Performance appraisal

Objective

• Describe the process of performance appraisal• List the method of appraisal• Analyze the concept of 360 degree

Process/steps of performance appraisal

• Define performance objective/goals• Measuring performance• Feedback and coaching

Factors affecting PMs

• Validity of PMs framework• Reliability of the assessment tool• Clarity• Praticality

Types of appraisal methods

• Trait based• Behavior based• Result based

Types of evaluation method

• Individual method• Multiple person evaluation method• 360 degree appraisal

Individual method

• Graphic rating scale• Forced choice method• Essay evaluation• Management by Objective• Critical incident technique• Checklists and weighted checklist• Behaviorally anchored rating scale

Multiple person evaluation method

• Ranking• Paired comparison• Forced distribution

360 degree appraisal

• Superior• Self appraisal• Peers• Subordinates• Customers

Benefits of performance appraisal

• Recognition• Awards• Incentives to reinforce action• Promotion

Compensation Management Unit 9

Objective

• Analyze the concept of compensation and different wages

• Describe wage and salary administration• Explain reward and incentives plans• Analyze managing benefits in organizaton

Wage and salary administration

Effective wage/salary administration should include:1. Signal to the employee the major objective of

the organization2. Attract and retain the talent an organization

needs3. Create the type of culture the organization

seeks

Managing wages

• Subsistence theory (David Ricardo)• Standard of living theory• Residual claimant theory (Francis A. Walker)• The wage fund theory• Demand and supply theory• Marginal productivity theory• Purchasing power theory• Bargaining theory of wage

Fair wages committee

• It has focused on the following factors for the fixation of wage:

- The degree of skill- The strain of work- The experience involved- Training involved- Responsibility undertaken- Mental and physical requirement

Classification of wage

• According to ILO wages are classified as:- The amount necessary for mere subsistence- The amount necessary for health and decency- The amount necessary to provide a standard

of comfort

In India, wages are classified as - Minimum wage- Fair wage - Living wage

Concept of reward and incentive

• Extrinsic reward• Intrinsic reward

Types of incentive plans

• Short term incentive• Long term incentive

Short term incentive

• Halsey plan• Rower plan• Barth system of wage• Task bonus system• Point rating system• Progressive bonus

Halsey Plan• This incentive plan was made by F.A. Halsey in 1891. It formula is given below

Total Wage = Taken Time X Standard Rate + ( Saved Time X Standard Rate) X 50/100

Calculate the wage with incentive of a worker from following information.

Standard time to produce units 250 hrs.

Time taken to produce the units 220 hrs.

Hour rate of wages Rs. 4 /-

Method of payment Halsey premium plan

solution :

Wage = Taken Time X Standard Rate = 220 X 4 = Rs. 880

Incentive Wage or bonus = Time saved X Standard Rate X 50%

= 30 X 4 X 50/100 = 60

Total wage = Rs. 880 + Rs. 60 = Rs. 940

Rowan Plan• This incentive wage plan was made by James Rowan in 1901. Formula of this plan is below.

Total Wage = Time taken X standard rate + ( time taken X time saved X standard rate ) / standard time

For Example

A worker takes 12 hrs to complete a job to time wage and 9 hrs on a scheme of payment by result. The rate of payment is Rs. 5/- per hr. Calculate his earning if he is paid on the basis of Rowan plan.

Solution :

By analysis, we get the following facts :

Standard time = 12 hrs.

Time taken = 9 hrs.

hourly rate = Rs. 5/-

Wage = time taken X standard rate = 9 X 5 = Rs. 45

Incentive wage or bonus = ( time taken X time saved X standard rate ) / standard time

= 9 X 3 X 5 / 12 = Rs. 11.25

Total Wage = 45 + 11.25 = 56.25

Long term incentives

1. annual plan2. Profit sharing3. Gain sharing4. Employee stock plans- Employee stock purchase plan- Employee stock option plan- Stock appreciation plan- Restricted stock plan- Phantom stock- Premium price options

Non monetary incentives