IMP LE M E N T IN G

P E N SA TIO N A N D SA F ET Y
COM P ENSATION
ORMANCE AP P RAISAL , COM
IN G E M P LO Y E E S: PE RF
REWARD
CL UD ING JO B E V A L U A T IO N
IN
 PURPOSE
THE PURPOSE OF THIS PRESENTATION IS AS
FOLLOWS:
 TO EXPLAIN PERFORMANCE APPRAISAL,
TO DISCUSS COMPENSATION, AND
TO ELUCIDATE WHAT IS JOB EVALUATION.
 LEARNING OBJECTIVES

AT THE COMPLETION OF THIS PRESENTATION YOU SHOULD BE

ABLE TO-
ARTICULATE THE BASIC CONCEPTS OF PERFORMANCE
APPRAISAL AND THE ROLES THEY PLAY IN MANAGEMENT
EXPLAIN HOW PERFORMANCE APPRAISAL IS CARRIED OUT
 LEARNING OBJECTIVES

DISCUSS THE CONCEPTS, ROLES AND METHODS

OF JOB EVALUATION
DESCRIBE THE CONCEPTS AND PRINCIPLES OF
COMPENSATION
DISCUSS EMPLOYEE BENEFITS
 PERFORMANCE APPRAISAL

WHAT IS PERFORMANCE APPRAISAL?

 PERFORMANCE APPRAISAL CAN BE DEFINED AS A
FORMAL AND STRUCTURED SYSTEM BY WHICH
MANAGEMENT MEASURES, EVALUATES AND
ASSESSES AN EMPLOYEE’S JOB RELATED
ATTRIBUTES, BEHAVIOUR AND OUTCOMES.
WEERATUNGA (2003).
PERFORMANCE APPRAISAL

ACCORDING TO MONDY ET AL (1999),

PERFORMANCE APPRAISAL IS A FORMAL SYSTEM
OF PERIODIC REVIEW AND EVALUATION OF AN
INDIVIDUAL’S OR TEAM JOB PERFORMANCE.
 PERFORMANCE APPRAISAL

WHY PERFORMANCE APPRAISAL?

 ONE OF THE PRIMARY REASONS FOR PERFORMANCE
APPRAISAL IS THAT IT IS UNDERTAKEN TO DISCUSS
HOW PRODUCTIVE THE EMPLOYEE IS AND WHETHER
THE EMPLOYEE CAN CONTINUE TO PERFORM IN
FUTURE TO HELP ACHIEVE THE ORGANISATION’S
GOALS.
 PERFORMANCE APPRAISAL

WHAT IS THE IMPORTANCE OF PERFORMANCE APPRAISAL?

• ITS IMPORTANCE IS REFLECTED IN THE INTEGRAL PART IT PLAYS IN

A VARIETY OF CRITICAL DECISIONS IN HRM. THE ORDER OF
IMPORTANCE FROM MOST TO BEST IS AS FOLLOWS-
• SALARY ADMINISTRATION
• PERFORMANCE FEEDBACK
• IDENTIFYING INDIVIDUAL STRENGTHS AND WEAKNESSES
• DOCUMENTING PERSONNEL DECISIONS
 PERFORMANCE APPRAISAL

RECOGNISING INDIVIDUAL PERFORMANCE

IDENTIFYING POOR PERFORMANCE
ASSISTING IN GOAL IDENTIFICATION
MAKING PROMOTIONAL DECISIONS
RETENTION OR TERMINATION OF PERSONNEL
EVALUATING GOAL ACHIEVEMENT
PERFORMANCE APPRAISAL AND PRODUCTIVITY

A STRONG PERFORMANCE APPRAISAL PROCESS PROVIDING

SYSTEMATIC FEEDBACK LINKED TO A REWARD SYSTEM CAN
CHANNEL EMPLOYEE’S EFFORTS INTO STRONG JOB
PERFORMANCE WITH SUSTAINABLE GROWTH OF
PRODUCTIVITY.
WHILE A WEAK AND UNCOORDINATED PERFORMANCE
APPRAISAL LINKING TO EQUALLY WEAK FEEDBACK AND
REWARDS SYSTEM CAN SURELY LEAD TO POOR RESULTS.
PERFORMANCE APPRAISAL PROCESS
WHAT IS THE PERFORMANCE APPRAISAL PROCESS AND ITS
COMPONENTS?
THE PERFORMANCE APPRAISAL PROCESS CAN BE BROKEN DOWN
INTO FOUR ELEMENTS, NAMELY,
THE APPRAISER
THE APPRAISEE
THE APPRAISAL METHOD
THE OUTCOME
PERFORMANCE APPRAISAL PROCESS

THE APPRAISER:
THE EXPERTS IN THE SUBJECT HAVE SPECIFIED FOUR
IMPORTANT CRITERIA THAT MUST BE SATISFIED TO
BECOME A PERFORMANCE APPRAISER (KREITNER AND
KINICKI, 1992) –
ABLE AND WILLING TO OBSERVE THE BEHAVIOURS
AND PERFORMANCE OF THE APPRAISAL AT WORK.
PERFORMANCE APPRAISAL PROCESS

KNOWLEDGEABLE ABOUT THE DIMENSIONS OR

FEATURES OF PERFORMANCE
UNDERSTAND THE INSTRUMENT USED, ITS FORMAT
AND THE SCALE.
POSSESS THE MOTIVATION TO CONDUCT A
PERFORMANCE APPRAISAL CONSCIENTIOUSLY.
 PERFORMANCE APPRAISAL PROCESS
THE APPRAISEE:
SOME EXPERTS SUGGEST THAT THE APPRAISER
HIMSELF/HERSELF NEEDS TO PLAY THE ROLE OF
AN ANALYSER, INFLUENCER, PLANNER AND
PROTÉGÉ IN THE PROCESS TO ACHIEVE A SORT OF
EQUALITY WITH THE APPRAISER.
 PERFORMANCE APPRAISAL PROCESS

THE APPRAISAL METHODS

 THE TRAIT APPROACH
BEHAVIOURAL APPROACH
RESULT APPROACH
 PERFORMANCE APPRAISAL PROCESS
TRAIT APPROACH
 THIS APPROACH INVOLVES RATING THE INDIVIDUAL EMPLOYEE’S
PERSONAL TRAITS OR CHARACTERISTICS SUCH AS INITIATIVE,
DECISIVENESS AND DEPENDABILITY.
 THIS APPROACH IS CONSIDERED TO BE THE WEAKEST BECAUSE
THE TRAITS ARE AMBIGUOUS RELATIVE TO THE ACTUAL JOB
PERFORMANCE AND THE NEEDED IMPROVEMENT.
 APPRAISING SOMEONE IS HAVING LOW INITIATIVE DOES NOT SAY
ANYTHING PRECISE ABOUT HOW TO IMPROVE
 PERFORMANCE APPRAISAL PROCESS

BEHAVIOURAL APPROACH

 THIS APPROACH POINTS DIRECTLY TO THE PERSON’S ACTUAL

WORK BEHAVIOUR RATHER THAN A TRAIT IN HIS OR HER
PERSONALITY. FOR EXAMPLE IT CAN BE FOCUSSED TO SEEK
INFORMATION AS TO WHETHER THE EMPLOYEE WORKS ALONE ON
ALL PROJECTS ON MOST PROJECTS OR ABOUT HALF THE PROJECTS.

 SIMILARLY, WHETHER HE OR SHE TEAMS UP WITH OTHERS ON

MAJOR PROJECTS OR WORK ALONE ON ALL MAJOR PROJECTS.
WHEN THESE BEHAVIOURAL PATTERNS ARE COUPLED WITH
PERFORMANCE RATING APPRAISAL IS ENHANCED.
 PERFORMANCE APPRAISAL PROCESS

THE RESULTS APPROACH

 THIS APPROACH FOCUSES ON THE PRODUCT OR THE
OUTCOME OF ONE’S EFFORT. IT SEEKS TO IDENTIFY AND
EVALUATE WHAT HAS BEEN ACCOMPLISHED BY AN
EMPLOYEE SUBJECT TO APPRAISAL.
MANAGEMENT BY OBJECTIVES (MBO) IS
USUALLY REGARDED AS THE MOST APPROPRIATE FORMAT
FOR USING THE RESULTS APPROACH.
 PERFORMANCE APPRAISAL PROCESS
THE BEHAVIOURAL APPROACH HAS ITS STRENGTHS BUT MUCH
DEPENDS ON THE ROLE AND CHARACTER OF THE APPRAISEE.

 MANY ORGANISATIONS FAVOUR THE RESULT- BASED MODEL OF

MBO BECAUSE MANAGEMENT ROLES ARE LESS PRESCRIBED AND
YET HAVE A SIGNIFICANT EFFECT ON OUTCOME.

 PERFORMANCE APPRAISALS ARE EMPLOYED BY MANAGEMENT

TO INFORM HUMAN RESOURCE DEVELOPMENT DECISIONS AND
PRODUCTIVITY.

IT IS THEREFORE CRUCIAL THAT PERFORMANCE APPRAISALS BE

EFFECTIVELY CONDUCTED SO AS TO PROVIDE INSTRUCTIVE
INFORMATION.
 METHODS OF PERFORMANCE APPRAISAL

WRITTEN ESSAYS
CRITICAL INCIDENTS
GRAPHIC RATING SCALE (GRS)
BEHAVIOURALLY ANCHORED RATING SCALE
(BARS)
METHODS OF PERFORMANCE APPRAISAL

INDIVIDUAL RANKING
PAIRED COMPARISON
GROUP ORDER RANKING
360 DEGREE FEEDBACK
 METHODS OF PERFORMANCE APPRAISAL
WRITTEN ESSAYS : THESE ARE WRITTEN NARRATIVES DESCRIBING AN
APPRAISEE’S STRENGTHS, WEAKNESSES, PAST PERFORMANCES, FUTURE
POTENTIAL AND SUGGESTIONS FOR IMPROVEMENT.
 CRITICAL INCIDENTS: IN THIS METHOD THE APPRAISER FOCUSES
ATTENTION ON THOSE KEY FACTORS WITHIN THE WHOLE ARRAY OF
FACTORS IN THE APPRAISEE’S BEHAVIOUR
THAT RENDERS THE PERFORMANCE EFFECTIVE OR INEFFECTIVE
 METHODS OF PERFORMANCE APPRAISAL

GRAPHIC RATING SCALE (GRS): UNDER THIS METHOD A SET OF PERFORMANCE STANDARD
CRITERIA IS DEVELOPED .

THESE STANDARDS ARE USUALLY RELATED TO SUCH FACTORS AS QUANTITY AND QUALITY OF
WORK, THE EXTENT OF KNOWLEDGE RELATED TO JOB TASKS, ATTENDANCE, INITIATIVE AND
LOYALTY .

 ONCE THESE CRITERIA ARE DETERMINED, A DECISION IS MADE ON THE SCALE TO BE USED
FOR EVALUATING EACH CRITERION ESTABLISHED.

TYPICALLY, FIVE SCALE POINTS ARE USED FOR EVALUATION.

 METHODS OF PERFORMANCE APPRAISAL

 BEHAVIOURALLY ANCHORED RATING SCALE (BARS): IN THIS METHOD,

THE APPRAISER RATES THE EMPLOYEE BASED ON PRE DETERMINED ITEMS
ON A CONTINUUM SCALE AND THE POINTS SCORED MEASURES ACTUAL
BEHAVIOUR RATHER THAN TRAITS OR GENERAL EMPLOYEE
CHARACTERISTICS.
 METHODS OF PERFORMANCE APPRAISAL

INDIVIDUAL RANKING: IN THIS APPROACH INDIVIDUAL EMPLOYEES ARE RANKED FROM

THE LEVEL OF BEST TO THE LEVEL OF WORST. THE RESULT IS THE RANK ORDERING OF
EMPLOYEE IN PARTICULAR CATEGORY FROM THE HIGHEST PERFORMER TO THE LOWEST
ONE.

 PAIRED COMPARISON: IN THIS METHOD EACH EMPLOYEE IS COMPARED WITH

ANOTHER AND ONE IS CONSIDERED A SUPERIOR OR WEAKER OF THE PAIR. WHEN ALL
PAIRED COMPARISONS ARE COMPLETED, EACH EMPLOYEE IS ASSIGNED A SUMMARY
RANKING BASED ON THE NUMBER OF SUPERIOR SCORES ACHIEVED.
 METHODS OF PERFORMANCE APPRAISAL

GROUP ORDER RANKING : THIS IS THE METHOD BY WHICH THE EMPLOYEES ARE CATEGORISED
AFTER EVALUATION INTO GROUPS SUCH AS TOP 5%, THE NEXT 15% AND SO ON.

THIS TAKES AWAY THE NEED TO RANK ORDER EACH AND EVERY INDIVIDUAL.
 360 DEGREE FEEDBACK: THIS METHOD USES MULTIPLE APPRAISERS THAT INCLUDE
SUPERVISORS, SUBORDINATES AND TARGET PERSONS.

IN SOME CASES, IT ALSO INCLUDED SELF-APPRAISAL.

THE APPRAISAL IS 360-DEGREE FEEDBACK IN THAT INFORMATION IS COLLECTED AND
FEEDBACK IS PROVIDED IN FULL CIRCULAR FASHION, I.E. TOP TO BOTTOM AND BACK TO TOP
 FEEDBACK ON PERFORMANCE

FEEDBACK IS CONCEPTUALLY OBJECTIVE INFORMATION ABOUT

ADEQUACY OF ONE’S OWN JOB PERFORMANCE.
FEEDBACK SERVES TWO BASIC FUNCTION-
INSTRUCTIONAL, AND
MOTIVATIONAL
 FEEDBACK ON PERFORMANCE

INSTRUCTIONAL FUNCTION CLARIFIES THE ROLE OR TEACHES

NEW BEHAVIOUR.
MOTIVATIONAL FUNCTION REFERS TO FOR EXAMPLE WHEN THE
BOSS COMPLIMENTS AN EMPLOYEE VERBALLY WITH A PROMISE OF
A REWARD FOR SUCCESSFULLY COMPLETING A PROJECT BEFORE
DEADLINE.
 THE PERFORMANCE APPRAISAL PROCESS

IDENTIFY SPECIFIC PERFORMANCE APPRAISAL GOALS

ESTABLISH JOB EXPECTATION (JOB ANALYSIS INFORMATION)
EXAMINE WORK PERFORMED
APPRAISEE PERFORMANCE
DISCUSS APPRAISAL WITH EMPLOYEE
 PROBLEMS WITH APPRAISER

INADEQUATE TRAINING OF APPRAISER CAN LEAD TO ANYONE OF THE

PROBLEMS OUTLINED BELOW-
THE HALO EFFECT
STANDARDS OF APPRAISAL
CENTRAL TENDENCY
RECENT- BEHAVIOUR BIAS
PERSONAL BIASES
 THE CHARACTERISTIC OF AN EFFECTIVE APPRAISAL
SYSTEM
• JOB-RELATED CRITERIA
• PERFORMANCE EXPECTATION
• STANDARDISATION
• TRAINED APPRAISERS
• OPEN COMMUNICATION
• EMPLOYEE ACCESS TO RESULTS
• DUE PROCESS
 REWARDIN G E M P L O Y E E S :
A P P R A I S A L ,
PERFORMANCE
N I N C L U D I N G
COMPENSATIO
J O B E V A L U A T I O N
JOB EVALUATION
 JOB - EVALUATION

JOB EVALUATION IS THE FORMAL PROCESS BY WHICH THE RELATIVE

WORTH OF VARIOUS JOBS IN THE ORGANISATION IS DETERMINED FOR PAY
PURPOSES.
ESSENTIALLY, IT ATTEMPTS TO RELATE THE AMOUNT OF THE EMPLOYEE’S
PAY TO THE EXTENT THAT HER OR HIS JOB CONTRIBUTES TO
ORGANISATIONAL EFFECTIVENESS. (GLWCK, 1978)
 JOB EVALUATION METHODS

THE FOUR MOST FREQUENTLY USED JOB EVALUATION METHODS ARE,

JOB RANKING
FACTOR COMPARISON
CLASSIFICATION
THE POINT SYSTEM
 JOB EVALUATION METHODS

JOB RANKING: IN THE JOB RANKING METHOD, THE RATER OR

EVALUATOR EXAMINE THE DESCRIPTION OF EACH JOB BEING
EVALUATED AND ARRANGE THE JOBS IN ORDER ACCORDING TO
THEIR VALUE TO THE ORGANISATION.
THE FIRST STEP IN THIS METHOD IS CONDUCTING JOB
ANALYSIS AND WRITING JOB DESCRIPTIONS.
 JOB EVALUATION METHODS

 CLASSIFICATION OR GRADING SYSTEM: THIS SYSTEM GROUPS

A SET OF JOBS INTO A GRADE OR CLASSIFICATION.
 THESE SETS OF JOBS ARE THEN RANKED ACCORDING TO LEVELS
OF DIFFICULTIES O SOPHISTICATION.
 JOB EVALUATION METHODS

FACTOR COMPARISON: THIS METHOD IS THE MOST COSTLY BUT SLIGHTLY

MORE RELIABLE THAN THE OTHER METHODS.
IT INVOLVES FIVE (5) STEPS -
CHOOSE THE KEY JOBS TO BE EVALUATED.
RANK THE KEY JOB ON IMPORTANT FACTORS OF JOB EVALUATION
DIVIDE THE CURRENT PAY AMONG THE FACTORS
 JOB EVALUATION METHODS

RECONCILE THE DIFFERENCES IN RANKING FOUND IN

STEPS 1 AND 2 BY THE COMMITTEE MEMBERS
PLACE THE KEY JOBS ON A SCALE FOR EACH FACTOR.
 THIS BECOMES THE BASIS FOR EVALUATING NON-KEY JOBS
IN THE STRUCTURE.
 EVALUATION METHODS

THE POINT SYSTEM: MOST JOB EVALUATION PLANS USE THE POINT SYSTEM
FOR TWO REASONS –
• IT IS MORE SOPHISTICATED THAN THE RANKING AND CLASSIFICATION
SYSTEMS.
• IT IS RELATIVELY MORE EASY TO USE.
THE POINT SYSTEM REQUIRES EVALUATORS TO QUANTIFY THE VALUE OF THE
ELEMENTS OF THE JOB.
 MANCE AP PR AISAL, CO MP ENSATION INCLUDING
RFOR
REWARDING EMPLOYEES: PE JOB EVALUATION
COMPENSATION
 COMPENSATION

COMPENSATION IS THE MONETARY REWARD PAID BY AN

ENTERPRISE FOR THE WORK DONE BY AN EMPLOYEE.
(WEERATUNGA 2003)
 COMPENSATION IS THE TOTAL OF ALL REWARDS PROVIDED
EMPLOYEES IN RETURN FOR THEIR LABOUR. (MONDY ET AL 1999)
 COMPENSATION

OBJECTIVE OF COMPENSATION
 THE OBJECTIVE OF COMPENSATION SYSTEM IS EQUITABLE TO
THE EMPLOYER AND EMPLOYEE ALIKE, SO THAT THE EMPLOYEE IS
ATTRACTED TO THE WORK AND MOTIVATED TO DO A GOOD JOB
FOR THE EMPLOYER.
 CRITERIA FOR AN EFFECTIVE COMPENSATION
POLICY

THE COMPENSATION SHOULD BE:

• ADEQUATE : MINIMUM GOVERNMENT, UNION, MANAGEMENT LEVELS SHOULD BE MET.

• EQUITABLE : EACH PERSON IS PAID FAIRLY.
• BALANCED : PAY, BENEFITS AND OTHER REWARDS PROVIDE A REASONABLE TOTAL PACKAGE.
 CRITERIA FOR AN EFFECTIVE COMPENSATION
POLICY

•COST EFFECTIVE : PAY IS NOT EXCESSIVE.

•SECURE : THE EMPLOYEE’S SECURITY NEED ARE MET.
•INCENTIVE PROVIDING: PAY MOTIVATES EFFECTIVE AND
PRODUCTIVE WORK.
 METHOD OF PAYMENT

1. PAYMENT FOR TIME WORKED

2.INCENTIVE PLANS
INDIVIDUAL INCENTIVES
GROUP INCENTIVES
 METHOD OF PAYMENT

3.ENTERPRISE INCENTIVE SCHEMES

SUGGESTION SYSTEMS
COMPANY GROUP INCENTIVE PLANS
PROFIT-SHARING, AND
STOCK OWNERSHIP
 EXECUTIVE COMPENSATION

EXECUTIVE PAY
EXECUTIVE PERKS
BONUSES
 WHAT ARE EMPLOYEE BENEFITS?

EMPLOYEE BENEFITS AND SERVICES ARE A PART OF THE REWARDS

(INCLUDING PAY AND PROMOTION) THAT REINFORCE LOYAL SERVICE
TO THE EMPLOYER.
ACCORDING TO MONDY ET AL, BENEFITS ARE ALL FINANCIAL
REWARDS THAT GENERALLY ARE NOT PAID DIRECTLY TO AN
EMPLOYEE.
 WHY BENEFITS AND SERVICES PROGRAMMES ARE
OFFERED TO EMPLOYEES?

SOME EMPLOYERS PROVIDE THESE PROGRAMMES FOR LABOUR MARKET

REASONS THAT IS TO KEEP THE ENTERPRISE COMPETITIVE IN RECRUITING
AND RETAINING EMPLOYEES IN RELATION TO OTHER EMPLOYERS
 OR THEY MAY PROVIDE THEM TO KEEP A UNION OUT, OR BECAUSE THE
UNIONS HAVE WON THEM.
ANOTHER REASON OFTEN GIVEN IS THAT THEY ARE PROVIDED BECAUSE
THEY INCREASE EMPLOYEE PERFORMANCE
 WHAT ARE CAFETERIA BENEFITS?

THERE APPEARS TO BE A MOVEMENT TOWARDS FLEXIBLE COMPENSATION SCHEMES

MORE COMMONLY KNOWN AS ‘CAFETERIA BENEFITS’ (BEARDWELL AND HOLDEN 1998).

 CAFETERIA BENEFITS SCHEMES OPERATE BY SETTING A ‘PRICE’ FOR EACH LEVEL OF

THE SELECTED BENEFITS WITHIN A MENU AND EACH EMPLOYEE IS ALLOCATED A BUDGET
TO SPEND ON BENEFITS, EXPRESSED AS CREDITS, POINTS OR CASH AMOUNTS.

THUS EMPLOYEES ARE ABLE TO DECIDE WHICH BENEFITS THEY PREFER AND HOW TO
BALANCE THE AMOUNT OF CASH PAID TO BENEFITS.
 BASIC TYPES OF BENEFITS

ACCORDING TO BEARDWELL AND HOLDEN, (1998), THE BASIC TYPES OF

BENEFITS ARE AS FOLLOWS:
• COMPANY CAR
• SUBSIDISED MEALS AND OR THE SUPPLY OF CANTEEN FACILITIES
• HOLIDAY ENTITLEMENT
• OPPORTUNITIES FOR FOREIGN TRAVEL
 BASIC TYPES OF BENEFITS

TELEPHONE COST
DISCOUNT, OR THE PROVISION OF INSURANCE
PRIVATE HEALTH CARE, DENTAL TREATMENT AND EYE TESTS
CRECHES
 BASIC TYPES OF BENEFITS

OFFICE ACCOMMODATIONS AND FACILITIES

SABBATICAL
SPORTS/SOCIAL FACILITIES
DISCOUNT AND COMPANY PLANS WHERE EMPLOYEES CAN
PURCHASE GOODS AT A FAVOURABLE PRICE
 BASIC TYPES OF BENEFITS

ASSISTANCE WITH HOUSING - COMPANY OWED HOUSES,

HOUSE MOVING EXPENSES AND ASSISTANCE WITH HOUSE
PURCHASE
HELP WITH EDUCATIONAL COURSES
PENSION SCHEMES