PERFORMANCE MANAGEMENT AND

REWARDS
PERFORMANCE MANAGEMENT
- Refers to the procedures and systems designed to improve employee outputs and
performance, often through the use of economic incentive systems.
Apart from economic incentives, the other means used to improve employee
performance are:
1. Goal setting
2. Streamlined organizational structure
3. Better technology
4. New arrangement of working schedules
5. High involvement of employees
6. Better motivation of employees
An effective performance management process
considers human resource (HR) strategic planning as
a basic requirement. HR strategic planning is the
process of providing capable and motivated people
to carry out the organization's mission and strategy.
STAFFING
Refers to the HR planning, acquisition, and development aimed at
providing the talent necessary for organizational success.
Staffing process consists of the following:
1. Job analysis
2. Recruitment
3. Selection
4. Socialization
1. JOB ANALYSIS
A technical procedure used to define the duties, responsibilities,
and accountabilities of a job.
The results of job analysis are very useful in:
1. Preparing job descriptions
2. Evaluating and classifying jobs
3. Training and career development
4. Performance appraisal
5. Other HR aspects
1. JOB ANALYSIS
Job description contains information concerned
with the job. The information include job duties
and responsibilities, equipment and materials
used, working conditions and hazards,
supervision, work schedules, standards of
performance, and relationships to other jobs.
1. JOB ANALYSIS
To meet the job requirements specified in the job description, the
job specification is derived.
Job specification requirement:
1. Education and experience;
2. Technical knowledge;
3. Physical aptitudes and abilities;
4. Interpersonal and communication skills;
5. Analytical aptitudes and abilities; and
6. Creative abilities
2. RECRUITMENT
Defined as a human resource management practice
designed to locate and attract job applicants for
particular positions.

Recruitment involves the following:

1. Advertisement of a position vacancy
2. Preliminary contact with potential job candidates
3. Preliminary screening to obtain a pool of candidates
2. RECRUITMENT
2. RECRUITMENT - INTERNAL

Process for attracting job applicants

from those currently working for the
firm.
2. RECRUITMENT - INTERNAL
Advantages
1. It is good public relations
2. It builds morale
3. It encourages good individuals who are ambitious
4. It improves the probability of a good selection, since information on the individual's
performance is readily available.
5. It is less costly than external recruitment
6. Those chosen internally already know the organization
7. When carefully planned, promoting from within can also act as a training device
for developing middle and top-level managers.
2. RECRUITMENT - INTERNAL
DISADVANTAGES
1. It can dysfunctional to the organization to utilize
inferior internal sources only because they are there,
when excellent candidates are available on the outside.
2. It may generate infighting among the rival candidates
for promotion.
3. It may decrease the moral levels of those not selected.
4. It may promote "inbreeding".
2. RECRUITMENT - INTERNAL
METHODS OF INTERNAL RECRUITMENT
A. Computerized career progression system
B. Supervisor recommendations
C. Job posting
D. Career development systems
2. RECRUITMENT - INTERNAL
A. COMPUTERIZED CAREER PROGRESSION SYSTEM (CCPS)
One of that stores extensive amounts of information about
employees of a company. It is a useful means of recruiting
people currently employed by the organization. The system's
computer file contains information on employees such as job
history, education, strengths and weaknesses, leadership
development needs, developmental needs, training, and
special skills.
The computer may also provide information on job title,
location, skills requirement, and potential successors to the
position.
2. RECRUITMENT - INTERNAL
ADVANTAGE OF CCPS
- Candidates can be found quickly
- A broad spectrum of candidates can be identified and it will not be
limited to candidates working in the department where the vacancy exists.
DISADVANTAGE OF CCPS
- The skill inventory contained in the computer database is limited only to
objective or factual information, such as educational degrees, certifications,
training courses taken, and languages spoken. Information of a more
subjective nature (like interpersonal skills, judgment, and integrity) is
excluded. Yet for many jobs, this type of information is crucial.
2. RECRUITMENT - INTERNAL
B. SUPERVISOR RECOMMENDATIONS
- are another method of internal recruitment. When
supervisor needs to fill a certain vacancy in his unit,
he is in the best position to identify the person who
fits the job. Most likely, the supervisor will nominate
those whose capabilities are well-known to him.
2. RECRUITMENT - INTERNAL
ADVANTAGES
1. The supervisor is given a total discretion in
selecting the person who will report him/her.
2. The supervisor is generally in a good position to
know the capabilities of potential candidates,
especially those who already work for him and
seeking a promotion.
2. RECRUITMENT - INTERNAL
DISADVANTAGES OF USING SUPERVISORS AS SOURCE
OF INTERNAL RECRUITMENT:
1. The supervisor’s recommendation is usually very
subjective, and is thus susceptible to bias and possible
discrimination.
2. Some qualified employees may be overlooked
because the supervisor wants to help his or her favorite,
or he or she may simply be unaware of the capabilities
possessed by some individuals.
2. RECRUITMENT - INTERNAL
C. JOB POSTING
- is a method of internal recruitment in which a job
vacancy notice is posted and all qualified
employees may bid. The notice describes the job,
the salary, work schedule, and necessary
qualifications. The most qualified applicants are
chosen for interview.
2. RECRUITMENT - INTERNAL
ADVANTAGES OF JOB POSTING ARE:
1. It enhances the probability that the firm’s most qualified
employees will be considered for the job.
2. It gives employees an opportunity to become more responsible
for their own career development. Many may attempt to improve
their job skills and performance because they perceive that such an
effort can lead to greater promotional opportunities.
3. It enables employees to leave a ‘’bad’’ work situation. In the
same light, it encourages their present supervisors to manage more
effectively to discourage employees from leaving the company.
2. RECRUITMENT - INTERNAL
DISADVANTAGES ATTRIBUTED TO JOB POSTING:
1. This method takes time in filling vacant positions.
2. The system may prevent supervisors from hiring the individuals
they prefer. As a result, the supervisors may resort to other moves
to make sure that their favorites will get the jobs.
3. Some employees may move from one job to another without any
clear direction.
4. Employees who did not get the job may become alienated from
the organization.
2. RECRUITMENT - INTERNAL
D. CAREER DEVELOPMENT SYSTEM
- Constitute another method of internal recruitment.
Under this method, the organization places ‘’ fast-
track’’ or high-potential employees on a career path
where they are groomed for certain target jobs.
2. RECRUITMENT - INTERNAL
ADVANTAGES
1. The top performers are more likely to remain with the
organization.
2. It helps ensure that someone is always ready to fill a position
when it becomes vacant.
DISADVANTAGES
1. An employee who is not selected even if he is good may become
frustrated if the expected promotion does not materialize because
the targeted position never becomes vacant.
2. RECRUITMENT - EXTERNAL
EXTERNAL RECRUITMENT
- It is a process of attracting job applicants from
outside the organization. It is undertaken when no
suitable candidates are available from within the
organization. This recruitment source tends to bring
in ‘’new blood’’ and fresh ideas to the organization.
2. RECRUITMENT - EXTERNAL
METHODS OF EXTERNAL RECRUITMENT
A. Employee referrals
B. Applicant-initiated recruitment
C. Help-wanted advertisement
D. Private employment agencies and executive search
firms
E. Campus recruiting
2. RECRUITMENT - EXTERNAL
A. EMPLOYEE REFERALS
- Is a method of recruitment in which
organizations ask their employees to solicit
applications from qualified friends and
associates.
2. RECRUITMENT - EXTERNAL
ADVANTAGES
1. Applicants referred by employees tend to perform better and remain with the organization
longer than applicants recruited by other means.
2. Employees then to be good recruiters because they know a lot about both the job being
filled and the individual, and can therefore accurately judge the ‘’fit’’ character to fall under
the job recruitment.
3. Employees make good recruiters because believing their reputation in on the line, they are
encouraged to refer only the highest qualified applicants.

DISADVANTAGE
1. Limited choice offered to the organization. Employees will tend to recruit only those they
know. Even if some are better qualified, they cannot be considered unless they are referred to
the employees.
2. RECRUITMENT - EXTERNAL
B. APPLICANT-INITIATED RECRUITMENT
- is a method of external recruitment in which an
organization accepts unsolicited applications or
resumes from individuals interested in working for
the organization.
2. RECRUITMENT - EXTERNAL
ADVANTAGES
1. It is both efficient and low cost.
2. The candidates are likely to be highly motivated, since they have taken the time to
learn about the organization.
DISADVANTAGE
1. One which concerns timing. When applications and resumes remain ‘’on file’’ for
some time, applicants may no longer be available when they are needed.
2. RECRUITMENT - EXTERNAL
C. HELP-WANTED ADVERTISEMENT
- is a method of external recruitment in which an
organization places an advertisement for the
position in the appropriate media such as
newspaper, magazine, and the like.
2. RECRUITMENT - EXTERNAL
ADVANTAGE
1. It allows the organization to reach a large audience in a
relatively short period of time.
DISADVANTAGE
1. Studies found out that people hired through newspaper
advertisements perform their job less efficiently and are absent
from work more than those hired through other recruiting methods.
2. RECRUITMENT - EXTERNAL
D. PRIVATE EMPLOYMENT AGENCIES AND EXECUTIVE SEARCH FIRMS
- constitute another method of external recruitment. Under this method, the hiring organization
initiated the recruitment process by contacting the appropriate agency or firm and informing if
of the qualifications needed for the job in question. The agency or firm assumes the task of
soliciting applications, and then refers top applicants to the hiring organization for further
screening.
Private employment agencies are those that provide organization, for a fee, with clerical,
blue collar, technical, and lower managerial personnel. Their services are especially useful
when many individuals are expected to apply for a job or when qualified candidates are
hard to find.
Executive search firms are employment agencies used to recruit middle and top level
managers. These firms can locate successful executives working elsewhere who are not even
actively seeking a new job
2. RECRUITMENT - EXTERNAL
E. CAMPUS RECRUITING
- is an external recruiting method in which the
organization’s recruiters visit various college and
university campuses to recruit individuals for
positions requiring a certain degree.
2. RECRUITMENT - EXTERNAL
ADVANTAGE
1. It can be used to fill specialized entry-level jobs in such
fields as engineering, finance, accounting, computer
science, law, and supervisory management.
DISADVANTAGE
1. It is costly and time consuming.
3. SELECTION
- This involves assessing and choosing among job candidates. The selection
process involves the following steps:
1. Completing the application form;
2. Conducting an interview;
3. Completing any necessary tests;
4. Background investigation;
5. Physical and medical examination; and
6. A decision to hire or not
4. SOCIALIZATION
- The final step in the staffing process and it involves
orienting new employees to the organization and its
work units, especially the work units where the newly
hired employee will be working. The purpose of
socialization is to enable new employees to quickly
become productive members of the organization.
4. SOCIALIZATION
In socialization, the new employees are provided with
information about the following:
1. Key organization factors which includes an overview of
the organization, policies and procedures, compensation,
benefits, safety and accident prevention, employee and
union relations, physical facilities, and economic factors; and
2. Department and job-related issues including department
functions; job duties and responsibilities; policies, rules,
procedures, and regulations; the autonomy of the
department; and socialization into the work group.
 TRAINING AND CAREER
PLANNING AND DEVELOPMENT
TRAINING
-is the process of changing employee behavior, attitudes,
and opinions through some type of guidance experience.
Classification of Ways to Conduct Training
1. On-the-job training
2. off-the-job training
TRAINING
On-the-Job Training
-this training method is conducted while employees
perform job-related tasks. It is the most direct
approach to training.
TRAINING
On-the-Job Training
-this training method is conducted while employees
perform job-related tasks. It is the most direct
approach to training.
TRAINING
Common Forms:
1. Internships - are opportunities for students to gain real
world experience.
2. Apprenticeships - involve learning a trade from an
experienced worker.
3. Job rotation - provides a broad range of experience
in different kinds of jobs in an organization. It is often
used to provide background for future managers and is
sometimes used to try to alleviate worker boredom.
TRAINING
Off-the-Job Training
- This type of training deals with work skills in settings away from their ordinary
workplace.
Techniques:
1. Classroom Lectures
2. Video and Films
3. Simulation Exercises
4. Computer-based training
5. Vestibule Training
6. Programmed instruction
CAREER PLANNING AND
DEVELOPMENT
Career may be defined as the pattern of work-
related experiences that span the course of a
person's life.
Career Stages - refers to the distinct stages that
individuals go through in their careers, typically
including establishment, advancement, maintenance,
and retirement.
CAREER STAGES
1. ESTABLISHMENT STAGE
- is one of apprenticeship where the young
employee enters and organization who may be
technically able but often without an understanding
of the organization's demands and expectations.
CAREER STAGES
2. ADVANCEMENT STAGE
- The employee seeks growth and increased responsibility
through the continued development and utilization of skills.
This stage calls for the employee to work as an
independent contributor of ideas in a chosen area.
CAREER STAGES
3. MAINTENANCE STAGE
- During this stage the employee may experience continued growth of performance
and accomplishments, or he/she may encounter career stability.
- But often the employee loses career flexibility. This may be a result of personal
considerations such as:
Limited interest in learning new skills;
Organizational considerations, such as a basic lack of opportunity; and
Family considerations that make it difficult to change jobs or to take additional work
responsibilities
CAREER STAGES
- Some experience career plateau, a situation in which, for either organizational or
personal reason, the probability of moving up the career ladder is low.
Types of Career Plateaus:
Structural Plateau - which marks the end of promotions and the affected employee,
will now have to leave the organization to find new opportunities and challenges.
Content Plateau - which occurs when a person has learned a job too well and is
bored with day-to-day activities.
Life Plateau - which occurs when an employee experiences a loss of identity and self-
esteem when there is no longer success in his work area.
CAREER STAGES
4. RETIREMENT STAGE
- is that stage when formal preparation for
retirement is made.
- The individual learns to accept a reduced role and
responsibilities.
PERFORMANCE APPRAISAL
- is a key aspect of performance management. It
may be defined as the process of evaluating the
performance of employees, sharing that information
with them, and searching for ways to improve their
performance.
FUNCTIONS OF PERFORMANCE
APPRAISAL
Performance appraisal is undertaken for the following reasons:
1. to give employees feedback on performance
2. to identify the employee's developmental needs
3. to make promotion and reward decisions
4. to make demotion and termination decisions
5. to develop information about the organization's selection and placement decisions
CRITERIA FOR PERFORMANCE APPRAISAL
- There are certain criteria used, the three most popular sets of criteria are:
1. Individual Task Outcomes - evaluating the employee's task outcomes.
2. Behaviors
3. Traits - the traits commonly used as basis for performance appraisal include:
A. good attitude
B. showing confidence
C. being dependable
D. looking busy
E. possessing a wealth of experience
THE PROCESS OF PERFORMANCE
APPRAISAL
- It is a process in an organization whereby
each employee is evaluated to determine how
he or she is performing.
THE PROCESS OF PERFORMANCE
APPRAISAL
- It consists of the following steps:
1. establishment of performance standards
2. mutually set measurable goals
3. Measure actual performance - to determine what actual
performance is, it is necessary to acquire information about it.
4. compare actual performance with standards
5. discuss the appraisal with the employee
6. if necessary, initiate corrective action
THE PROCESS OF PERFORMANCE
APPRAISAL
Information may be derived from the following sources:
A. personal observation
B. statistical reports
C. oral reports
D. written reports
PERFORMANCE STANDARDS
- should be clearly defined and communicated
to the employee. These standards should be
based on job-related requirements derived
from job analysis and reflected in the job
descriptions and job specifications.
METHODS OF PERFORMANCE APPRAISAL
METHODS OF PERFORMANCE
APPRAISAL- ABSOLUTE STANDARDS
-In this approach, the subjects of this appraisal are not compared with
other persons.

A. Essay Appraisal
B. Critical Incident
C. Checklist
D. Adjective Rating Scale
E. Forced Choice
F. Behaviorally Anchored Rating Scale
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
a. Essay Appraisal - is a performance appraisal method whereby an appraiser
writes a narrative about the employee.
Advantages: Provides excellent opportunity to point out the unique characteristic of
the employee.
Disadvantages:
it is very time consuming
the quality of the appraisal may be influenced by the appraiser's writing skill and
composition style
It tends to be subjective and may not focus on relevant aspects of job performance.
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
b. Critical Incident Appraisal - is a performance appraisal
method which requires effective or ineffective
performance for each employee being appraised.
- This method can be very useful if the appraisal is given
enough time to observe the subject employee.
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
c. Checklist - is a performance appraisal method wherein the
evaluator uses a list of behavioral descriptions and checks off
those behaviors that apply to the employee.
•Advantage: it reduces some biases since the rater and the scorer
are different.
•Disadvantage: it is when there are many job categories, a
checklist of items must be prepared for each job
categories and that is costly in terms of materials and time
consumed.
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
d. Adjective Rating Scale Method - also known as graphic rating scale, is a
performance appraisal method that lists a number of traits and a range of
performance for each.
Advantages: it is practical and costs less to develop
Disadvantages:
1. It does not clearly indicate what a person must do to achieve a given rate.
2. It does not provide a good mechanism for providing specific, nonthreatening
feedback.
3. Accurate ratings are not likely to be achieved because the points on the rating
scale are not clearly defined.
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
e. Forced-choice Appraisal - is a type of
performance appraisal in which the rater must choose
between two or more specific statements about an
employee's work behavior.
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
f. Behaviorally Anchored Rating Scale (BARS) - is a
rating instrument comprised of traits anchored by job behaviors
Advantage: is its ability to direct and monitor behavior. The
behavioral anchors let employees know what types of behavior
are expected of them which gives appraisers the opportunity to
provide behaviorally based feedback.
Disadvantage: is the difficulty of selecting the one behavior on the
scale that is most indicative of the employee’s performance level.
METHODS OF PERFORMANCE APPRAISAL-
ABSOLUTE STANDARDS
METHODS OF PERFORMANCE APPRAISAL-
RELATIVE STANDARDS
This category of appraisal methods compare
individuals against other individuals.
METHODS OF PERFORMANCE APPRAISAL-
RELATIVE STANDARDS
Group order ranking –is a relative standard of
performance characterized as placing employees into a
particular classification such as top “one-fifth” for
example, excellent, 5%; above average, 15%; average,
60%; below average, 15%; and poor, 5%.
METHODS OF PERFORMANCE APPRAISAL-
RELATIVE STANDARDS
Individual Ranking – this method requires the
evaluator merely to list the employees in order
from highest to lowest.
METHODS OF PERFORMANCE APPRAISAL-
RELATIVE STANDARDS
Paired Comparison – is an appraisal method
whereby subordinates are placed in all possible
pair and the supervisor must choose which of the
two in each pair is the better performer.
METHODS OF PERFORMANCE APPRAISAL-
OBJECTIVES
The third approach to appraisal makes use of objectives.
This approach is also known as, management by objectives, is a
process of joint goal setting between a supervisor and a
subordinate.
METHODS OF PERFORMANCE APPRAISAL-
OBJECTIVES
Steps:
1. Goal Setting- the individual objectives are set based on the organization’s overall
objectives.
2. Action Planning- realistic plans are developed and measuring of performance.
3. Self- control – refer5s to the systematic monitoring and measuring of
performance.
4. Periodic Reviews – are the means used to determine whether there is a need for
corrective action.
METHODS OF PERFORMANCE APPRAISAL-
OBJECTIVES
METHODS OF PERFORMANCE APPRAISAL-
OBJECTIVES
Advantages of MBO:
It improves job performance by monitoring and directing behavior;
It is practical and inexpensive;
It fosters better communication between employees and supervisors.

Disadvantages of MBO
It does not specify the behavior required to reach goals
It tends to focus on short term goals
The successful achievement of MBO goals may be pertly a function of factors outside the worker’s
control.
MBO does not provide a common basis for comparison of performance standards
•It often fails to gain acceptance
ERRORS IN PERFORMANCE APPRAISAL-
Halo Error – This is a rating error that occurs when a rater assigns ratings on the
basis of an overall impression of the person being rated
Leniency Error – This is a rater’s tendency to give relatively high ratings to virtually
everyone.
Central Tendency Error – this occurs when a rater lump everyone together around the
average, or middle, category.
Recency Error – this is a biased rating that develops by allowing the individual’s most
recent behavior to speak for his or her overall performance on a particular
dimension.
Personal Bias Error – this occurs when a rater allows specific biases, such as racial,
age, and gender, to enter into performance appraisals.
REWARDS
After staffing, training, career planning and development, and performance appraisal, a final
requirement is necessary to ensure effective performance.

TYPES OF ORGANIZATIONAL REWARDS

Rewards may be classified as either:

1. Intrinsic or extrinsic
2. financial or nonfinancial
3. performance-based or membership-based
REWARDS
Intrinsic rewards are those that the worker receives from the job itself, such as pride in
one’s work, feeling of accomplishment, or being part of a team. Theses rewards are
self-regulated as the worker is not dependent on an outsider.

Extrinsic rewards are those that the workers get from the employer, usually money, a
promotion, or benefits.
REWARDS
Financial rewards are those that enhance an employee’s financial well-being directly
through wages, bonuses, profit-sharing, and the like.

Nonfinancial rewards are indirect enhancement of an employee’s financial well-being.

This is done through supportive benefits like pension plans, paid vacation, paid sick
leaves, and purchase discounts.
REWARDS
Performance-based rewards are those given using performance as basis. These
rewards take the form of commissions, piecework pay plans, incentive systems, group
bonuses, or other forms of merit pay.

Membership-based rewards refer to those that are given to all employees regardless
of performance. This type includes cost-of-living increases; benefits; and salary
increases attributable to labor-market conditions, seniority or time in rank, credentials
such as a college degree, or future potential such as a new MBA degree from a
prestigious university.