Refers to all aspects of pay and reward including
promotion, bonuses and recognition.
Compensation is always a STICKY ISSUE.
Objective of good compensation is to attract , retain
and not to demotivate employees.
Most companies use traditional financial measures such
as financial growth, profitability. Method of utilizing market pay data to evaluate organization’s pay level.
Develop hierarchy.
a.) Ranking Method – ranking of employees from best
to worst
b.) Classification Method
c.) Point Method (skills, responsibilities, efforts,
working conditions) Nucor Corporation is the largest steel producer in the United States, is well-known for having succeeded in quality, productivity, participation and compensation.
Nucor’s compensation at all levels is based on pay
for performance. In the mills, it means that pay is tied to the number of tons of steel produced each day. The company has found out that this results in above industry average wages for employees. By pushing decision-making to the lowest levels of organization, employees empowered to do such things as to stop operation when they see problem. Employee relations to Nucor are based on four clear-cut principles Management is obligated to manage Nucor in such a way that the employees will have the opportunity to earn according to their productivity.
Employees should feel confident that if they do their jobs
properly, they will have a job tomorrow.
Employees have the right to be treated fairly and must
believe that they will be.
Employees must have an avenue of appeal when they
believe they are treated unfairly. To emphasize the importance of employees as a vital part of the corporate culture and its ongoing success, to cover the company’s Annual Report contains the individual names of a segment of its employees, in alphabetical order. In past years, Nucor featured the names of each of its 20,500 employees spread over the first 14 cover pages of the report. Recognition and rewards can be powerful motivators. They can be monetary, non monetary, formal or informal, individual or group.
Whatever the recognition, it should be a symbolic value
that the employees inspire.
Recognition has important benefits to both employees
and organizations.
Not everyone values the same type of recognition and
reward. Conference Board found out that a combination of cash and noncash works better.
Certain key principle lead to effective recognition and
rewards: Give both individual and team awards. Tie rewards to measurable performance. Involve everyone Drive behaviors that supports organizational values and high performance. Publicizing extensively. Making recognition fun. Performance appraisal is a process of subjectively evaluating the quality of employee’s work.
Exceedingly difficult.
Provide feedback to employee.
Recognize their strength and weaknesses.
Determine trainings needed.
Refers to setting of objectives for a certain period of time. Objectives might focus on the development of knowledge or skills.
Objective setting is followed by a supervisory review
of accomplishments. Numerous research studies have pointed out the problems and pitfalls of performance appraisals. Many legitimate objections can be made:
They tend to foster mediocrity and discouraging risk
taking. Focus on short term and measurable results. Focus on the individual and therefore destroy teamwork between departments. They are often unfair, as managers frequently do not possess observational accuracy. A group of individuals who interact with the employees or teams.
This team might include suppliers, clients, peers, internal
customers, managers and subordinates.
The final performance appraisal consists of discussing an
aggregation of the comments and ratings with the employees.
Performance appraisal are the most effective when they are
based on the objectives. An effective performance appraisal should focus on the feedback and improvement.