LESSON 4: Policy guidelines on Compensation/Wages and Performance

Evaluation/Appraisal
INTRODUCTION

This module will help you learn how to become a managers often consider human
resources as their organization's most important resource. Every few administrators
would argue with the fact that human resources are very important for the efficient and
effective operation of a company. To emphasize their importance, human resources are
also called human capital, intellectual assets, or management or company talents, These
terms imply that human resources are the drivers of the organization's performance;
hence, staffing must be considered as a crucial function of managers.

How to join the VSMART?  Install VSMART application or visit the website
school.vsmart.ph
 Log in your given username and password
 Go to your scheduled lesson

OBJECTIVES:
• Identify the policy guidelines on compensation/wages and performance
evaluation/appraisal (I-lla-b-23),
• Discuss the importance of employee relations (ABM AOM11-lla-b-24),

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MODULE 1: Policy guidelines on Compensation/Wages and Performance
Evaluation/Appraisal

Compensation policies range from basic shift differentials for employees who work
outside normal business hours – such as swing shifts or graveyard shifts – to strategies
that reward employees for high-level performance that reaches organizational goals. In
addition, employers regularly monitor their compensation policies to ensure they are paying
employees in an equitable manner and as competitively as possible when compared to
other businesses in the industry.

Employee Incentives
Employee incentives are a part of some employers’ compensation policies. Incentives
can be based on number of factors, such as performance, sales or other standards the
company uses to reward employees for attaining organizational and career goals. For
example, employees whose sales exceed the company’s expectations might be eligible for an
incentive if their sales performance meets certain guidelines. Guidelines employers use for
sales incentives include actual sales figures, repeat customer sales or sales to customers
within the company’s emerging markets. Employee incentives are almost always specifically
outlined using eligibility criteria to eliminate gray areas about performance expectations.

Merit Increases
Performance appraisal reviews are an integral part of compensation policies on merit
increases. Employers typically require that supervisors and managers conduct performance
appraisals for employees who report to them. Performance appraisals use job descriptions,
performance standards and work logs to determine if employees are meeting the employer’s
expectations in terms of productivity and quality of work. Companies that use merit
increases to reward employees rely on supervisor ratings to determine salary or wage
increases, referred to as merit increases. Merit increases generally have specific percentage
increases for employees who attain certain performance ratings. An example of merit
increase guidelines might be 5 percent and 8 percent increases for employees who meet
and exceed performance expectations, respectively.

Pay for Performance

A pay-for-performance compensation policy is similar to a merit increase because it’s
based on employee performance. The difference between a merit increase and a pay-for-
performance policy is that pay-for-performance increases are not usually limited to specific
percentages based on achieving a certain rating. Pay-for-performance policies increase
employee salaries based on performance that advances the organization’s goals. One of the
characteristics of a pay-for-performance compensation policy is that managers have more
latitude in determining the amount of a salary increase. For example, a lawyer who brings a
substantial amount of business or a large number of clients to the law firm may be eligible
for an increase based on a pay-for-performance compensation policy.

Annual Review
Human resources staff or compensation and benefits specialists should review
compensation policies annually basis to ensure the company is maintaining a competitive
edge. An example of using annual reviews to strengthen competitive compensation policies
occurs when employers effect salary adjustments based on market pricing for employees
with skills and qualifications in high demand. Another example involves adjusting salaries
and wages in accordance with cost of living increases. Reviewing compensation policies
regularly also ensures the company is in compliance with federal regulations concerning
fair pay, minimum wage and overtime rules. During annual compensation reviews, some
employers audit their policies related to exempt and non-exempt status. The U.S.
Department of Labor enforces the Fair Labor Standards Act guidelines pertaining to exempt
and non-exempt employee classifications and provides technical support and guidance to
employers who need assistance in this area.

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What are Employee Relations and Why They are Important?

Employee relations and communications are some of the main factors that influence
employee satisfaction and engagement. Therefore, many companies today invest more
resources to improve employee relations and keep their workplaces healthy .

What are Employee Relations?

Employee relations are a term used to describe relations between employers and employees.
Today’s organizations are striving to become more agile, faster and transparent. For that
reason, the focus on employee communications is bigger than ever before. 

The main goal of every employee relations strategy is to improve relationships and
collaboration in the workplace. 
Good leadership is ranked as one of the most important factors that attracts new
candidates and keeps existing employees. In that sense, employee relations often focuses
on helping line managers truly connect with their employees.

7 Reasons Why Employee Relations Are Important

Companies with good employee relationships enjoy many benefits. In general, it is easier for
them to engage, motivate, understand and keep their employees.

Here are just a few benefits of building a positive employee relations workplace. 

 Employee engagement
According to research about employee engagement, 90% of leaders understand
how important employee engagement is. However, only 50% of them know how to
address this issue. Here, employee relations play a crucial role. It has been proven
that companies with better employee communications have much higher rates of
employee engagement. 

Here few tips to improve employee communications to drive better employee

engagement include:
o Share, review and update employee expectations.
o Encourage open communication to identify obstacles and issues.
o Don’t neglect consistent feedback and recognition.
o Encourage discussion and sharing of thoughts.

 Employee satisfaction
Employee engagement is often related to employee satisfaction. Less engaged
employees are less satisfied. Poor employee relations can be one of the main causes
for that. Moreover, 65% of US employees say that communications by their
employer impacts job satisfaction. 45% of them say that their employer does not
do a good job communicating with employees. 

 Employee productivity
Employee satisfaction and engagement boost employee productivity. Companies
with well structured employee relations enjoy higher productivity, revenues and
profits. Moreover, organizations with highly engaged employees have an average 3-
year revenue growth that is 2.3 times greater than companies with less engaged
teams.  If your employees know exactly what their goals are and if you give them
constant feedback on their work, they will work harder towards achieving their
goals. 

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5 TIPS TO IMPROVE EMPLOYEE PRODUCTIVITY WITH BETTER COMMUNICATIONS.

 Employee retention
High employee turnover is one of the biggest problems companies face today. The
cost of an employee leaving is significant. Therefore, many employees try to avoid
that expense. 
Employee retention can be improved in many ways. Employee relations is one of
them. Employees who feel like they don’t know what is going on in the company feel
frustrated and isolated. As a result, they feel insecure and often consider new job
opportunities. 

 Employee advocacy
Employee advocacy is a benefit many companies are trying to achieve. The ability
to reach employees’ connections and use your company’s social capital to its full
potential can have a big impact on the company’s visibility, brand awareness and
productivity. 
In order to achieve employee advocacy, employers have to be ready to improve
employee relations. They need to keep employees in the loop and share important
content them. 

 Employee experience
Similar to employee satisfaction, good employee experience is one of the biggest
proofs of a healthy workplace culture. 
To deliver a good employee experience, employers need to be ready to improve the
way they communicate with employees. Open and transparent communication helps
employees feel involved which often leads to higher employee engagement. 
In contrast, poor employee communications lead to insecurity, lack of engagement
and honesty in the workplace. 

 Employee empowerment
Millenials and younger generations want to be involved in many aspects of a
business. They want to have a certain level of decision-making power. 
This is called employee empowerment. It involves giving employees responsibility
and autonomy to manage their own work and make decisions to achieve their own
goals. 
In order to empower your employees, you need to have a good employee relations and
communications strategy. 
For employees to feel empowered, they need to understand clearly what your
company’s mission and vision are. Also, they have to be able to understand how
their work contributes to the overall business success. 
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 Trust is crucial for successful employee empowerment. Managers who trust their
employees and communicate company’s strategy and goals regularly, often have no
problems giving more power to their employees. 

 How to Implement an Employee Relations Plan

The very first step towards planning and implementing a successful employee
relations strategy is to have a set of clearly written policies. 
Employee relations policies should describe the employer's philosophy, rules, and
procedures for handling employee-related matters and resolving issues in the
workplace.
In addition, it is important to understand that employee relations programs are not a
one-size-fits-all solutions.
What works in a company with 100 employees in the United States, may not work for
a company of 5000 employees in China. In other words, employee relations
programs vary based on company size, location, industry, culture and many
other factors. 
However, there are a few characteristics of every good employee relations plan:
 Help employees understand your mission and vision
 Show them how their job aligns with your mission and vision
 Communicate with employees frequently
 Give employees feedback
 Reward them for good work

 What Do Employee Relations Professionals Do

Having an Employee Relations Professional, especially in large companies, is critical
for better employee communications. These professionals are either a part of
communications or HR departments.
Their main job is to keep employees informed and to ensure that company policies
and procedures are followed. 
 Employee Relations Specialist Duties and Responsibilities
 Here are some of the most important duties and responsibilities of
Employee Relations Managers and Specialists:
 Manage employee files.
 Share company news.
 Share policies and procedures updates.
 Monitor compliance with policies and procedures.
 Recruit employees.
 Assist in the hiring processes.
 Encourage employees for advocacy.
 Manage relationships between employer and employees.
 Collaborate in employee exit processes.
 Assist in writing employee handbook.

ACTIVITY: ‘ANSWER ME’

Directions: Answer the following questions. Justify your answer

1. What are employee relations?

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2. How to implement an employee relations plan?
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
_____________________________________________________________________________________
___________________________________________________________________________________

3. What are employee relations and why they are important?

____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

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LESSON 5: EMPLOYEE MOVEMENTS/ ADOPT EFFECTIVE REWARDS SYSTEM
INTRODUCTION:

This module will help you learn how to become a managers often consider
human resources as their organization's most important resource. Every few
administrators would argue with the fact that human resources are very important for
the efficient and effective operation of a company. To emphasize their importance,
human resources are also called human capital, intellectual assets, Or management Or
company talents, These terms imply that human resources are the drivers Of the
organization's performance; hence, staffing must be considered as a crucial function of
managers.

How to join the VSMART?

 Install VSMART application or visit
the website school.vsmart.ph
 Log in your given username and
password
 Go to your scheduled lesson

OBJECTIVES:
• Differentiate various employee movements (ABM_AOMI I-Ila-b-25), and
• Adopt effective rewards system (ABM _ AOMI I .b.26).

MODULE 1: EMPLOYEE MOVEMENTS/ ADOPT EFFECTIVE REWARDS SYSTEM

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1.VERTICAL MOVEMENT
> Movement of an employee from a lower to a higher one.

2. HORIZONTAL MOVEMENT
> Transfer of an employee to another department or
position with similar.

3. PROMOTION
> Movement to a higher level or position

Criteria:
Tenure — refers to number of years in service of an employee.
Meritorious performance — refers to excellent or outstanding performance of an
employee.
4. DIMENSION
> Movement to a lower level/position.

5. TRANSFER
> Movement to another position but with the same level or
scope of transfer to another
branch or location but the employee still occupies the
same tasks.

6. SEPARATION

Employees departure
from the organization.

It may take following forms:

 Resignation — employees voluntary decision to leave the organization.

 Separation w/ authorized cause (layoff) — company's decision to terminate
employees due to business reasons.
 Redundancy — introduction of a new technology will duplicate some of the existing
functions of certain considerable monetary package to enable employees to maintain
their standard of living during the period that they are unemployed.
 Separation w/ Just cause – employee is terminated due to theft, fraud and other
serious offenses.

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  Retirement – refers to the end of a worker's employment w/ the company due to old
age, 'Illness infirmity.

SOCIAL MEDIA MOVEMENTS

Functions of Reward Systems

Reward systems in organizations are used for a variety of reasons. It is generally agreed
that reward systems influence the following
 Job effort and performance. Following expectancy theory, employees’ effort and
performance would be expected to increase when they felt that rewards were
contingent upon good performance. Hence, reward systems serve a very basic
motivational function
 Attendance and retention. Reward systems have also been shown to influence an
employee’s decision to come to work or to remain with the organization. This was
discussed in the previous chapter.
 Employee commitment to the organization. It has been found that reward
systems in no small way influence employee commitment to the organization,
primarily through the exchange process.
 To the extent that employee needs and goals are met by the company, we would
expect commitment to increase.

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  Job satisfaction. Job satisfaction has also been shown to be related to rewards, as
discussed in the previous chapter. Edward E. Lawler, a well-known researcher on
employee compensation, has identified four conclusions concerning the relationship
between rewards and satisfaction: (1) satisfaction with a reward is a function of both
how much is received and how much the individual feels should have been received;
(2) satisfaction is influenced by comparisons with what happens to others, especially
one’s coworkers; (3) people differ with respect to the rewards they value; and (4) some
rewards are satisfying because they lead to other rewards.
 Occupational and organizational choice. Finally, the selection of an occupation by
an individual, as well as the decision to join a particular organization within that
occupation, are influenced by the rewards that are thought to be available in the
occupation or organization. To prove this, simply look at the classified section of your
local newspaper and notice how many jobs highlight beginning salaries.

Bases for Reward Distribution

A common reality in many contemporary work organizations is the inequity that

exists in the distribution of available rewards. One often sees little correlation between
those who perform well and those who receive the greatest rewards. At the extreme, it is
hard to understand how a company could pay its president $10 to $20 million per year (as
many large corporations do) while it pays its secretaries and clerks less than $15,000. Each
works approximately 40 hours per week, and both are important for organizational
performance. Is it really possible that the president is 1,000 times more important than the
secretary, as the salary differential suggests?

How do organizations decide on the distribution of available rewards? At least four

mechanisms can be identified. In more cases than we choose to admit, rewards go to those
with the greatest power (either market power or personal power). In many of the
corporations whose presidents earn eight-figure incomes, we find that these same people
are either major shareholders in the company or have certain abilities, connections, or
status that the company wants. Indeed, a threat of resignation from an important or high-
performing executive often leads to increased rewards.

A second possible basis for reward distribution is equality. Here, all individuals
within one job classification would receive the same, or at least similar, rewards. The most
common example here can be found among unionized workers, where pay rates are
established and standardized with little or no reference to actual performance level. Instead
of ability or performance, these systems usually recognize seniority as the key factor in pay
raises or promotions.

Team Based Rewards

Performance appraisals, whether team or individual, provide feedback to workers or
organizational teams. Traditionally, performance evaluations provide information to help
improve individual performance, increase efficiency and define management’s expectations.
Performance appraisals compare work performed against measurable objectives that the
employee and supervisor agreed to at the beginning of the appraisal period. As work has
become more team oriented, performance appraisals now measure how a team of workers
perform rather than just how an individual performs his job.

The basis for the social welfare reward system in this country is need. In large part,
the greater the need, the greater the level of support. It is not uncommon to see situations
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in business firms where need is taken into account in layoff situations—where an employee
is not laid off because she is the sole support of a family.

A fourth mechanism used by organizations in allocating rewards is distributive

justice. Under this approach, employees receive (at least a portion of) their rewards as a
function of their level of contribution to the organization. The greater the contribution (such
as performance), the greater the reward. This mechanism is most prominent in merit-based
incentive programs, where pay and bonuses are determined by performance levels.

Extrinsic and Intrinsic Rewards

The variety of rewards that employees can receive in exchange for their contributions
of time and effort can be classified as either extrinsic or intrinsic rewards. Extrinsic
rewards are external to the work itself. They are administered externally—that is, by
someone else (usually management). Examples of extrinsic rewards include wages and
salary, fringe benefits, promotions, and recognition and praise from others.

On the other hand, intrinsic rewards represent those rewards that are related directly
to performing the job. In this sense, they are often described as “self-administered”
rewards, because engaging in the task itself leads to their receipt. Examples of intrinsic
rewards include feelings of task accomplishment, autonomy, and personal growth and
development that come from the job.

In the literature on employee motivation, there is considerable controversy

concerning the possible interrelationship of these two kinds of reward. It has been argued
(with some research support) that extrinsic rewards tend to drive out the positive effects of
some intrinsic rewards and can lead to unethical behavior.

Money and Motivation: A Closer Look

A recurring debate among managers focuses on the issue of whether money is a

primary motivator. Some argue that most behavior in organizational settings is motivated
by money (or at least monetary factors), whereas others argue that money is only one of
many factors that motivate performance. Whichever group is correct, we must recognize
that money can have important motivational consequences for many people in many
situations. In fact, money serves several important functions in work settings.
These include serving as (1) a goal or incentive, (2) a source of satisfaction, (3) an
instrument for gaining other desired outcomes, (4) a standard of comparison for
determining relative standing or worth, and (5) a conditional reinforce where its receipt is
contingent upon a certain level of performance

Pay Secrecy

Secrecy about pay rates seems to be a widely accepted practice in work organizations,
particularly among managerial personnel. It is argued that salary is a personal matter and
we should not invade another’s privacy. Available evidence, however, suggests that pay
secrecy may have several negative side effects. To begin, it has been consistently found that
in the absence of actual knowledge, people have a tendency to overestimate the pay of
coworkers and those above them in the hierarchy. As a result, much of the motivational
potential of a differential reward system is lost.

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ACTIVITY: LET’S DO

Directions: Explain in your own words the following pictures. Use the line space
provided.

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REFERENCES:

https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.exterro.com%2Fblog
%2Fno-matter-where-you-go-how-employee-movements-cause-major-e-discovery-risk
%2F&psig=AOvVaw3zgkXFkl3LSVM3rQOuieMh&ust=1602204850232000&source=im
ages&cd=vfe&ved=0CAIQjRxqFwoTCJiR9avko-wCFQAAAAAdAAAAABAO

https://www.google.com/url?sa=i&url=https%3A%2F%2Ffacilityexecutive.com
%2F2014%2F04%2Femployee-activists-spark-new-social-movement
%2F&psig=AOvVaw3zgkXFkl3LSVM3rQOuieMh&ust=1602204850232000&source=i ht
tps://www.youtube.com/watch?v=XgjBqZ47O-E

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