Employee evaluation and reward
Employee's performance is one of the main factors influencing the decisionto promote or demote his ranking in the firm. Performance is whatdetermines whether the person qualifies for a raise or not and should he berewarded for his hard work or reproached for lack of effort. In any case,performance is the key. This has given rise to many different methods andstrategies of progress evaluation, better known as performance appraisal.Performance appraisal can be defined as "a structured formal interactionbetween a subordinate and supervisor, that usually takes the form of aperiodic interview (annual or semi-annual), in which the work performanceof the subordinate is examined and discussed, with a view to identifyingweaknesses and strengths as well as opportunities for improvement andskills development" (Introduction: Performance Appraisal). With correctperformance appraisal techniques, we can determine how much effort does aparticular employee put in and then he/she can
Greater the hard work better should be the rewards. That is why "analysts are predicting that performance-based deals willbecome increasingly prevalent, with some estimates showing pay-for-performance rising to 30 percent of all online ad revenues by 2006" (Riolo,2002)Thus, one of the most pivotal elements in any true performance-based systemis that "rewards must actually be tied to actions within the direct controlof individuals" (Tulgan, 2001, p. However, close analysis of the history of performance appraisal revealsthat pay scale is not the only factor that determines and affects anemployee's performance. " His research on piecework in middle and low-tier jobs demonstrates that productivity increases substantially when pay is directly tied to performance. Stanford University professor Edward Lazear has conducted extensive research on what he calls "personnel economics. On the same account, "in the 1950s inthe United States, the potential usefulness of appraisal as tool formotivation and development was gradually recognized. 19) This approach is widely used in manufacturing and farming, and should be easy to picture, but let me give you a slightly counterintuitive example. The general model ofperformance appraisal, as it is known today, began from that time"(Introduction: Performance Appraisal). 19)In simpler words, we can say that employee's evaluation process should beundertaken not only to weed out the lethargic ones, but instead it shouldbe used to increase rewards for the hardworking members of theorganization. One of the most common examplesprojecting and proving this model includes organizations wherein employeesare paid a specific amount that has been agreed upon before for eachdefined unit of work these workers manage to manufacture. Thenew strategies in this connection have given rise to the concept of payingfor performance, which means that employees' rewards must be tied to hisperformance. Recent developments in the field of management and performance-basedevaluation systems provide conclusive evidence of the fact that theunderstanding of the urgent need to motivate and reward employees based ontheir performance is augmenting over time.
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