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.

1. Human Resource Management
By Prof. Jayalakshmi
Performance Appraisal & Compensation
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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.
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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
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4. Process of Performance Appraisal
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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
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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
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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.
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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.
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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
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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
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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
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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
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13. Learnito Study Series for Business Students
Find notes, curated videos, MCQs, case studies and solved
university papers at www.learnito.com