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Performance Appraisal
Performance Appraisal
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Performance Appraisal & Compensation

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Meaning of performance appraisal, objectives of performance appraisal, methods of performance appraisal and limitations. Principles and techniques of wage fixation, job evaluation, compensation -meaning of compensation, objectives of compensation.

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Performance Appraisal & Compensation

  1. 1. Human Resource Management By Prof. Jayalakshmi Performance Appraisal & Compensation Learnito Study Series for Business Students Find notes, curated videos, MCQs, case studies and solved university papers at www.learnito.com
  2. 2. Introduction to Performance Appraisal • According to Flippo, a prominent personality in the field of Human resources… “performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job.” • Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and Planning for his future. www.learnito.com HRM 2
  3. 3. 1. Review the performance of the employees over a given period of time. 2. Judge the gap between the actual and the desired performance. 3. Help the management in exercising organizational control. 4. Helps to strengthen the relationship and communication between superior – subordinates and management – employees. 5. Diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs for the future. 6. Provide feedback to the employees regarding their past performance. Objectives of Performance Appraisal www.learnito.com HRM 3
  4. 4. Process of Performance Appraisal www.learnito.com HRM 4
  5. 5. Methods of Performance Appraisal Traditional Methods Modern Methods 1. Paired Compensation 2. Graphic Rating Scale 3. Forced Choice Description Method 4. Forced Distribution Method 5. Check Lists 6. Free Essay Method 7. Critical Incidents 8. Group Appraisal 9. Field Review Method 10. Confidential Method 11. Rankings 1. Assessment Centre 2. Appraisal by Results or Management by Objective 3. Human Asset Accounting 4. Behaviorally Anchored Rating Scales www.learnito.com HRM 5
  6. 6. • Job evaluation is a systematic way of determining the – Value/worth of a job in relation to other jobs in an organization. – Establish a rational pay structure. Job Evaluation www.learnito.com HRM 6
  7. 7. Objectives of Job Evaluation 1. Compare the duties, responsibilities and demands of a job with that of other jobs 2. Determine the hierarchy and place (rank/grades) of various jobs in an organization. 3. Justify an existing pay rate structure or to develop one that provides for internal equity. 4. Provide a rational basis for negotiating pay rates when bargaining collectively with a recognized union. 5. Ensure fair and equitable compensation of employees in relation to their duties, skills, responsibilities and working conditions. www.learnito.com HRM 7
  8. 8. Compensation Compensation may be defined as a package of financial and non-financial benefits that the employee receives for his/her contribution rendered to the organization. It consists of all forms of monetary and non-monetary rewards/pays provided by the employer to the employees for services contributed by them towards organizational objectives. www.learnito.com HRM 8
  9. 9. 1. Reward employees on the basis of their abilities, training and contribution. 2. Motivate the employees towards increasing productivity. 3. Improve productivity and also union management relations. 4. Control cost. 5. Retain employees. Objectives of Compensation www.learnito.com HRM 9
  10. 10. Principle Techniques of Wage Fixation 1. Preserving real income: this is the argument used by employee and unions viewing wages as an income. 2. Based on labour productivity 3. The capacity of business to afford wage increases 4. The capacity of the economy to absorb wage increases 5. Supply and demand of labour 6. Prevailing market rate 7. Living wage www.learnito.com HRM 10
  11. 11. Wage-Fixation Acts 1. The Minimum Wages Act 1998 2. The Equal Remunerations Act 1976 3. The Companies Act 1956 4. The Industrial Dispute Act 1956 5. The Payment of Wages Act 1936 www.learnito.com HRM 11
  12. 12. References Books Human Resources Management by Shashi. K. Gupta and Rosy Joshi Web Resources Career Ride http://www.careerride.com/view.aspx?id=20380 Pearson Education http://wps.pearsoned.com/durai_hrm/154/39672/10156044.cw/index.html Study Value http://studyvalue.com/_management_sciences/_hrm/limitations_of_performance_appraisal_36.html WhatIsHumanResource http://www.whatishumanresource.com/objectives-of-performance-appraisal Jet HR http://www.jethr.com/magazine/human-resource-management/performance-appraisal-process/article.html HR Zone http://www.hrzone.com/hr-glossary/what-is-a-behaviourally-anchored-rating-scale-bars MCQ Learn http://www.mcqslearn.com/mba/hrm/employee-compensation.php www.learnito.com HRM 12
  13. 13. Learnito Study Series for Business Students Find notes, curated videos, MCQs, case studies and solved university papers at www.learnito.com

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