PRETEST:

Direction:
 ] Unscramble the letters below, based on the definition
provided in each number. Write your answers in your activity notebook.
1. CASONMOPIETN - all forms of pay given by employers to their
employees for the performance of their jobs
2. ERFOPRMCAEN VTIELNUAOA - a process undertaken by the
organization, usually done once a year, designed to measure
employees’ work performance
3. MEPLYEOE ERLTIAOSN - the connection created among
employees/workers as they do their assigned tasks for the organization
to which they belong
4. PELMOEYE EOVMEMTSN - series of actions initiated by employee
groups toward an end or specific goal
5. NUIMNIOS – the principle of combination for unity of purpose and
action
 PRETEST:
6. WRADRE
 ] - gift, prize, or recompense for merit, service, or
achievement, which may have a motivating effect on the employee
7. OMNTERYA WERADR - refers to money, finance, or currency reward
8. NNOMAOETRYN AERDWR - refers to intrinsic rewards which do not
pertain to money or finance
 COMPENSATION/WAGES and PERFORMANCE
EVALUATION Compensation/wages and performance
evaluation are related to each other because the
employees’ excellent or poor performance also determines
the compensation given to them, after considering other
internal and external factors like the actual worth of the
job, compensation strategy of the organization, conditions
of the labor market, cost of living, and area wage rates,
among others. Compensation may come in different
forms. It may be direct, indirect, or nonfinancial
 Types of Compensation
 Direct compensation – includes workers’ salaries, incentive
pays, bonuses, and commission
 Indirect compensation – includes benefits given by employers
other than financial remunerations; for example travel, educational
and health benefits, and others
 Nonfinancial compensation – includes recognition programs,
being assigned to do rewarding jobs, or enjoying management
support, ideal work environment, and convenient work hours
 global), required skills from workers, and changes in technology,
among others. Along with these, organizations’ pay philosophies
have also changed. Instead of paying employees based mainly
on their job position or titles, they are now given pay according
to their competencies or according to how much they could
contribute or have contributed to their company’s success. Wage
experts now prepare compensation packages to create values for
both the organization and its employees.
 Compensation: A Motivational Factor for Employees
 Compensation pay represents a reward that an employee receives for good
performance that contributes to the company’s success. With this, the following
must be considered:
 Pay Equity – related to fairness; the Equity Theory is a motivation theory
focusing on employees’ response to the pay that they receive and the feeling that
they receive less or more than they deserve. Employees generally feel that their
pay must be commensurate to the effort exerted in the performance of their job. In
other words, pay equity is achieved when the pay given to them by their
employers is equal to the value of the job performed; thus, this motivates them to
perform well and to do their jobs to the best of their abilities.
 Expectancy Theory – another theory of motivation which predicts that
employees are motivated to work well because of the attractiveness of the
rewards or benefits that they may receive from a job assignment. The employee’s
perception of the compensation or pay attached to a job position is an important
factor in ascertaining the motivational value of compensation
Bases for Compensation
Employees may be compensated based on the following: Piecework basis
– when pay is computed according to the number of units produced
Hourly basis – when pay is computed according to the number of work
hours rendered
Daily basis – when pay is computed according to the number of
workdays rendered
Weekly basis – when pay is computed according to the number of
workweeks rendered
Monthly basis – when pay is computed according to the number of work
months rendered Compensation rates are influenced by internal and
external factors. Among the internal factors are the organization’s
compensation policies, the importance of the job, the employees’
qualifications in meeting the job requirements, and the employer’s
financial stability. External factors, on the other hand, include local and
global market conditions, labor supply, area/regional wage rates, cost of
living, collective bargaining agreements, and national and international
laws, among others.
Performance Appraisal Methods
Methods of evaluating workers have undergone development to adapt to
new legal employment requirements and technical changes. Some appraisal
methods used today are the following:
1. Trait Methods – performance evaluation method designed to find out if
the employee possesses important work characteristics such as
consciousness, creativity, emotional stability, and others
2. Graphic rating scales – performance appraisal method where each
characteristic to be evaluated is represented by a scale on which the
evaluator or rater indicates the degree to which an employee possesses that
characteristic
3. Forced-choice method – performance evaluation that requires the rater
to choose from two statements purposely designed to distinguish between
positive or negative performance; for example: works seriously – works fast;
shows leadership – has initiative
4. Behaviorally anchored rating scale (BARS) – a behavioral approach
to performance appraisal that includes five to ten vertical scales, one for
each important strategy for doing the job and numbered according to its
importance
5. Behavior observation scale (BOS) – a behavioral approach to
performance appraisal that measures the frequency of observed behavior
Advantages of Performance Appraisal
It is said that performance appraisal is an investment for the company which
can be justified by the following advantages: (Enriquez, 2016)
➢ Promotion: Performance Appraisal helps the supervisors to chalk out the
promotion programs for efficient employees. In this regard, inefficient
workers can be dismissed or demoted in case.
➢ Compensation: Performance Appraisal helps in chalking out
compensation packages for employees. Merit rating is possible through
performance appraisal. Performance appraisal tries to give worth to
performance. Compensation packages which include bonuses, high salary
rates, extra benefits, allowances, and pre-requisites are
dependent on performance appraisal. The criteria should be merit rather than
seniority.
➢ Employees Development: The systematic procedure of performance
appraisal helps the supervisors to frame training policies and programs. It
contributes to analyzing the strengths and weaknesses of employees so that
new jobs can be designed for efficient employees. It also helps in framing
future development programs.
➢ Selection Validation: Performance Appraisal helps the supervisors to
understand the validity and importance of the selection procedure. The
supervisors come to know the validity and thereby the strengths and
weaknesses of the selection procedure. Future changes in selection
methods can be made in this regard.
➢ Motivation: Performance Appraisal serves as a motivation tool.
Through evaluating the performance of employees, a person’s efficiency
can be determined if the targets are achieved. This very well motivates a
person for a better job and helps him to improve his performance in the
future.
 Why Some Evaluation Programs Fail Performance appraisals (such as manager/supervisor
appraisal, self-appraisal, subordinate appraisal, customer appraisal, peer appraisal, team
appraisal, or 360-degree appraisal) may sometimes fail due to various reasons including the
following:
 • the inadequate orientation of the evaluatees regarding the objectives of the program;
 • incomplete information of the evaluatees (e.g. proper answering of the evaluation
questionnaire);
 • bias exhibited by evaluators;
 • inadequate time for answering the evaluation forms;
 • ambiguous terms used in the evaluation questionnaire;
 • employee’s job description is not properly evaluated by the evaluation questionnaire used;
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 • inflated ratings resulting from the evaluator’s avoidance of giving low scores;
 • evaluator’s appraisal is focused on the personality of the evaluatee and not his or her
performance;
 • the unhealthy personality of the evaluator; and
 • the evaluator may be influenced by organizational politics.