COMPENSATION/WAGES and

PERFORMANCE EVALUATION

Compensation/wages – all forms of pay

given by employers to their employees
for the performance of their jobs.
Compensation/ wages and performance
evaluation are related to each other because the
employees’ excellent or poor performance also
determines the compensation given to them,
after considering other internal and eternal
factors like the actual worth of the job,
compensation strategy of the organization,
conditions of the labor market, cost of living and
area wage rates, among others.
Compensation can come in different forms.
Types of Compensation
1. Direct compensation- includes worker’s salaries,
incentive pays, bonuses and commissions.
2. Indirect compensation- includes benefits given
by the employers other than financial
remunerations; for example: travel, education
and health benefits and others.
3. Nonfinancial compensation- includes recognition
programs, being assigned to do rewarding jobs,
or enjoying management support, ideal work
environment and convenient work hours.
Bases for compensation
1. Piecework basis- when pay is computed according
to the number of units produced.
2. Hourly basis – when pay is computed according to
the number of work hours rendered.
3. Daily basis- when pay is computed according to
the number of days rendered.
4. Weekly basis- when pay is computed according to
the number of work weeks rendered.
5. Monthly basis – when pay is computed according
to the number of work months rendered.
Performance evaluation- a process
undertaken by the organization, usually
done once a year, designed to measure
employee’s work performance.
PURPOSES OF PERFORMANCE
EVALUATION:ADMINISTRATIVE AND
DEVELOPMENTAL
Improving individual job performance through
performance evaluation is just one of the
reasons why employees are subjected to
assessments on a continuous basis.
There are other purposes behind employee
assessment that are beneficial to both the
company and the employees, these are:
Administrative purpose – these are fulfilled
through appraisal/ evaluation programs that
provide information that may be used as basis
for compensation decisions, promotions,
transfers, and terminations. Human resource
planning may also make use of it for
recruitment and selection of potential
employees.
Developmental purposes- these are fulfilled
through appraisal/ evaluation programs that
provide information about employees’
performance and their strengths and
weaknesses that may be used as basis for
identifying their training and development
needs.
Why some evaluation programs fail
Performance appraisals may sometimes fail due to
various reasons including the following:
 inadequate orientation of the evaluatees regarding
the objectives of the program.
Incomplete cooperation of the evaluatees(eg. Proper
answering of evaluation questionnaire)
Inadequate time for answering the evaluation forms
Ambiguous language used in the evaluation
questionnaire
Employee’s job description is not properly
evaluated by the evaluation questionnaire used
Inflated ratings resulting from evaluator’s
avoidance of giving low scores
Evaluator’s appraisal is focused on the
personality of the evaluatee and not his or her
performance
Unhealthy personality of the evaluator