Module 1 Performance management and reward systems in context Flashcards
What is a Performance appraisal system?
Employee evaluation once a year
No ongoing effort to provide feedback or coaching
Systematic description of employee strenghts and weaknesses
Important but just small part of Performance Management
What is Performance Management?
«A continous process of identifying, measuring and developing performance in organisations by linking each individual’s performance and objectives to the organisations overall mission and goals.»
List the 12 contibutions of having a Performance Management System
Motivation to perform is increased
Self-esteem is increased
Managers gain insight about subordinates
The job definition and criteria are clarified
Self-insight and development are enhanced
Personnel actions are more fair and appropriate
Organisational goals are made clear
Employees become more competent
There is better protection from lawsuits
There is better and more timely differentiation between good and poor performers
Supervisors’ views of performance are communicated more clearly
Organisational change is facilitated
12 Dissadvantages/dangers of poorly implemented PM systems
Employees may quit due to results
Definition of Reward systems
“A set of mechanisms for distributing both tangible and intangible returns as part of an employment relationship”
Two forms of compensation
Tangible returns
Intangible returns
Tangible returns
Base pay Cost of living adjustments and Contingent pay Short-term incentives Lon-term incentives Income protection Work/life focus Allowances
Intangible returns
Relational returns
Base pay
Given to employees in exchange for work performed.
Focus on position and duties rather than individual contribution.
Cost of living adjustments (COLA)
COLA - imply the same percentage increase for all employees regardless of their individual performance.
Given to combat the effects of inflation -> preserve employees buying power.
Contigent Pay
Given as an addition to base pay based on past performance.
Depends on the employees level of performance.
Not known in advance.
Short-term incentives
Attempt to motivate performance in short term.
Allocated on past performance.
Temporary pay adjustment based on review period.
Not added to base pay.
One-time payments -> variable pay.
Known in advance.
Long-term incentives
Attempt to influence future performance over longer period.
E.g. Stock ownership, option to buy stocks at pre-established and profitable price.
“Employees will be personally invested in the organisations success.
Income protection
Back-up to salary in the event of employee is sick, disabled or no longer able to work.
Medical insurance.
Pension plans.
Saving plans.
-> Optional benefits, increasingly important.
Often guide appplicants decision to accept a job offer.
Work/life focus
Programmes to help employees achieve a better balance between work and non-work activites.
Time away from work.
Services to meet specific needs.
Flexible work schedules.
