The performance appraisal requires willingness and a commitment to focus on improving performance at the level of the individual or team every day. Like a compass, an ongoing performance appraisal system provides instantaneous, real-time information that describes the difference between one’s current and desired course. To practice sound performance appraisal system, managers must do the same thing-provide timely feedback about performance, while constantly focusing everyone’s attention on the ultimate objective of being the best among the competitors in the market. Well-written performance appraisals are among the most effective tools for developing people. The following guidelines would be used for effective performance appraisals to significantly increase your team’s effectiveness and perceived value within your organization. Increase employees comfort level with performance appraisals. At the beginning of each review period, explain the appraisal process, rating system, and appraisal form. Agree on performance objectives and measurements for the upcoming review period. Start thinking Continue reading
Compensation Management
Introduction to Performance Appraisal
In almost every organization, every employee is subjected to periodic appraisal of his/her performance. This is highly important if the organization’s human resource development objectives are to be realized, if the organization wants to make best use of its human resource available and if the organization wants to have a scientific and retinal compensation system. An effective performance appraisal system brings rationality in management. If an organization wants to maximize its effectiveness then the organization must have tool by which it can discriminate between an effective employee and not so effective employee. Today, appraisal is not something of a choice left to the wishes of the corporate bosses, nor it is a privilege to be enjoyed by few businesses conglomerates. Therefore, it is a must for every organization for its survival and growth. The appraisal practices are in somewhere structured and formally sanctioned and in other instances they are an Continue reading
Objectives of Compensation Management
The basic objective of compensation management can be briefly termed as meeting the needs of both employees and the organisation. Since both these needs emerge from different sources, often, there is a conflict between the two. This conflict can be understood by agency theory which explains relationship between employees and employers. The theory suggests that employers and employees are two main stakeholders in a business unit, the former assuming the role of principals and the latter assuming the role of agents. Objectives of Compensation Management The compensation paid to employees is agency consideration. Each party to agency tries to fix this consideration in its own favor. The employers want to pay as little as possible to keep their costs low. Employees want to get as high as possible. The compensation management tries to strike a balance between these two with following specific objectives: 1. Attracting and Retaining Personnel From organisation’s Continue reading
Methods of Job Evaluation
For fixing compensation to different jobs, it is essential that there is internal equity and consistency among different job holders. Job evaluation is the process of determining the relative worth of different categories of jobs by analyzing their responsibilities and, consequently, fixation of their remuneration. The basic objective of job evaluation is to determine the relative contributions that the performance of different jobs makes towards the realization of organisational objectives. There are four basic methods of job evaluation: ranking method, job grading method, point method and factor comparison method. Out of these, first two methods are non-quantitative and also known as traditional, non-analytical or summary methods. The last two methods of job evaluation are quantitative, also known as analytical methods, and use various quantitative techniques in evaluating a job. The basic difference between qualitative and quantitative methods of job evaluation is in terms of; Consideration of the job as a Continue reading
Wage Determination Process
Wages can be expressed in two ways. When they are expressed in terms of money paid to the worker they are called nominal wages. But when they are expressed in terms of their purchasing power with reference to some base year they are called real wages. These wages are arrived at by making adjustment in the nominal wages for the rise or fall in the cost of living. How do we measure changes in the cost of living, or changes in the prices that consumers pay? The measuring rod is the consumer price index number. This index number is intended to show over a period of time the average percentage change in the prices paid by the consumers belonging to the population group proposed to be covered by the index for a fixed list of goods and services consumed by them. The average percentage change, measured by the index, is Continue reading
Advantages and Disadvantages of Incentive Schemes
Merits of Incentives The following are the advantages derived by providing incentives to employees: Higher output: By providing incentives to his employees, the employer is able to induce them to work better. This leads to higher output. Greater profits: Needless to say, higher output results in greater profits for the business. This happens in two ways. First, the cost per unit becomes less and second, the enterprise is able to keep the selling price low and this results in greater sales. No problem of idle time: In an organisation where no proper incentives are available for the workers, the tendency will be to while away the time. When suitable incentives are available, the workers become time conscious. They begin to see every minute in terms of money. Supervision does not pose any problem: When suitable incentives are available, the workers become duty conscious. The need for close supervision, thus, does Continue reading