Definitions:Performance AMJ:Activities which are relating tojob are expected by the employer to the worker and how well those tasks areexecuted by him the evaluation of them, these all includes in performance. The employeeperformance is basically the results which are achieved on operations with thecapabilities/abilities of the employee who performs in certain situations. Businessexecutive directors evaluate the employee productivity of each worker orexecutive with perspective/aim of their help and identify suggested weak areasfor improvement on a quarterly or annually basis.
The standards of Performancecriteria are defined to manage employee behavior relating work. This criteriacontains information that is much more to get to know that how an employee haveto done his work. After evaluation that employee performance is rated andcompared with predefined standards which are determined by the employer.Compensation:Compensation is the paymentswhich an employee receives for services which he has rendered.
Two types of compensationusually offered to employees. Cash compensation and other types of benefits. CashPayments typically happens as hourly wages or salaries, but can also occur as variablepay, such as commissions, bonuses or small amounts of other cash pay. Other typeof Benefits is usually extras companies offers to their employees, such ashealth insurance, annual Christmas bonuses. Roles: Performance: Measuring andmanaging employee performance is important because it gives you theability to properly gauge worker efficiency, identify who is working hard andwho isn’t, determine how to properly compensate your workforce, and improveyour workplace’s overall productivity. Performance is a critical factorin organizational success.
Job description is a form of clear direction thatwhat is actual required to do and at which extent is required by employer. Bothqualitative and quantities measures can be defined in that criteria. Employeelearning programs can be an instant boost in employee performance and it costsvery little.
Employee attitudes such as job satisfaction and commitment, and stressare crucial to achieving involvement and employee performance both throughtheir direct links to performance as well as their links to communication.Compensation:Whywe compensate employees, to attract capable applicants, to retain currentemployee so that they don’t quit. If a manager doesn’t know exactly how well orhow poorly her employees are performing, he/she will have no idea how to rewardthe workers who are excelling. Nor will he/she know when to assist or even firethose that are underperforming. Sometime standout employee deserves apromotion, or a pay increase.
Similarly, if a consistently underperformingemployee deserves a demotion, or should not be given a pay raise until sheraises her level of performance. In this perspective a manger should have the accurateidea what is going on in performance perimeters then this personnel cancompensate properly. Compensationoffers opportunities to analyze many concepts central to labor economics,including incentives, marginal productivity, contracts, promotions,separations, and careers. Although compensation contracts are multi-dimensionaland complex to form.Employeescan be compensating in different forms of pay (monetary and non monetarybenefits). Most executive and employee pay packages contain four basic components,a base salary, an annual bonus tied to accounting performance, stock options,and long term incentive plans.
Stock options seem a natural way to tie worker’spay to company stock price performance. Long term incentive plan in addition tobonus plans based on annual performance. The basic cash amount you agreed to pay anemployee is that worker’s base or guaranteed pay, The other type of pay is VariableEarnings, Piece-rate plans, merit-based programs, incentive bonuses andprofit-sharing plans are types of variable compensation, which is based on anemployee’s performance or results obtained. Compensation might also includesupplemental wages, which are paid in addition to regular wages. Somesupplemental wages, such as non-performance based bonuses and accumulated sickleave, are benefits. Others, such as commissions, overtime pay and severancepay, are compensation.
An equity-based compensation program letsyou pay your employees with company shares, such as stock options, restrictedstock, stock appreciation rights, profits interest and restricted stock units.Voluntary benefits are incentives you choose to provide your employees; you arenot legally required to give them. They might include paid time off such asvacation, sick, personal and bereavement time and other forms of leave. Discussion: Productive employees are thelifeblood of every recruiting business.
Does performance effectscompensation to understand this term we have to take a look on the otherindications that must create a negative impact on employee preference viceversa compensation package offered by employer. Punctuality of an employee, ishe regularly arrives late for work or are frequently absent from the office,what level of work being carried out is average or outstanding, the quality ofwork. Perpetual bad habits can detract from employee performance such asindulging in office gossip, taking unauthorized breaks, disruptive behavior andthe use of computers for personal reasons. A bad attitude will often manifestitself in insubordinate behavior, these employees will not comply with companypolicies and are likely to display disrespect for your company and co-workers. Mostfirms have a professional dress code appropriate to the job and company cultureso the employee can create a bad mantle image by doing this type of negligence.These defined activities can leave a severe impact on the employee compensationpackage.
Now we will discuss that doescompensation effects employee performance. A research has found that firms withhigh accounting profits, sales growth and shareholder wealth growth pay theirexecutives and workers more. But the magnitude of such relations has sometimesseemed small.
Bonuses would be expected to account for much of the relationbetween performance and pay. Thus, increases in financial performance should beassociated with higher ratios of bonus to base pay. In addition, a researcherestimated that a $1,000 increase in shareholder wealth is associated with a$2.
50 increase in the value of the stock owned by the workers. This againsuggests a relation between organizational performance and pay mix.Becauseshort-term bonuses are designed to have their most direct impact on short-termperformance and long-term incentives are designed to improve business performanceover the long run, in this way bonuses have more impact to directing theemployees productivity towards the organizational objects. Conclusion:Acompensation package does not necessarily mean rewarding in the monetary form.
It also includes flexible benefits, medical care, work-life balance, as well asemployee perks. Today’s employees not only work for the money, but also placeequal emphasis on other aspects of compensation. Poorcompensation induces low productivity. There is less motivation for employeesto strive for excellence.
Compensation is the primary motivating factor foremployees to continuously push themselves to strive for greater heights. Itoffers them a reason to work hard and keep driving towards achieving the nextmilestone.Ifthe reward ratio is higher than effort ratio then employee will must achievethat reward, means that rewardis high then turnover then there is a good effect of compensation over turnoverratio and vice versa performance.Performance evaluation practices helps to recognize thelevel of performance performed by employees. Performance appraisals should bedevised in such a way that it must have all the elements and aspects.
Setting of a proper compensationpackage also make an employee equitant to its education and skills level, inthis way it provides him a comfort zone of workplace. Aresearch concludes that there is a positive impact of Compensation on employeeperformance and compensation management has a direct impact on employeeperformance. Performance related pays directlyimpact the workers performance creating the output through pay and workers hasmore able to give pay structure according to the performance. Whenyou have the ability to properly gauge employee efficiency, identify the strongand weak employees, and compensate them appropriately, then your business willbecome more productive and therefore more successful.