Activities which are relating to
job are expected by the employer to the worker and how well those tasks are
executed by him the evaluation of them, these all includes in performance. The employee
performance is basically the results which are achieved on operations with the
capabilities/abilities of the employee who performs in certain situations. Business
executive directors evaluate the employee productivity of each worker or
executive with perspective/aim of their help and identify suggested weak areas
for improvement on a quarterly or annually basis. The standards of Performance
criteria are defined to manage employee behavior relating work. This criteria
contains information that is much more to get to know that how an employee have
to done his work. After evaluation that employee performance is rated and
compared with predefined standards which are determined by the employer.
Compensation is the payments
which an employee receives for services which he has rendered. Two types of compensation
usually offered to employees. Cash compensation and other types of benefits. Cash
Payments typically happens as hourly wages or salaries, but can also occur as variable
pay, such as commissions, bonuses or small amounts of other cash pay. Other type
of Benefits is usually extras companies offers to their employees, such as
health insurance, annual Christmas bonuses.
managing employee performance is important because it gives you the
ability to properly gauge worker efficiency, identify who is working hard and
who isn’t, determine how to properly compensate your workforce, and improve
your workplace’s overall productivity.
Performance is a critical factor
in organizational success. Job description is a form of clear direction that
what is actual required to do and at which extent is required by employer. Both
qualitative and quantities measures can be defined in that criteria. Employee
learning programs can be an instant boost in employee performance and it costs
very little. Employee attitudes such as job satisfaction and commitment, and stress
are crucial to achieving involvement and employee performance both through
their direct links to performance as well as their links to communication.
we compensate employees, to attract capable applicants, to retain current
employee so that they don’t quit. If a manager doesn’t know exactly how well or
how poorly her employees are performing, he/she will have no idea how to reward
the workers who are excelling. Nor will he/she know when to assist or even fire
those that are underperforming. Sometime standout employee deserves a
promotion, or a pay increase. Similarly, if a consistently underperforming
employee deserves a demotion, or should not be given a pay raise until she
raises her level of performance. In this perspective a manger should have the accurate
idea what is going on in performance perimeters then this personnel can
offers opportunities to analyze many concepts central to labor economics,
including incentives, marginal productivity, contracts, promotions,
separations, and careers. Although compensation contracts are multi-dimensional
and complex to form.
can be compensating in different forms of pay (monetary and non monetary
benefits). 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’s
pay to company stock price performance. Long term incentive plan in addition to
bonus plans based on annual performance.
The basic cash amount you agreed to pay an
employee is that worker’s base or guaranteed pay, The other type of pay is Variable
Earnings, Piece-rate plans, merit-based programs, incentive bonuses and
profit-sharing plans are types of variable compensation, which is based on an
employee’s performance or results obtained. Compensation might also include
supplemental wages, which are paid in addition to regular wages. Some
supplemental wages, such as non-performance based bonuses and accumulated sick
leave, are benefits. Others, such as commissions, overtime pay and severance
pay, are compensation.
An equity-based compensation program lets
you pay your employees with company shares, such as stock options, restricted
stock, stock appreciation rights, profits interest and restricted stock units.
Voluntary benefits are incentives you choose to provide your employees; you are
not legally required to give them. They might include paid time off such as
vacation, sick, personal and bereavement time and other forms of leave.
Productive employees are the
lifeblood of every recruiting business. Does performance effects
compensation to understand this term we have to take a look on the other
indications that must create a negative impact on employee preference vice
versa compensation package offered by employer. Punctuality of an employee, is
he 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 of
work. Perpetual bad habits can detract from employee performance such as
indulging in office gossip, taking unauthorized breaks, disruptive behavior and
the use of computers for personal reasons. A bad attitude will often manifest
itself in insubordinate behavior, these employees will not comply with company
policies and are likely to display disrespect for your company and co-workers. Most
firms have a professional dress code appropriate to the job and company culture
so 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 compensation
Now we will discuss that does
compensation effects employee performance. A research has found that firms with
high accounting profits, sales growth and shareholder wealth growth pay their
executives and workers more. But the magnitude of such relations has sometimes
seemed small. Bonuses would be expected to account for much of the relation
between performance and pay. Thus, increases in financial performance should be
associated with higher ratios of bonus to base pay. In addition, a researcher
estimated 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 again
suggests a relation between organizational performance and pay mix.
short-term bonuses are designed to have their most direct impact on short-term
performance and long-term incentives are designed to improve business performance
over the long run, in this way bonuses have more impact to directing the
employees productivity towards the organizational objects.
compensation package does not necessarily mean rewarding in the monetary form.
It also includes flexible benefits, medical care, work-life balance, as well as
employee perks. Today’s employees not only work for the money, but also place
equal emphasis on other aspects of compensation.
compensation induces low productivity. There is less motivation for employees
to strive for excellence. Compensation is the primary motivating factor for
employees to continuously push themselves to strive for greater heights. It
offers them a reason to work hard and keep driving towards achieving the next
the reward ratio is higher than effort ratio then employee will must achieve
that reward, means that reward
is high then turnover then there is a good effect of compensation over turnover
ratio and vice versa performance.
Performance evaluation practices helps to recognize the
level of performance performed by employees. Performance appraisals should be
devised in such a way that it must have all the elements and aspects.
Setting of a proper compensation
package also make an employee equitant to its education and skills level, in
this way it provides him a comfort zone of workplace.
research concludes that there is a positive impact of Compensation on employee
performance and compensation management has a direct impact on employee
Performance related pays directly
impact the workers performance creating the output through pay and workers has
more able to give pay structure according to the performance.
you have the ability to properly gauge employee efficiency, identify the strong
and weak employees, and compensate them appropriately, then your business will
become more productive and therefore more successful.