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Human Resource Management

Employee Performance Appraisal

& Reward Management
 Importance
 Manage and improve employees’
 Compensation
 Training needs analysis
 Make more valid staffing decisions
 Enhance overall effectiveness of firm
Advantages of Quarterly Appraisals
 Employees efforts and capabilities are
recognised promptly and they are suitably
rewarded for their performance resulting in
enhanced performance level of the individual
employees in terms of productivity and low
material losses due to defects in
 The employer can ensure that the quality
specifications of its products are strictly
adhered to.
Advantages of Quarterly Appraisals
 The employer is able to identify and retain
the highly skilled workers and promptly
replace those workers who are unable to
meet the quality standards
 Employees make sustained efforts
throughout the year, rather than strive to
achieve high levels of performance close to
the year end to earn good appraisal rating.
What should be measured?

 Worker or work performance

 Performance outcomes
 Example of instructor
 Clear distinction between competencies and
Appraisal System

 Who devises an appraisal system

 Measurement content
 Measurement process
 Rater
 Ratee
 Administrative characteristics
Measurement Content
 Person
 Work
 Record of outcomes
 Domino’s
 Sheraton Hotel
 Others
 Important outcome categories
Quality, Quantity, Timeliness, Cost Effectiveness, Need
for supervision, Interpersonal Impact
Measurement Process
 Comparison among ratees
 Paired comparison
 Straight ranking
 Forced distribution (GE example)

 Comparison among performance anchors

 Pairs of behavior statements
 Forced choice
 Comparison to performance level anchors
 Graphic rating scales
 Behaviorally anchored rating scales
 MBOs
 Summated scales
 Performance Distribution Assessment
Rating errors

1. Leniency/Severity
2. Halo/Horns Effect
3. Central Tendency
4. Actor-observer bias
5. Representativeness
6. Availability
7. Anchoring
Limitation of Performance
 Efforts for short-term reward instead of long term
success of organization
 Supervisors consider EPA as reward punishment
exercise, not on overall skills and potential of the
 Routine paperwork exercise rather than objective
critique of the individual’s performance
 Individuals consider the exercise as biased or unfair
 Subordinates react negatively when evaluators offer
unfavorable comments.
 Personal biases and inconsistencies of the individual
conducting EPA may undermine the efficacy of the
entire exercise
Gauging the internal practices and activities
with an external standard or reference

1. Identify a benchmark
2. Identify comparables
3. Data on comparables
4. Internal data
5. Set specific targets
6. Train staff to meet targets
7. Feedback and reinforcement
8. Progress review
Employee Compensation Package
Employee Compensation Package
refers to all forms of pay and
rewards received by the employees
for the performance of their jobs,
including cash, bonuses, benefits,
facilities and perquisites.
Well Conceived Employee
Compensation Strategy
 Identification of the Objectives of the
Employee Compensation Strategy
 Review of Compensation Plan
 Identification of the Positions and Prepare
their Job Descriptions
Well Conceived Employee
Compensation Strategy
 Evaluation of the relative importance of
the Positions and their significance for
achieving the objectives
 Comparison of the Compensation
Packages with the packages offered by
the competitors
 Administration of the Compensation
 Communication of the Compensation
Objectives of Reward & Employee
Compensation System
 Obtaining support of employees
 Building relationship between the employer
and the employees.
 Deriving significant value-addition at all the
stages of customer service
 Inducting and retaining a pool of suitably
skilled and motivated work force.
Objectives of Reward & Employee
Compensation System
 Inculcating a sense of financial transparency
and fairness of the compensation and reward
system among the employees.
 Articulating in precise terms the
organization’s expectations of employee
performance and service standards to create
a competitive business advantage.
 Aligning the compensation and reward
packages with the comparative packages
offered by the competitors.