Performance Related Pay is a kind of a payment system which relates the wages and salaries with the performance of an employee. It includes incentive payments, merit pay, etc. Performance Related Pay is also known as Variable Compensation. Variable compensation programs are customized in such an order that, as said before, the performance of the employees depicts their incomes. It does not depend on his/her designation in an organization. These programs are designed to motivate individuals and groups that contribute effectively, as they differentiate between performers and non-performers. Many companies believe that a variable compensation program enhances productivity and motivates employees. The American Management Association, based on a study of 83 companies, concluded that grievances had dropped by 83%. absenteeism by 84% and lost – time by 64%, after variable pay programs were introduced in these firms. Variable compensation is also one of the employee involvement programs. Such programs make Continue reading
HRM Functions
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
Tips for Effective Employee Recognition and Reward Programs
Recognition is defined as a form of sincere praise or appreciation given to an individual by another and reward as the earned item of value presented to an individual for successful accomplishment of a particular service, task or mission. Recognition and reward programs has always been an effective strategy for retaining employees and it normally do not cost much and not very time-consuming. Informal recognition and reward program can recognize outstanding performance rather quickly while formal program develops the performance growth in a long term basis. Well planned recognition and reward programs builds comradeship within the team and makes employees feel valued and appreciated. Employees want to feel appreciated and seldom will they find compliments a surplus. Effective recognition and reward programs recognizes and appreciates the efforts of individuals while taking into account their individual needs, differences and personalities. As a leader, do not assume that the approach of one-size-fits-all Continue reading
Performance Related Pay – Definition, Objectives and Conditions
Rewarding performance is the element of the performance management process which seeks to give employees some kind of return for achieving their targets. This is wider than just financial recompense and includes such things as praise, greater opportunities for training and development, and promotion. Very often one of the things most sought by an employee is the recognition that he or she is doing a good job and where, for example, this is expressed in terms of bonus it is very often the recognition rather than the cash that really matters. It is only when money enters the equation that rewarding performance become very tricky and the emphasis her is therefore on the financial aspects. People very often consider performance management solely in terms of Performance Related Pay (PRP). PRP is a method of remuneration that provides individuals with financial rewards in the form of increases to basic pay or Continue reading
Management Development Programme
Management development programme is an attempt to improve managerial effectiveness through a planned and deliberate learning process. Unlike general purpose of training, management development programme aims at developing conceptual and human skills of managers and executives through organized and systematic procedures. In India, many professional institutes like Administrative staff college of India, Management Development Institute, Indian Institute of Management, Quality Management International, National Institute of Personnel Management, Indian Society of Training and Development etc, conduct different management development programmes to sensitize managers and executives to various emerging problems of the corporate world. The major components of Management Development Programme are: Selection: To identify innate potentiality or managerial abilities of executives. Intellectual conditioning: To educate executives and managers on different managerial tools & techniques. Supervised training: To guide executives and managers on application and use of knowledge in the course of day to day activities. Management Development Programme Objectives For top 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