Business Insider

1. Performance Management and
Appraisal

2.  Performance management aims at building a high
performance culture for both the individuals and the
teams so that they jointly take the responsibility of
improving the business processes on a continuous
basis and at the same time raise the competence bar
by upgrading their own skills within a leadership
framework.

3.  According to Lockett (1992), performance
management aims at developing individuals
with the required commitment and
competencies for working towards the
shared meaningful objectives within an
organizationalframework.

4.  managementare discussed below:
 To enable the employees towards achievement of
superior standards of work performance.
 To help the employees in identifying the knowledge
and skills required for performing the job efficiently
as this would drive their focus towards performing
the right task in the right way.

5.  Boosting the performance of the employees by encouraging
employee empowerment,motivation and implementation
of an effective reward mechanism.
 Promoting a two way system of communication between the
supervisors and the employees for clarifying expectations
about the roles and accountabilities, communicating the
functional and organizational goals, providing a regular and
a transparent feedback for improving employee
performance and continuous coaching.

6.  Identifying the barriers to effective performance and
resolving those barriers through constant monitoring,
coaching and development interventions.
 Creating a basis for several administrative decisions strategic
planning, succession planning, promotions and performance
based payment.
 Promoting personal growth and advancement in the career
of the employees by helping them in acquiring the desired
knowledge and skills.

7.  Performance appraisal is a method of
evaluating the behaviour of employees in the
work environment.
 Refers to the degree of accomplishmentof
the tasks that make up an individuals job.

8.  Performance appraisal
▪ Evaluating an employee’s current and/or past
performance relative to his or her performance
standards.
 Performance management
▪ The process employers use to make sure employees
are working toward organizational goals.

9.  Performance appraisal may be understood as the
assessment of an individual’s performance in a
systematic way. The performance being measured
against such factors as job knowledge, quality and
quantity of output, initiative, leadership abilities,
supervision, dependability, cooperation, Judgment,
versatility, health etc. It is the systematic evaluation
of the individual with respect to his/her performance
on the job and his/her potential for development.

11.  Assessment of current employee performance
▪ are performance standards being met?
 Training needs
▪ what does the employee need to learn in order to improve
current work performance?
 Career planning and development
▪ assessing an employee’s strengths and weaknesses to
determine advancement
 Compensation programs
▪ provides a basis for rational decisions regarding pay
adjustments (raises and bonuses)
 Internal employee relations
▪ used for decisions in several areas of internal employee
relations, including promotion, demotion, termination, layoff,
and transfer (transfers, layoffs, terminations).

12.  Feedback
 Documentation purpose
 Administration uses
 Improve communication
 Personal development
 Recruitment and selection
▪ generates data to validate selection criteria
 Human resource planning
▪ assessment data is helpful in building replacement or
succession charts

14. Figure 11–8b

15.  Annually (Once A Year)
 Semi-annually (Every 6 Months)
 Quarterly (Every 3 Months)
 Monthly
 Continuously
When Should Appraisals Be Done?
Do all the appraisals at one time?
A lot of work to do at one time..overworks the supervisor
All appraisals cover the same time period
Do each one on the employee’s “anniversary”?
The appraisal process is spread over the whole year
Appraisals are not comparable…they don’t cover the same
time period

16.  The immediate supervisor
 Peers
 Rating committees
 Self-ratings
 Subordinates
 360-Degree feedback

17.  BEAWAREOFTHEOBJECTIVES & REQUIREMENTSOFTHE
EMPLOYEE’S JOB
 HAVETHEOPPORTUNITYTO FREQUENTLYOBSERVETHE
EMPLOYEEOR HIS/HERWORK
 BECAPABLEOFEVALUATINGAND RECORDINGOBSERVEDWORK
BEHAVIOROR PERFORMANCE
 AVOIDORMINIMIZE POTENTIAL APPRAISAL ERRORSANDBIAS

18. Establish Performance
standards
Communicate
Performance Criteria
(Standards) Employees
Examine Work Performed
Measure actual performance
Discuss Appraisal with
Employee
Compare actual with the
standard

19. 1) Establish PerformanceStandards orGoals
The evaluators must determine what outputs,
accomplishments and skills will be evaluated. These
standards should have evolved out of job analysis and job
description. These performance standards should be clear
and objectives are to be understood and measured.
2) Communicate Performance Expectations to Employees –
Once the performance standards are established, these
need to be communicated to the respective employees so
that they come to know what expected of them. It become
communication only when the transference of information
has taken place and has been received and understood by
the staff. The feedback from the staff on the
standards communicated to them must be obtained.

20. 3) Measure Actual Performance –
This is the third step involved in the appraisal process. In this
stage, the actual performance of the employees is measured
on the basis of information available from various
sources such as personal observation, statistical reports, oral
reports, and written reports. The evaluator’s feeling should
not influence the performance measurementsof the staff.
4) CompareActual Performance with Standards –
In this stage, the actual performance is compared with the
predetermined standards. Such a comparison may reveal
the deviation between standard performance and actual
performance and will enable the evaluator to proceed to the
fifth step on the process

21. 5) Discuss and Review the Appraisal with the Staff –
The fifth step in the appraisal process is to communicate to
and discuss with the employees the results of the appraisal.
A discussion on appraisal enables employees to know their
strengths and weaknesses. This has, in turn, impact on their
future performance. The impact may be positive or negative
depending upon how the appraisal is presented
and discussed with the employees.
6) Initiate Corrective Action –
The final step in the appraisal process is the initiation of
corrective action when it is necessary. The areas
needing improvement are identified and then, the measures
to correct or improve the performance are identified and
initiated.

27. 1. More focus on teams, fewer individual goals
2. More collaboration on strategy, less rigid cascading (to hang
down) of goals
3. A more iterative approach instead of a waterfall approach
4. More cross-departmental collaboration, fewer silos
5. More transparency, less secrecy
6. More regular, multi-perspective feedback, fewer annual
performance reviews
7. More continuous, self-directed learning for all, less focus on
training catalogs
8. Changed roles and team composition, fewer rigid boxes in the
organizational chart
9. More focus on value creation, less actionism

29.  Compensation is what employees
receive in exchange for their
contribution to the organization.
 Total of all rewards provided to
employees in return for their
services
 Compensation offered by an
organization can come both directly
through base pay and variable pay
and indirectly through benefits.

30.  Base pay – Basic compensation of an
employee. Usually wage or salary
1. Wage –remuneration paid by the employer for
the services on an hourly, daily, weekly and
fortnightly basis to the employees.
2. Salary- remuneration paid to the clerical,
administration and managerial personnel
employed on a monthly basis.
 Variable pay – compensation that is directly
linked to performance accomplishments
(bonuses, incentives, commission)
 Benefits- Indirect rewards given to employee or
group of employees as a part of organizational
membership. (Health insurance , vacation pay ,
pension, ESOP)

31. Compensation
Direct
Wages
Salaries
Commissions
Bonuses
Indirect (Benefits)
Legally Required Benefits
Social Security
Unemployment Compensation
Workers’ Compensation
Family & Medical Leave
Voluntary Benefits
Payment for Time Not Worked
Health Care
Life Insurance
Retirement Plans
Employee Stock Option Plans
Supplemental Unemployment
Benefits
The Job
Skill Variety
Task Significance
Autonomy
Feedback
Job Environment
Sound Policies
Competent Employees
Congenial Coworkers
Working Conditions
Workplace Flexibility
Flextime
Compressed Work Week
Job Sharing
Part-time Work
Modified Retirement
Financial Non-Financial

32. The most important objective of any pay system is fairness or
equity.
Equity in Financial Compensation
Equity means Fair pay treatment for employees.The term
equity has three dimensions:
 External equity - Firm's employees are paid comparably to
workers who perform similar jobs in other firms
 Internal equity - Exists when employees are paid according to
relative value of their jobs within same organization
 Employee equity - Individuals performing similar jobs for
same firm are paid according to factors unique to employee,
such as performance level or seniority. (Equalpay for equal
work )

33.  To attract talent / acquire competent personnel.
 To retain talent / retain the present employees.
 To inculcate new and desired behavior
among the employees.
 To control costs .
 To comply with legal rules.
 To improve morale and motivation of the
employees.
 To project a good image of the company .

34.  Total rewards is the combination of benefits,
compensation and rewards that employees receive
from their organizations.This can include wages
and bonuses as well as recognition, workplace
flexibility and career opportunities.
 Total rewards may also refer to the function or
department within HR that handles compensation
and benefits, or the combined intrinsic and extrinsic
rewards (or value) that an employee perceives.


35. 1. Compensation
 Compensation refers to an employee's total compensation
for their skills, time, knowledge and efforts. This can also
include any bonus pay earned by achieving a company's
goal. Other compensations are stock options or cash
bonuses for holidays.
2. Benefits
 When an employer offers benefits to its team members, it is
usually in addition to their base pay or salary but may deduct
some money from their earnings. Benefits can help
employees meet their physical and emotional needs, such as
dental, health, vision, disability, life insurance, or retirement
plans.

36. 3.Well-being
 An individual working for a business that offers well-being
programs might be more likely to remain in their job,
thereby increasing a company's employee retention rate.
These important programs can help people to feel healthier
and maintain a better work–life balance, allowing them to
perform their job efficiently and boost business
performance.
4. Recognition
Recognition includes acknowledging employee efforts with
non-financial rewards to help team members feel motivated
and respected.

37. 5. Development
 Development is when companies invest in their employees
by offering training programs and other career advancement
workshops. They can also extend a stipend for employees to
use toward formal education institutions and obtain further
credentials.

38. Different types of compensationinclude:
 Base Pay
 Commissions
 Overtime Pay
 Bonuses, Profit Sharing, Merit Pay
 StockOptions
 Travel/Meal/HousingAllowance
 Benefits including: dental, insurance,
medical, vacation, leaves, retirement, taxes...

39. The process of establishing pay rates while
ensuring external, internal, and procedural
equity consists of five steps:
 Conduct a salary survey of what other
employers are paying for comparable jobs.
 Determine the worth of each job in your
organization through job evaluation.
 Group similar jobs into pay grades.
 Fine-tune pay rates.

40. Step 1.The Salary Survey
 It’s difficult to set pay rates if you don’t know what others are
paying, so salary surveys–surveys of what others are paying–
play a big role in pricing jobs. Salary surveys can be formal or
informal.
Step 2. Job Evaluation
 Job evaluation aims to determin a job’s relative worth. The
basic principle of job evaluation is this: Jobs that require
greater qualifications, more responsibilities, and more
complex job duties should receive more pay than jobs with
lesser requirements.

41. Step 3.Group Similar Jobs into Pay Grades
 A pay grade is comprised of jobs of
approximatelyequal difficultyor importance
as established by job evaluation.
Step 4. Price Each Pay Grade–WageCurves
 The wage curve shows the pay rates currently
paid for jobs in each pay grade, relative to the
points or rankings assigned to each job or
grade by the job evaluation.

42. Step 5. Fine-Tune Pay Rates
 Fine-tuninginvolves (1) developingpay
ranges and (2) correcting out-of-line rates.

43. Demand & supply of Labour influence wage and salary fixation.
A low wage may be fixed when the supply of Labour exceeds
the demand for it. A higher wage will have to be paid when
the demand exceeds supply e.g. skilled Labour. But in our
country there are plenty of workers e.g. unskilled Labour and
they are underpaid, to avoid this exploitation, minimum wages
act of 1948 is established.
 In contrast, there is a shortage of technicians, computer
specialists and professional managers. High remuneration
packages are necessary to retain these skilled employees.
Current trends in salary, Productivity also influences wage
fixation. A number of factors influence the wage fixation.
They are categorized into external and internal factors.

44. The term “Wage & salary administration” or “compensation
administration” denotes the process of managing a
company’s compensation programme. The goals of
compensation administration are to design a cost effective
pay structure that will a important factor.
 Base compensation -monetary payments to employees in
the form of wages and salaries.
 Supplementary compensation- Attract, motivate and retain
competent employees.

45. a)Job needs
b)Ability to pay
c)Cost of living
d) Prevailingwage rates
e) Unions
f) Productivity
g) State regulation
h) Demand & supply of labour

46.  Time rate system: Employees are simply paid a
predetermined rate per week, or hour for the actual time they
have worked. The basic rate for the job can be fixed by
negotiation by reference to local rates, or by job evaluation.
This system is prevalent in the engineering and processing
industries among clerical, supervisory and managerial
personnel.
 Piece rate system: Systems allow you to adjust wage cost per
unit in relation to output. In this system, the wages cost per
unit of production falls as output increases. At the same time
the hourly rate of workers earnings still increases, although
not in proportion to the increased output.

47. Factors influencing Executive compensation
are,
a) Job complexity
b) Employers ability to pay
c) Executive human capital

48.  Company car
 Financial counseling
 Company plane
 Income tax preparation
 First-class air travel
 Country club membership
 Luncheon club membership
 Estate planning
 Employee stock options(ESOP)
 Personal liability insurance
 Spouse travel

49. The International LabourOrganization (ILO) defines decent
work as “productive work for women and men in conditions of
freedom, equity, security and human dignity”.
In general, work is considered as decent when:
 it pays a fair income
 it guarantees a secure form of employment and safe working
conditions
 it ensures equal opportunities and treatment for all
 it includes social protection for the workers and their families
 it offers prospects for personal development and encourages
social integration
 workers are free to express their concerns and to organise

51.  The InternationalLabour Organization(ILO)
is a United Nations agency dealing with
labour issues, particularly international labour
standards, social protection, and work
opportunities for all.

52.  The ILO is a meeting point for governments, workers and
employers of ILO’s memberStates to set labour standards,
improve upon policies and create programs that promote
decent work for people.The four strategic objectives at the
heart of the Decent Work agenda are:
 To develop and effectuate standards, fundamental
principles, and fundamentalrights at work.
 To ensure that men and women have equal access to decent
work while enhancing opportunities for the same.
 To magnify the coverage and effectiveness of social
protection for everyone.
 To strengthenTripartism (collaboration among unions,
employers and the Government) and social dialogue.

53.  The ILO comprises the International Labour
Conference, the Governing Body, and
the International Labour Office.
 International Labour Conference:
▪ The progressive policies of the ILO are set by the
International LabourConference.
▪ The Conference is an annual event, which happens in
Geneva, Switzerland.The conference brings together all
the representatives of the ILO.
▪ Function: It is a panel for the review of the important
issues regarding labour.

54.  Governing Body: The Governing Body is the
executive body of the International Labour
Organization.
 The governing body meets in Geneva. It meets
three times annually.
 TheOffice is the secretariat of theOrganization.
 It is composed of 56 titular members, and 66 deputy
members.(28 Governments, 14 Employers and 14
Workers) and 66 deputy members (28
Governments, 19 Employers and 19Workers).

55.  International Labour Office: It is the permanent secretariat
of the International LabourOrganization.
 Functions: It decides the activities for ILO and is supervised
by the Governing Body and the Director-General.
 The ILO member States hold periodically regional
meetings to discuss the relevant issues of the concerned
regions.
 Each of the ILO’s 183 Member States has the right to send
four delegates to the Conference: two from government and
one each representing workers and employers, each of
whom mayspeak and vote independently

56. Importance of IR
• Moral dimension
• IR protect right of managers
• Handling disciplinary proceedings
• Fairness in practices and working relations
Industrial Relations

57. Approaches To IR
Unitary approach
Pluralistic
approach
Marxist approach
Industrial
Relations

58. Approaches To IR
Unitary Approach
• Based on mutual cooperation, individual treatment, shared
goals and team work
• Everyone gains when there is common interest and goals and
promotion of harmony
• Conflict is destructive and unnecessary
• Direct negotiations with employees
• No need to involve government, and unions to resolve conflict

59. Approaches To IR
Pluralistic Approach
• There is competing interests, management’s role is to act as
mediator amongst competing interests groups
• Trade unions are representative of employee interests
• Concessions and compromised between management and
unions
• Conflict between management and union is good for productive
work environment and innovation
• Unions balance interest of employees and employer
• Government interferes in form of regulations to protect the right
of society and employees
• Conflict is inevitable and needs to be contained with in the
social mechanism of conciliation, collective bargaining, and
arbitration

60. Approaches To IR
Marxist Approach
• Conflict is inevitable but it is because of capitalist society
• Conflict is not because of competing interests of employees
and management but division with in society between people
who own resources and people who offer labour
• Industrial conflict is because of social and political unrest
• Trade unions are forum to react to capitalism exploitation and
bring social revolution
• Trade unions make employees (labour) position more strong in
capitalistic society
• All strikes are legitimate, fair and political
• Regard state interventions through legislation is to protect the
owners

61. Parties to IR
Employees
Employees
Association
Government
Employers
Employers
Associations
Courts and
Tribunal
Employer-
employee
relations

62. IR Strategy
1) Reactive Strategy
Resolve conflict when it arises and reach to uncontrollable level
2) Proactive Strategy
Follow forward looking and well planned strategy to deal with IR
Four main components of proactive IR strategy
i) Communication
ii) Relationships
iii) Competence
iv) Discipline and Conflict

63. Factors Affecting Employee Relationship Strategy
Internal Factors
1. The attitude of management to unions and employees
2. The attitude of employees and unions to management
3. The attitude of employees to unions
4. The strength of unions
5. The extent to which agreed and effective procedures and rules exist
within company to resolve disputes and handle disciplinary matters
6. The competence of managers to deal with employees issues
External
1. Strength and effectiveness of employers’ associations
2. The pay and employment situations at local and national level
3. The legal framework in which IR operates

64. Role of HR Department in IR
• Motivated and competent workforce is responsibility of HR
• Through effective recruitment, work conditions, job designs, safety
and health environment, training and compensation HR department
satisfies employee and organization needs
• Through these efforts it contributes to quality of life of workers
• Workers with better quality of life less likely to resist, involve in
disputes and go on strikes