theory suggests that task-specific self-efficacy is important to
effective learning.
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



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Goal setting improves work motivation and task performance, reduces role stress, and
improves the accuracy and validity of performance appraisal.
Performance appraisals help organizations develop employees and make decisions about
them.
Making accurate attributions about the behavior of others is an essential prerequisite to
correcting poor performance.
High-quality performance should be rewarded and poor performance should be corrected.
Mentoring is a relationship for encouraging development and career enhancement for people
moving through the career cycle.
REVIEW QUESTIONS: SUGGESTED ANSWERS
1. Define the terms learning, reinforcement, punishment, and extinction.
Learning is a change in behavior acquired through experience. Reinforcement is the bestowing
of positive consequences or withholding of negative consequences to develop desired behavior.
Punishment, in contrast, bestows negative consequences or withholds positive consequences to
eliminate or weaken undesirable behavior. Extinction is the attempt to weaken a behavior by
attaching no consequences to it.
2. What are positive and negative consequences in shaping behavior? How should they be
managed? Explain the value of extinction as a strategy.
Managers have access to useful positive and negative reinforcement strategies to assist
employees in their pursuit of goals in the workplace. Consequence-related strategies should be
matched to the specific personalities and situations involved. Extinction is a low intrusion
approach to behavior modification, and an appropriate strategy for situations that allow for
patience and time.
3. How can task-specific self-efficacy be enhanced? What are the differences in the way
introverted and extroverted and intuitive and sensing people learn?
Task-specific self-efficacy can be enhanced through (1) performance accomplishments, (2)
vicarious experiences, (3) verbal persuasion, or (4) emotional arousal. Introverts need quiet time
to study, concentrate, and reflect on what they are learning. They think best when they are alone.
Extroverts need to interact with other people, learning through the process of expressing
themselves and exchanging ideas with others. An intuitive thinker prefers to analyze data and
information, looking for the meaning behind the analysis and focusing on the big picture. A
sensing feeler prefers to learn through interpersonal involvement and focuses on details and
practical applications.
4. What are the five characteristics of well-developed goals? Why is feedback on goal progress
important?
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Well-developed goals are specific, challenging, measurable, time-bound, and prioritized.
Goal acceptance is thought to lead to goal commitment and then to goal accomplishment.
Feedback helps employees assess how well their efforts are leading to goal accomplishment.
5. What are the purposes of conducting performance appraisals? Who should appraise
performance? Why?
Accurate appraisals help supervisors fulfill their dual roles as evaluators and coaches. The major
functions of performance appraisals are to give employees feedback on performance, to identify
the employees' developmental needs, to make promotion and reward decisions, to make
demotion and termination decisions, and to develop information relevant to the organization's
selection and placement decisions. Multiple sources of appraisal data should be used: supervisor,
self, peers, and employees.
6. What are the two possible attributions of poor performance? What are the implications of
each?
Poor performance may be attributed to the person or the situation. If poor performance is
attributed to the person, interventions such as training, counseling, or disciplinary action may be
appropriate. If poor performance is attributed to the situation, an intervention designed to
remove situational constraints on performance may be appropriate.
7. How can managers and supervisors best provide useful performance feedback?
Feedback should be specific and based on observed behavior. The behavior in question should
be controllable by the individual, and both leader and follower should have ample time to prepare
for the feedback session.
8. How do mentors and peers help people develop and enhance their careers?
Both provide information sharing, career strategizing, job-related feedback, emotional
support, and friendship. The key in both mentor and peer relationships is mutual trust.
DISCUSSION AND COMMUNICATION QUESTIONS: SUGGESTED ANSWERS
1. Which learning approach – the behavioral approach or Bandura's social learning theory –
do you find more appropriate for people?
This answer may have to do with how much importance students place on the task-specific selfefficacy aspect of Bandura’s theory. It is obviously a more complex set of dynamics to consider.
Students can be encouraged to consider the type of learning (e.g., level of complexity) as another
variable.
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2. Given your personality type, how do you learn best? Do you miss learning some things
because of how they are taught?
Students will often be able to determine what they don't like about learning opportunities more
readily than they can identify how they would learn more comfortably. It is interesting to ask
students whether grading completely through group grades would change their view of individual
studying and learning. Many college classes are taught by NTs, who use a particular style. Have
students discuss what the NT teaching/learning style is, and how it affects other learning styles.
3. What goals do you set for yourself at work? In your personal life? Will you know if you
achieve them?
Encourage students to discuss this question beyond the obvious, "complete a business degree."
They can evaluate their goals using the characteristics of effective goals, and discuss how they
get feedback on their goal progress.
4. If a conflict occurred between your self-evaluation and the evaluation given to you by your
supervisor or instructor, how would you respond? What specifically would you do? What have
you learned from your supervisor or instructor during the last reporting period?
The key is to gather as much information as possible about the other's position. A key in
approaching differing views is preparation. Suggest students should respond only after thinking
through the information for a day or so. Students can use their knowledge of the perceptual
process to analyze this question.
5. What rewards are most important to you? How hard are you willing to work to receive them?
Encourage students to develop a gradual rating of the rewards. Not all of the rewards are
necessarily worth the cost. They may have some ethical issues related to high performers. The
alternative experiential exercise at the end of Chapter 10, Who Works Saturday Night, compares
rewards and how badly individuals want rewards versus balance in their lives.
6. Prepare a memo detailing the consequences of behavior in your work or university
environment (e.g., grades, awards, suspensions, and scholarships). Include in your memo your
classification of these consequences as positive or negative. Should your organization or
university change how it applies these consequences?
In response to the final question (Should your organization or university change how it applies
these consequences?) students should provide support, based on material from the chapter, for
why changes should or should not occur.
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7. Develop an oral presentation about the most current management practices in employee
rewards and performance management. Find out what at least four different companies are
doing in this area. Be prepared to discuss their fit with the text materials.
Based on the fit between current management practices identified and text materials, students
can discuss how successful they believe the various management practices will be.
8. Interview a manager or supervisor who is responsible for completing performance appraisals
on people at work. Ask the manager which aspects of performance appraisal and the
performance appraisal interview process are most difficult and how he or she manages these
difficulties. Include the aspects of his or her job that enable the manager to meet these three
different needs.
This is also a good opportunity for students to share experiences (both positive and negative)
that they have had as employees being appraised. The contrasting perspectives of the
managers/supervisors and the students (as employees) should provide for some interesting
discussion.
ETHICS QUESTIONS: SUGGESTED ANSWERS
1. Suppose a team of behavioral experts was asked to enhance the motivation of military
personnel to kill the enemy. Is this request ethical? Is it socially desirable? Should the team
accept the assignment? Explain.
The dilemma should be confronted long before the action, and upon entering the organization,
the task should be presented so that individuals with moral principle disagreements with the task
would have an option to reject the assignment.
2. Suppose the organization you work for simply assigns employees their task goals without
consulting them. Is this an ethical problem? Should the organization consult its employees?
What are the consequences of not consulting them?
The obvious drawback is that individuals may lack loyalty and autonomy that will affect their
performance, productivity, and task significance. It is a poor leadership and management
strategy, but is not patently unethical. The managerial problem is that people who are assigned
goals lack goal commitment, and may be unwilling to put forth the necessary effort to achieve the
goal.
3. Assume you are an experienced technical employee with a better understanding of your work
than your supervisor has. Further assume that your supervisor sets such high performance
standards for an inexperienced coworker that the person cannot ever meet them and therefore is
fired. What should you do? Is your supervisor's action ethical? Explain.
The action is unethical if the supervisor is aware that the new employee cannot fulfill the
expectations. However, it appears that the supervisor needs to be exposed to the degree of
difficulty, which you could do diplomatically.
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4. Suppose your company announced that it would pay bonuses to employees who met a certain
performance standard. The company did not realize, however, that many employees would be
able to reach the standard with hard work and that the bonuses would cost the company much
more than expected. Is it fair to lower the bonus rate? Is it fair to increase the performance
standard for bonuses after the fact? Explain.
The time of reference is important to the situation. For example, if a company cannot pay its
bills at the end of the year, and layoffs are inevitable, that is different than reneging on a shortterm promise. Students should be encouraged to examine the issue from both the individual and
the organizational perspectives.
CHALLENGES
6.1 TASKGOAL ATTRIBUTE QUESTIONNAIRE
This challenge is a good one to assign prior to class discussion in a class related to goal setting.
Students can then relate their scores and their personal experiences with goal setting to the class
discussion.
6.2 CORRECTING POOR PERFORMANCE
As students list contributing factors to their poor performance, it is important that they consider
internal as well as external factors. As a follow-up to this challenge, students might be asked to
summarize how effective their plan was once they implemented it.
EXPERIENTIAL EXERCISES
6.1 POSITIVE AND NEGATIVE REINFORCEMENT
Instructor's Notes:
The purpose of this exercise is to illustrate the effects of positive and negative reinforcement on
behavior change. This exercise is useful when a class seems unruly and needs a change of pace.
It is similar to the childhood game most students have played. Students will become very vocal
and typically animated. You may want to take care in selecting the volunteers.
Discussion Questions:

What were the differences in behavior of the volunteers when different kinds of
reinforcement (positive, negative, or both) were used? Most of the time the individual
receiving positive reinforcement will have a number of gestures and nonverbal indicators of
success.
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
What were the emotional reactions of the volunteers to the different kinds of reinforcement?
One of the ways to give the volunteers time to reflect and to get out of the spotlight for a
moment is to have them go to a board or flip chart and list a series of words that described
how they felt. Typical for volunteer #1 will be embarrassment, frustration, quit, etc.
Volunteer #3 may have feelings like confusion, frustration, and ambiguity.

Which type of reinforcement – positive or negative – is most common in organizations?
What effect do you think this has on motivation and productivity? Students' responses will
depend on their exposure to specific instances.
6.2 CORRECTING POOR PERFORMANCE
Role Descriptions
Assistant Director, Academic Computing Service Center
You are the assistant director of the university's Academic Computing Service Center. You are a
skilled information systems software engineer with twenty years of experience at two different
universities. You assumed your current job about three years ago. Within the first year you
became very familiar with the entire information systems infrastructure at the university and
developed a highly successful relationship with all of the technicians and support staff under your
supervision.
With a notable downturn in enrollment since you came, it has been a struggle to obtain the
financial resources necessary to complete all of the upgrades you think are required for a first rate
center and to procure all the latest hardware sought by the faculty, research, and teaching staff
across campus. The center services a wide variety of university customers, such as the hard
science requirements in engineering, physics, and chemistry for massive data analysis and
networking with other universities; the social science requirements in psychology, business, and
social work for specific types of statistical analysis packages; the administrative requirements of
the registrar and financial services offices; and finally the unique needs of the medical school.
Because of the differing needs of these customers, the center experiences conflicting pressures
and demands. These customers are not information systems experts, and you take a lead role in
attempting to educate them about the competing demands and limitations the center faces.
You report directly to the new director of the ACS Center who has been on the job for about
seven months. Although the director appears friendly, she also does not seem to be a real
information systems expert with the technical expertise you would like a director to have. You
are scheduled to meet with a university committee of faculty and staff, although you are not
exactly sure why, though you have heard rumors there is some discontent among the center's
customers.
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Role Descriptions
University Committee Members
You are members of a university committee of faculty and staff that the new director of the
Academic Computing Service Center has asked the president to form. You understand that the
new director is a rather new graduate of an eastern university with a M.S. degree in information
systems and some prior computing and information systems experience prior to going back to
graduate school. She has been the director for about seven months, and declines in enrollment
which preceded her arrival by several years have taken a toll on the financial and human
resources of the university at the same time advances in information systems technology have
increased demand for system upgrades and advances across campus.
The assistant director of the ACS Center has been in the vice of these forces for several years.
The assistant director is a talented, highly proficient information systems expert who grew up
through the technical ranks after getting an undergraduate business degree in information systems
and management science. His technically superior attitude is apparently evident to the diverse
disciplines across campus who see him as increasing the tensions and conflicts flowing from
declining resources and increasing demand. The new director seems a little puzzled as to how to
sort out all the issues and make appropriate attributions as to the behavior and actions of the
various parties involved. A key responsibility for her is getting a clear picture of the performance
of her assistant director, who does seem to have some poor performance problems.
ALTERNATIVE EXPERIENTIAL EXERCISE
THE DEATH OF MANAGEMENT
Instructor's Notes:
Since this is an editorial page, this is a logical assignment for students to read as homework. A
technique that works to aid in getting to the issues quickly in class is to have the students
highlight the most important issues for their position.
In class, divide into five groups that will discuss this topic with the speaker when he visits
campus. Each group will submit, within 20 minutes, what their issue and discussion question
will be, and who is their designated debater. The instructor takes the position of the editorial
writer, Robert Samuelson. (You may want to let 5 students take his position, and debate for
him). During the debate, students may request assistance from their group, and they will need to
reference the book for their support.
(1) decide who in your group will be the 5 students to debate this topic
(2) decide which particular point you wish to refute
(3) back up you argument with specific references to this chapter
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(4) prepare your group by defining what you believe Samuelson means by the following words:
pseudo skills
all-purpose executives
general managers
skills
(5) What would Mr. Samuelson say about the concepts in this chapter?
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THE DEATH OF MANAGEMENT
Robert J. Samuelson, Newsweek, May 10, 1993, 55.
We are now witnessing the death of management. By management, I mean the peculiarly
American idea (still taught at many business schools) that a "good manager" should be able to
manage any enterprise, anywhere, any time. Through incisive analysis and decisive action, our
supermanagers supposedly could make any company productive and profitable. The idea has
collapsed with failures at companies that once symbolized U.S. management prowess: Sears,
Westinghouse, and IBM.
With hindsight, we can see the absurdity. We don't imagine a winning football coach
switching to basketball, nor a concert pianist becoming a symphony violinist. We don't think an
orthopedic surgeon would automatically make a good psychiatrist. We recognize that differences
in talent, temperament, knowledge, and experience make some people good at some things and
not at others. Somehow, managers were supposed to be immune to this logic.
They aren't, of course. Indeed, the people who have created great businesses in recent
decades typically confirm the logic. They have not been all-purpose executives, casually
changing jobs and succeeding on the strength of dazzling analysis. Instead, they have been semifanatics who doggedly pursued a few good ideas. People like Sam Walton (Wal-Mart), Ray Kroc
(McDonald's), William McGowan (MCI), and Bill Gates (Microsoft).
What seems astonishing is how such a bad idea survived so long. Our infatuation with it
partly reflected American's optimism that all problems are amenable to reason. In 1914,
Frederick Winslow Taylor's "The Principles of Scientific Management" appeared and set a tone.
Taylor pioneered time-and-motion studies, which analyzed how specific jobs might be done
more efficiently. But his larger purpose was to "prove that the best management is a true science,
resting upon clearly defined laws..."
Up to a point, who can quarrel with the resort to reason? The trouble is that it was taken
too far and became self-destructive. The problem was not that freelance managers constantly
jumped between companies, although that happened. The problem was that the style of running
big companies changed for the worse. The belief that all problems could be solved by analysis
favored the rise of executives who were adept with numbers and making slick presentations.
Huge staffs of analysts served these executives, who created conglomerates on the theory that a
good manager could manage anything.
With bigger bureaucracies, companies couldn't respond quickly to market changes - new
technologies, competitors or customer needs. The more powerful top executives became, the less
they knew. Their information was filtered through staff reports and statistical tables. Some
executives developed what consultant Mel Stuckey calls a phobia of manufacturing: they didn't
know what happened in factories and feared exposing their ignorance.
Roger Smith, GM's chairman between 1981 and 1990, exemplified this sort of knownothing executive. When asked by Fortune to explain what went wrong, he answered, "I don't
know. It's a mysterious thing." To fathom what went wrong, Smith truly had to understand how
automobiles are designed and made; he apparently never did, despite a career at GM. As a
society, we have spent the past decade paying for mistakes like Smith's. Inept management,
though not the only cause of corporate, turmoil, has been a major contributor. "Downsizing" and
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"restructuring" are but the catch phrases for the harsh process by which companies seek to regain
their edge.
Truly dead? Consider General Electric. A decade ago, it was "choking on its nitpicking systems of formal reviews...which delayed decisions...and often made GE a laggard at
bringing new products to market," write Noel Tichy and Stratford Sherman in a new book. The
"mastery of arduous procedures had become an art form" necessary for executive advancement.
GE chairman John Welch Jr. fired thousands and sold 19 major businesses. Profits rose from
$1.7 billion in 1981 to $4.7 billion in 1992, but GE's payroll shrank from 404,000 to 268,000.
Such have been the ultimate social consequences of a bad idea. But is the muddled
notion of "management" truly dead? You can object on two grounds. First, some generalists still
ascend to the top of big companies, the naming of Louis Gerstner - who knows little of
computers - to head IBM is a case in point. Well, maybe. But these executives are often
specialists of a different sort; they specialize in dismantling conglomerates or top-heavy
bureaucracies. Welch played precisely this role at GE; and Christopher Steffen intended to do
the same at Kodak.
The second objective is more serious: it is that business schools still aim to produce
general managers. The present notion of the M.B.A. (Master of Business Administration) is
foolish. It is impossible to take people in their mid-20s - without much business experience - and
educate them as "managers.” Yet business schools cling to the notion, because to do otherwise
would jeopardize their tuition revenues. What's lost is the opportunity for these bright young
people to learn something of value - a specific business, a foreign language, an engineering skill instead of the pseudo skills taught in business school.
Until this changes, we shall miseducate a large part of the talent pool for America's
business leadership. The one hopeful sign is that the subject now seems open for discussion.
Indeed, the Harvard Business Review recently conducted a debate about the M.B.A.degree. Most
contributors agreed it is not very useful. M.B.A. graduates are "glib and quick-witted", wrote
Henry Mintzberg of McGill University, but are not committed to "particular industries...but to
management as a means of personal advancement."
A recent M.B.A. graduate said it better, "My main reason for obtaining an M.B.A., "she
admitted, "was not necessarily to improve my business skills but because the degree is required
to 'get in the door'." When the Harvard Business School can acknowledge that--and act upon it-American management will have taken a huge stride forward.
Mr. Samuelson has been asked to your campus to debate the Phi Beta Kappa honorary business
fraternity about the accusations presented in this editorial. Your responsibility as a member of
the business school, is to practice the question and answer portion of the upcoming event with
the individuals selected to talk with him at the open forum. In order to assist your friends, you
must:
(1) decide who in your group will be the 5 students to debate this topic
(2) decide which particular point you wish to refute
(3) back up your argument with specific references to this chapter
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(4) prepare your group by defining what you believe he means by the following words:
pseudo skills
all-purpose executives
general managers
skills
EXTRA EXPERIENTIAL EXERCISES
The following alternative exercise to supplement the material in the textbook can be obtained
from:
Marcic, Dorothy, Seltzer, Joseph, & Vaill, Peter. Organizational Behavior: Experiences and
Cases, 6th Ed. South Western College Publishing Company, 2001.
The Learning Model Instrument. p. 35-41. Time: 30 minutes.
Purpose: To help students understand learning style preferences and to determine their
own learning style preference.
CASE QUESTIONS: SUGGESTED ANSWERS
REWARDING EMPLOYEE PERFORMANCE AT HEWLETT-PACKARD
1. Evaluate the performance management impact of variable pay in terms of goal setting.
Goal setting can increase work motivation and task performance, reduce role stress that
results from conflicting or confusing expectations, and improve the accuracy and validity of
performance evaluation.
From the perspective of work motivation and task performance, Hewlett-Packard’s use of
variable pay can be evaluated in terms of the potential behavioral impact of the company’s
three types of variable pay. The company performance bonus links individual rewards to
HP’s overall success. The pay for results incentive links compensation for executives and
managers to individual, business organization, and company performance results. Sales
incentives link the compensation of sales professionals to the attainment of individual,
business organization, and company performance goals. With all three variable pay
components, HP seeks to reward individual goal attainment within the context of broader
organizational success, thereby reinforcing appropriate work behavior and increasing its
likelihood of future occurrence.
In addition, the linkage of variable pay to individual threshold, target, and aspirational goals
identifies key performance activities for employees. This helps to enhance employee
performance by clarifying performance expectations. Further, the specification of criteria by
which goal attainment is evaluated improves the accuracy and validity of the performance
evaluation process.
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Chapter 6: Learning and Performance Management
2. Why is it important to link an organization’s performance management system to its reward
system?
From an operant conditioning perspective, positive reinforcement is essential for promoting
and encouraging the continued exhibition of work behaviors that contribute to attaining
organizational goals. By contingently linking rewards to performance, superior performance
is encouraged while inferior performance is discouraged. When rewards are not contingent on
performance, inferior, or at best mediocre, performance is encouraged and superior
performance is discouraged.
Hewlett-Packard’s use of variable pay is intended to encourage superior performance through
differential reward levels for achieving threshold, target, and aspirational goals. It also
discourages inferior performance by not granting variable pay incentives to those employees
who fail to meet threshold goals. HP’s use of employee stock ownership is based on the
notion that HP employees will work harder to achieve goals and make contributions because
their collective efforts will affect the stock value. Unfortunately, however, the connection
between any given employee’s job performance and increased stock value is somewhat
elusive.
3. Why should a performance management system be flexible yet embedded in a company’s
culture?
Any system, performance management or otherwise, that is inflexible is doomed to failure. In
the uncertain, global environment of contemporary business, organizations and their systems
cannot be static. Like a rigid pole that breaks in a heavy wind, static organizational systems
will fail under the onslaught of significant and pervasive environmental change. Thus,
organizational systems must be flexible in order to adapt to changing environments.
While organizations and their systems must adapt in the face of increasing environmental
uncertainty, they must also be grounded in some fundamental guiding principles and
processes. Such a firm grounding increases the likelihood of safe passage through the
dangerous straits of environmental uncertainty. A performance management system and its
associated reward system, if designed well and operated effectively, can both accommodate
change and provide a solid anchor for individual performance goals in the context of the
broader organizational mission.
Role Plays
Additional role plays relevant to the material in this chapter are located in Appendix A of this
instructor's manual.