3-1 Pay for Performance and Compensation Strategy

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3-1 Pay for Performance and Compensation Strategy

The most difficult part of the performance appraisal process is to accurately and objectively measure the employee performance. Measuring the performance covers the evaluation of the main tasks completed and the accomplishments of the employee in a given time period in comparison with the goals set at the beginning of the period. Measuring also encompasses the quality of the accomplishments, the compliance with the preferred standards, the costs involved and the time taken in achieving the results.

Some performance evaluation methods and measures used for individual or team performance incentives are defined and develop the employee plans of action (performance) with their role, duties and responsibilities. This helps the evaluator focus on the task at hand. Organizational outcomes or the achievement of organizational goals should also be kept in mind. This helps you see the big picture of what the individuals were trying to accomplish as a team. Focus on accomplishments and results rather than on activities. Also take note of the knowledge, skills, ability and behaviors of the employees that help the organization to achieve its goals. A specific skill set could be used on other projects. If possible, collect the feedback about the performance of the employees through self-assessments. This gives the employees a voice and allows them to tell the evaluator how they thought they performed.

Pay-for-performance plans are a method of compensation where workers are paid based on productivity, as opposed to hours spent on the job or at a set salary. They are often used in fields such as sales, where workers rely on commissions and/or bonuses for their income. Due to recent outcry of health care reform, pay-for-performance and variable pay are terms used to describe health care payment systems which reward doctors, hospitals, and other health care providers for their efficiency. Efficiency is usually...
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