Performance Appraisal Systems In Todays Environment Business Essay

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In today's business environment the performance appraisal is one of the most important tool in any organization for motivating the employees. Every employee will work for money. The employees will get the salary for the work done , but to make more concentration on work and to make them to work for the goals of the organization in better, the management has to motivate each employee of the company. The motivation is one of the techniques to make the employees to work for goals of the organization.

If any employees of the company see compensation as a return in exchange between their employees and themselves, as an entitlement for being an employee of the company or as a return for a well done.

Every employee of the company has to give motivation at workplace. The motivation at work place can be given by different ways such as designation, promotions, increments, bonus, incentives...etc

There some of the motivation techniques that will motivate employees at work place. The employee has to provide with not only salary but also with some other incentives and benefits. The benefits and incentives that will motivate the employee may be like this.

health benefit schemes

pension contributions

savings

retirement benefits

sickness and other forms of paid time off

expenses reimbursement...etc

Like this there are different types of incentive and benefit plans that will motivate the employees

ESOP:

The ESOP can implement in many ways in different firms. The employees can buy the stock directly in some firms, stock can give as bonus, and the employees can obtain stock as a sharing plan.

An ESOP is one kind of benefit plan to the employee's like profit sharing plan. In this plan the company will setup a trust and the employers will contribute some cash or new shares to it. How the plan acquires stock is, the cash or stock contributed by the company will be exempted from tax to some extent.

The benefits will receive by the employees of the firm based on relative pay or some equal formula. The share of the employees increases along with experience with the company.

The ESOP plan was designed to give employees significant stock ownership in their employers. In united states many firms offer board employee ownership programs to cover unions of workers. Many super markets like Publix, price chopper...etc offers ESOPS. Many firms in other industries also will have ESOP as well.

ESOP will give a piece of action to the employers, so the employees can work for profitability and growth of the firm. By this ESOP every firm will receive favourable tax treatments. ESOP will motivate the employees to be more productive and focused on performance.

( Robert L.Maths. John H.jackson, 2007 HUMAN RESOURCE MANAGEMENT , chapter 13)

Advantages of ESOP plan:

This plan will motivate the employees. The can work best for the company. The productivity of the company will increase.

The contributions that are made by the company in form of stock, cash or shares will be exempted from tax to some extent.

This plan will motivate the employees to retain within the company.

Disadvantages of ESOP plan:

The employees' salaries and the retirement benefits will be based on the performance of the employers. If the management is not good then the employees cannot get proper benefits.

If financial bankruptcy will affect success and existence of the company, it will affect the employees who became investors.

Some incentive programs will encourage unethical issues, particularly if incentives are based on commissions.

The ESOP contributions are not guaranteed like federally established pension plans, gratuity benefits...etc, it based on the performance or the employer.

(graydessler, graydessler, 2003, HUMAN RESOURCE MANAGEMENT ,9th edition),

(http://books.google.co.uk/books?id=_yCe7fiQbokC&pg=PA403&dq=profit+sharing+to+employees&cd=1#v=onepage&q=profit%20sharing%20to%20employees&f=false )

Example1:

Example2:

Employee share schemes:

Employee share schemes are those which will offer the employees of the company to become the share holders. If a person becomes a share holder in his working place he will work hard for the company. According to survey of many analysts revealed that, the employees who are members of the company will work hard for the company than non members.

In today most of the organizations are using this share schemes for motivating employees at work place. The companies like Tesco, Sainsbury's will offer shares to the employees at discounted rate. The employees who bought shares from the company will work for the goals of the company well.

(http://www.naukrihub.com/best-employers/best-it-employers.html)

Example:

Tesco group saving schemes: davidpotts, retail director of Tesco:

Monday 09 Feb. 2010

The employees at Tesco are shared £144 million payout after maturing a group,s savings scheme .more than 55000 employees of the company has received the benefit from the saving plan.

(http://money.uk.msn.com/news/articles.aspx?cp-documentid=152021858)

re investment plans:

The reinvestment plans is one of the motivating techniques at work place. If a company motivates an employee to invest in the work place then he can work best for the company because he is also a member of the company. If an employee of Tesco has invested in some shares of Tesco, then normally he will work best for the Tesco.

Normally in any company if any employee got benefits from the saving plan or any investment, the will give an option to the employees to reinvest the money in the shares, the company will offer the shares at lower cost than the normal price.

(http://www.naukrihub.com/best-employers/best-it-employers.html)

Example:

Re Investment: 09/02/2010

Tesco: when the savings plan matures all the employee of the company has received tax free cash bonus .The Tesco has given an option to the employees of the company to reinvest the amount that is saved in shares of Tesco. The employees of Tesco can get the shares at a discount rate.The employee who joined the savings plan five years ago will get shares at 232p per share and who joined 3 years ago can get at 307p

The price of Tesco shares has risen to 422p per share, and then the employee who has invested got a return of 100% for those who joined the plan before 5 years and 44% for those employees who joined 3 years ago.

(http://money.uk.msn.com/news/articles.aspx?cp-documentid=152021858)

Example:

ASDA: FRIDAY 10 OCTOBER 2008

Colleague share ownership plan

The people director of ASDA David smith

(http://www.talkingretail.com/news/industry-news/12186-tesco-staff-set-for-p126m-savings-payout.html)

The people director of ASDA David smith has reviled that, the colleague share ownership plan was created in 1995 , to let the workers get access to free shares of the company. The plan was matured and the staff members have received a£2 in shares

4. Sales commission plan:

The compensation paid to employees will depend on the individual performance done by them. The sales incentives are one of the most widely used individual incentive plan , based on the performance made in the sales by the employees the incentives will differ. The main reason behind this sales compensation plan is to stimulate more efforts from the employees more profits.

( Robert L.Maths. John H.jackson, 2007 HUMAN RESOURCE MANAGEMENT , chapter 13)

(http://books.google.co.uk/books?id=J1MgADAhyr8C&pg=PA474&dq=scanlon+plan&cd=4#v=onepage&q=scanlon%20plan&f=false)

Example1: ACQUA GAURD COMPNAY EMPLOYEES

Aqua guard is one of the well known companies in India producing water purifiers. For marketing those products aqua guard has implemented sales commission plan. The company will appoint some marketing agents , the marketing agents has to get the orders from the customs, the company will fix some targets to them i.e. every marketing agent will have to get minimum 10 orders each month, if any employees get more orders than 10 in any month he will get some commission instead of regular pay, because of this sales commission plan the employees can work more for the company.

There are different types of approaches related to sales , such as customer satisfaction, repeated business, customer service...etc. some types of sales compensation plans are salary only, straight commission, salary plus commission and bonus.

Example2:

ICICI prudential life insurance.

(NAGRAJ, 2008 ICICI prudencial life insurance corporation)

ICICI is one the famous well known bank established in India. It has many more branches throughout the world .icici has implemented a life insurance policies. It has different policies like children plans, retirement plans, health plans...etc. for motivating the people towards these insurance plans, it will appoint some insurance advisers, the duty of advisers is to motivate the customers to contribute for the policy and make them to pay. The employees of the icici prudential life insurance will get some commission from the premium paid each customer towards policy.

This is one of the incentive plan used by many insurance companies like LIC of India,

In some marketing companies for marketing products, the employees will receive the salary and commission, in some companies the employees will receive only commission, in some companies they may receive salary along with the commission and bonus.

5. Profit sharing:

Profit sharing is one of the incentive plan methods that is used by many companies to motivate employees. Profit sharing means the distribution of some profits of the organization to the employees of the firm. The objectives of the profit sharing plan may be to increase the organizational performance, increase the productivity of the firm, improves the service quality. This type of profit sharing will motivate employees to retain the company. In this plan the employer will distribute some portion of profits to the employees at the end of each accounting year. The portion of profits may receive by the employees in the form of retirement benefits, bonus or while leaving the firm.

Example: in bonuses

Advantages:

The employees can receive benefits after retirement.

The employees will be motivated, the productivity and performance will increase.

The employees will retain the company.

Disadvantages:

When the plan of profit sharing applicable to the lower level employees, there may be disadvantages that the management will not disclose the exact results of the company. When the management does not disclose exact results then employees and share holders may not get exact benefits.

(Bohlander , Snell, 2009 , MANAGING HUMAN RESOURCE, 15th EDITION)

Example: SATYAM COMPUTERS.

Satyam computers is one of the famous IT Company in India, it has good such reputation throughout the world.

The managing director of this company does not disclose the exact financial results of the company for 3 years properly; all the employees and share holders of the company are under the assumption that the financial results are good. In 2009 the exact results of the company come to know and the employee of the company has lost their job and the share holders who have invested in the company lost their value.

(2009 , THE HINDU indian news paper)

The profit of any company may differ from year to year, based on the profit the profit sharing will differ from year to year.

If the company has bear loss in year then the employee cannot get the profit sharing, there is no guarantee that every year will get profit sharing.

6. Scanlon plan:

The Scanlon plan is one of the motivating methods used by marketing and advertising companies. The idea behind this Scanlon plan is employees should give ideas and suggestion for increasing the productivity of the company .the employees will receive reward for their constructive efforts made in the work.

The company will expect the employee's participation in improving the productivity of the company. The financial incentives provided by the company to the employees will depend on the participation and innovation done by the employees. In the United States of America most of the companies are using this plan for motivating and getting proper innovative ideas from the employees.

Example: BURGER KING

Burger king is one of

7. Annual bonus:

Bonus means the additional compensation received as onetime payment which is not become part of employee's basic pay. Bonus incentive plan can be used for all the levels of employees. The amount that gives to employees will differ based on the performance of the employees.

If the performance of an employee is good then the bonus will go up and if the performance is not good then the amount of bonus will decreases. Normally in any company the bonus will be announced based on the performance of the employees and the financial results of the company. Some company may announce bonus to the employees at the end of accounting year and some companies may announce bonus at some particular days like festivals. Some companies will announce bonus based on the salary of employee, they may give some number of months salary as bonus.

Example: burger king announce bonus

Example: manufacturing

There are different types of bonus i.e. can give in different forms

Spot bonus:

spot bonus is the bonus that will give for extra hours worked, extra efforts made by the employee...etc.

Example: IT companies can give for installation.

Special incentive programs:

Special incentives are like rewarding an individual for meeting performance targets over time.

Example: incentives given to a driver with no accidents and delays during the year.

Performance awards:

Reward for significant performance.

(Robert L.Maths, John H.jackson, 2007, HUMAN RESOURCE MANAGEMENT, 12th edition chapter14)

8. Gain sharing:

Gain sharing is the method of sharing of unexpected high profits with employees of the company. When the workers are performing extra ordinary efforts in work, company can pay them more than the present pay.

For implementing gain sharing every company must identify the way in which increased quality, production and financial performance and how they are shared with employees. The measure for gain sharing such as labour costs, over time hours...etc.

Figure

Incentives

9. Individual incentives:

Individual incentives are implemented in organization because of the following reasons

By this method the performance of individual will be identified .if the performance of any employee is good then he will get more incentives and if the performance is not good , he may not get more.

The individual incentives will separate the performance of an employee form those of other employees. Generally there is competition between the employees of the firm. This will give an individual recognitionhghghg to employees who will win the competition. If an organization emphasizes team work and cooperation then the individual incentives may be counterproductive.

(Robert L.Maths, John H.jackson, 2007, HUMAN RESOURCE MANAGEMENT, 12th edition chapter14)

Performance awards:

Performance awards are one of the social incentive programs.

Generally the reward for the performance can give in the form of cash, gift certificates or travel facility ...etc

Team incentives:

This type of group incentives will be given to a group of employees for the performance done by them. The group increments will be given to all the employees equally on the basis of group output, savings in cost ...etc.

12. mandated benefits:

The mandated benefits provided by the company may be like this.

Providing health care benefits to employees.

Education and health benefits to children of all the employees.

Providing pension plan coverage benefits.

Paid time off for family leave.

(Robert L.Maths, John H.jackson, 2007, HUMAN RESOURCE MANAGEMENT, 12th edition chapter14)

13. Workers compensation:

Generally the workers compensation will be provide to the employees who injured on the job. State laws require most of employers to provide self insurance to the employees of the company.

Example: uk govt employees are covered under employees compensation act.

In workers compensation plan the employees will give cash benefits, medical care services to employees for accidents occurred within the scope of the company.

The amount of workers compensation will be average of 1.8% of total payroll and the cost about $0.47 per hr in wages per worker.

There are different types of medical incentive plans like mini medical plan, driven health plans , providing health saving account, health reimbursement arrangements...etc

(GRAYDESSLER, 2003, HUMAN RESOURCE MANAGEMENT, 9th edition)

Example:

Thursday, 06/11/2008

Justin king (Sainsbury's chief executive)

The Sainsbury is going to recruit 25% of its workers with nationally recognized qualifications. This plan has been mad to meet the government targets for skilled employees.

(http://www.tcs.com/news_events/press_releases/Pages/Morocco-Central-Depository-deploys-TCS-BaNCS-Market-Infrastructure.aspx)

Example:

March 10 2010

Teresa James (group share schemes manager Tesco)

Tesco:

Tesco has implemented a plan for the benefit of employees of the company to signed up to share plans. The employees of the Tesco are eligible to take part in free shares scheme. The invitations for this 2010 plan has sent on march 8 and 14000 staff have been signed up under their terms and conditions. James said that, while implementing this type of schemes by Tesco, always receiving a positive fed back form all the employees of Tesco.

(http://www.employeebenefits.co.uk/item/10078/23/5/3)

Example:

Cognizant technology solutions:

Infosys technologies limited:

Cognizant technology solutions is one of the multinational company providing IT services like client server technologies, data ware housing and database,...etc. The cognizant is offering different types of services to their employees.

Who has completed 2 years of service is eligible for free checkups

It will provide separate allowances for an overseas assignment

Can take 6 medical leaves every year 12 vacation leaves.

It is providing comprehensive medical and insurance benefits paid by the company on behalf of employees

Conducting cultural activities to gather all employees on a platform

(http://www.naukrihub.com/best-employers/best-it-employers.html)

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