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Now the global business scenario is in a competitive mood. The business employer always looks at the good quality at the cheaper price. Due to this a strong competition will happened in the product and job market. So the employees want skilled, talented, hardworking employees. Now the selection of employee is more focused than older. The qualification of the employee is always valued like academic level, professional experienceâ€¦. After selecting the employee, the employer gives proper training to the employees. After the training, employer appointed the trained employees in the proper position. Then the employer or the manager of the organization motivating, controlling the employees work. Employee is the backbone of each and every organization. Without employee, there is no production in the company.
Employee motivation is a necessary thing for the success of an organization. Organization has different variety ways to motivate their employees. The employee satisfaction will also influence the quality and quantity of the product that produced in the company. Happiness of the employee in the workplace is very important for the organization. Employee benefits and rewards are the tools used for the businesses to attract talented employees, improve employee satisfaction, reduce turnover and maintain competition. There are different types of employee benefits are there. Some of them are Annual Bonus, insurance, paid leave, profit sharing, social security, different incentivesâ€¦.. If the human resources management of the company is not properly working, the employees have no happiness in their work. Now the workforce becoming increasingly diverse and organisations provide more to maximise the benefits of the differences in employees.
An organisation success is always depends upon the skills, talents and abilities of the company employees. It gives more market share than the competitors. The company's stability and growth is always depends upon the employees. Only motivation can influence the employees in the company. The reward and benefit system is one of the best method for the motivation of the employees.
It is only based on their performance. Performance appraisal determines the benefits to the employees. This performance evaluation done by the human resource management of the company.
Performance appraisal is a process of assessing workers performance in to certain predetermined organisational standard. It is also a feedback about their performance at work. It is an assessment of an employee's performance, potential and developmental needs. It is a formal system of measuring, evaluating, and influencing an employee's job-related attributes, behaviours and outcomes. After evaluating the performances, the company gave increase in the pay, additional bonuses or promotions. Sometimes this evaluation used for the decrease in the pay, counselling, dismissal due to the poorer performance of the employees. (www.google.co.uk, www.acas.org.uk)
Now it is a very controversial managerial issue. The management experts and the researchers have doubts about the validity and reliability of the performance appraisal process. On the other side, there are advocates of performance appraisal who claim that it may well be the most critical of all Performance Appraisal and Motivation. It provides employees with recognition for their work efforts. It will help a positive motivational influence on the individual's sense of worth, commitment and belonging. It helps to improve performance of the employee and helps to improve high productivity in the future.
Its allow employees to see where they are at and managers can get valuable information from employees to help them make employees to see where they are at and managers get valuable feedback from the employees to help them more satisfied and productive. As a result of appraisals, managers control over work and results may increase, problems can be identified early, employees are motivated by being allowed to input into and their own objectives, enhances communication, objective feedback given back to employees, facilitates decision making in regard to pay scale an promotion, centralized record of performances. (http://www.work911.com/performance/particles/pmch1.htm)
Michael Armstrong (1994) defines performance appraisal as a process designed to improve organisational, team and individual performance. He describes the performance management as a continuous self-renewing cycle whose main activities are Role definition, Performance Contract, PDP, Performance Evaluation etc. (Performance management: key strategies and practical guidelines, Michael Armstrong, Kogan page Ltd., 1994, page 1,8-12). According to Rogers, Performance management is a joint process that involves both the supervisor and the employee, who identify common goals, which correlate to the higher goals of the institution. This process results in the establishment of written performance expectations later used as measures for feedback and performance evaluation. (Rogers Davis, Assistant Vice Chancellor, HR, University of California, Performance Management: A Holistic Approach, CUPA Journal, Summer 1995, www.intelesoftech.com/pm.htm)
Stoery and Sisson said that it is about harnessing the abilities and creativity of each employee. In order to get the most out of performance management, organizations need to put in place systems and methods which translate the goals of strategic management into individual performance terms. According to Mabey, Salaman and Storey argue that performance agreement cover the objectives and standards of performance, performance measures and indicators, competency evaluation and core values or operational requirements.
Kitay and Lasbury forward the ideas that there has been a growth in pay for performance schemes, flexible employment practices, training, performance appraisals and broader job structures. These developments imply an emphasis on improving employee performance while at the same time increasing the flexibility of the labour.
PERFORMANCE APPRAISAL PROCESS
Performance appraisal process is the evaluation of the employee performance. It compares quality, quantity, cost and time. It also checks the work performance, their needs and their weakness also. The following graph shows the performance appraisal process.
Source: - www.performanceappraisalprocess.com
We can divide the performance appraisal process into four steps. The four steps are the following.
Establish a common understanding between the employer or manager and the employee. The work expectations from the company point of view, and the work accomplished by the employee and how the work is evaluated is explained in the process.
The second step is to perform the evaluation based on the progress against work expectation. In this step the manager or the employer evaluates the employee goals, work, attitude and behaviour also.
The next step is formal documentation of the performance through completion of the performance appraisal form.
Then they discuss and appreciate the performance and development of the employee based on the completed appraisal form.
REWARDS AND BENEFITS
In the performance appraisal process, after the evaluation the employer or the company give rewards and benefits to the employee. If the employee work is good, the company give proper rewards and provide the needs for better productivity. The rewards and benefits are different types. Some of them are promotion, bonus, increasing in the salary, profit sharing, increasing the incentives etc. (Managing Human Resources, George Bohlander and Scott Snell, Cengage learning)
Merit pay will not serve to motivate employees when they seen as entitlements, which occurs when those are given yearly without regard to changes in employee performance. Merit pay is not motivational when they are given because of seniority or favourism or when merit budgets are inadequate to sufficiently reward employee performance. To be motivational, merit raises must be such that employees see a clear relationship between pay and performance, and the salary increase must be large enough to exceed inflation and higher income taxes. (Managing Human Resources, George Bohlander and Scott Snell, Cengage learning)
The Scanlon pay bonuses to employees unrelated to profit levels. Each of these plan encourages employees to maximise their performance and co-operation through suggestions offered to improve organizational performances. The Scanlon pays an employee a bonus based on saved labour cot measured against the organisational sales value of production. (Managing Human Resources, George Bohlander and Scott Snell, Cengage learning)
Profit sharing plans pays to employees sums of money based on the organisation's profits. Cash payments are made to eligible employees at specified times, normally yearly. The primary purpose of profit sharing is to provide employees with additional income through their participation in organizational achievement. Employee commitment to improved productivity, quality and customer service will contribute to organizational success and in turn to their compensation. (Managing Human Resources, George Bohlander and Scott Snell, Cengage learning)
ESOP (Employee Stock Option Plan) means the company contributes stock or cash to buy stock that in then placed an ESOP trust. The ESOP holds the stock for employees until they either retire or leave the company, at which time the stock is sold back to the company or through a brokerage firm. Employers received tax benefits for qualified ESOP's they also hope their employees commitment to organisational improvement. Employees however, may lose their retirement income should the company fail or stock prices fall. Another drawback to ESOP's is that they are not guaranteed by any federal agency. (Managing Human Resources, George Bohlander and Scott Snell, Cengage learning)
Gain sharing rewards employees for exceeding a predetermined goal by sharing the extra profits. If profits exceed the goal, employees share in the extra profits. Pay for knowledge rewards employees for continuing their education and /or learning new job tasks. The more education or experience an employee has, the higher he/she moves up on the pay-for-knowledge pay scale. Pay for knowledge is an incentive for employees to continue their education because it results in immediate rewards on the job. (Managing Human Resources, George Bohlander and Scott Snell, Cengage learning)
BRITISH GAS CORPORATION-AN EXAMPLE
British Gas Corporation planned to offer scratch cards in 1995 with the cash prizes of £1, £2 or £5 to employees whose suggestion scheme ideas are rejected in a bid to encourage more people to put forward ideas. Employees whose ideas are accepted receive higher rewards. Scratch cards were initially to be offered to the 25,000 people working in TransCo, the transmission unit of British Gas. The employee's have the time to suggest the ideas for the improvement of the company. For the better suggestions the company gave a cash bonus through the scratch cards. The employee's of this company give thousands of serious suggestions for the improvement of the company. Some of the suggestions implicated in the company and save thousands of million per year. Then the company give more benefits and bonuses to the employee's.
In the McDonalds, every three months there is a performance appraisal process. The company evaluates every employee's work. If the work of the employee is satisfied or good they give increase in the salary. It helps an encouraging tendency in the employee's mind. Because of this, they give better service to the customers.
MARKS & SPENCER
In the Marks & Spencer, at the end of every 6 months the performance review is takes place. The Manager evaluates and discuss with the employees about the work. Then the manger compared their work target, goals and skills with the last year. If the employee wants the training the company provide that. In this company, there is a good response about this evaluation process from the employees. (www.google.co.uk/perofrmance appraisal /marks & spencer)
PROBLEMS OF PERFORMANCE APPRAISAL PROCESS
This idea of companies gives higher productivity, profit, customer service in the company. This system creates higher level of commitment to the company also. Employees report higher levels of pay satisfaction under pay for-performance systems. In the same time, this system has many drawbacks. These incentives may create a risky environment that diminishes diversity. It is because of if employees are rewarded for doing things in a certain way and taking risks may negatively affect their pay check. The incentives tend to focus employee skills and ability to goal directed efforts, and behaviours or become a good employee may be neglected.
Financial incentives or benefits may be considered as the powerful motivators if they are used properly and if they are aligned with company's expectations about the employee's work, skill and ability. Sometimes the employee's goal is become financial benefit through these types of incentives. According to my opinion, this type of performance appraisal process is good but sometimes it may adversely affect to the company. But in this case, the evaluator or the manager of the company must take the serious and careful stage, if not that performance appraisal process is not succeed. It becomes fail and it will hinder the whole structure of the company also.
This process has a chance to criticise the subordinates and the judgemental value may be subjective or individual and prejudice or bias errors. In the feedback process sometimes the employee's marked only the negative comments. Now most of the times, the performance appraisal process is taken as the personal criticism. (Thomas.F.Patterson, Rating Performance Appraisal, Journal Winter, Volume25). Now majority the employees marked a middle point of the rating scale in the feedback session and the evaluation about the company and the superiors. In the some cases the evaluator underestimates or overestimates the facts. It will adversely affect the whole process.
In my opinion, performance appraisal process is suitable for evaluation of the management and staff. It will help to develop individuals, improve organizational performance also. But the appraisal process is must fully prepared, fix a proper way, time, place and clarify the doubts of the employee's, aim of process is must fully focused only for the better productivity, record main points etc are the necessary steps for this process. The evaluator or the manager never allows the chance to prejudice or bias.
The company must provide a proper training to the evaluators. Reduce the outside pressure from all sides of the company. Don't compare the negative incidents of the employee in the performance appraisal process. Employee suggestion and feedbacks are valuable. Employee suggestion schemes can be described as formalised mechanisms which encourage employees to contribute creative ideas for improving the company they work. The overall idea of this process is evaluate, analyse, and collect the valuable feedback and suggestions in order to create valuable results that have a high growth in the business. Handle the ideas and suggestions carefully. Do not handle with the prejudice.
Use creative meaning and encouraging tendency for the whole process. The incentives or the benefits never allow making a group of lazy people. The company tried to introduce new alternative or substitute method that reinforce this process. Some business experts said that the performance appraisal process is an old idea. It cannot evaluate the exact performance of the employee or the management of the company. But I never agreed to that statement. Performance appraisal is the best method to evaluate, analyse and collect the data for the betterment of the company. But the evaluator or the manager handle this process very carefully. He has the full responsible in that process. So do it carefully and find solution for the each and every problem in this process. This will help to gain success in that process.
From this assignment, it is evident that motivating the employees is very important in order to achieve the company's goal. Only by keeping the employees happy the organization can attain its desired things directly. If, the employees are not feeling good while they are in the organization then the firm can not able to reach the heights. So, while motivating the employees by the incentive system it is more important to encourage them and guide them in a proper way.
So, we understand the point that money can motivate the employees to a great extent and by following certain kind of strategies like what we have mentioned above, organizations enjoy by giving the good working atmosphere to their employee. Even, there are certain other firms which try to adopt new trends which are entirely different from their competitors. Nowadays, organizations are not only setting strategies in selling their product or attracting their customers but also in following different incentive systems in order to attract employees towards them.