Lesson 5 Recap: Compensation

and Performance Evaluation

In continuation of Group 3’s Presentation
Recap Presenters
“Your Libra Tandem”

-Ed Ali L. Magondacan-

Group Assistant Leader

-Darren R. Estrada-
Group Leader
 Lesson 5: Coverage
01 02 03
Definition and Types of Compensation Relating
Emphasis Topics
Connecting compensation to
Definition of Compensation Get to know the 3 types of Organizational Objectives
and Performance Evaluation Compensation

04 05 06
More about Compensation Purposes of
Bases of Compensation
Performance
Compensation: A
Evaluation
Get to know the 5 Bases of What is Administrative and
motivational factor for
Compensation Developmental Purpose?
Employees
 01
Definition and Emphasis
-Estrada-
 “Compensation or wages is all the forms of providing pay or the
benefits given by the employers to their employees for doing a job.
Performance evaluation is the process undertaken by the organization
designed to measure the employees’ work performance, this is usually
done once in a year.”

—Previous Meeting
 02
Types of Compensation
-Magondacan-
 3 Types of Compensation
1. Direct Compensation
-Direct compensation is the most well-known sort of compensation, and it
is often the first type of compensation requested by most workers.
2. Indirect Compensation
-A benefit given to an employee that has monetary worth but is not a
direct cash payment is known as indirect compensation. It's commonly
known as a non-cash benefit.
3. Nonfinancial Compensation
-Non-financial compensation has no monetary value; instead, it refers to
an employee's discontentment with his or her work environment. This
sense of fulfillment can be both emotional and psychological.
 03
Connecting compensation to
Organizational Objectives
-Estrada-
“Instead of paying employees based mainly on their job positions or
titles, they are now given pay according to their individual
competencies or according to how much they could contribute or
have contributed to their company’s success.”

—Previous Meeting
 04
Compensation: A motivational
factor for Employees
-Magondacan-
 Compensation: A motivational factor for Employees
1. Pay Equity
-The equity theory is a motivation theory that looks at how employees
react to their compensation and whether they believe they are getting less
or more than they deserve. Employees often believe that their salary
should reflect the amount of work they put into their jobs.
2. Expectancy Theory
-Another idea of motivation is the expectancy theory, which states that
employees are driven to work hard because of the appeal of the rewards or
advantages they could obtain from a job assignment.
 05
Bases of Compensation
-Estrada-
 5 Bases of Compensation
1. Piecework Basis
Workers paid on piecework basis are those who are paid a standard amount for every piece or unit of work
produced that is more or less regularly replicated without regard to the time spent in producing each piece
or unit.
2. Hourly Basis
Hourly Basis means compensation paid according to the number of hours that employee actually works.
For example, if a worker has an hourly rate of $10 and works 40 hours in a week, then their wages for that
period would be 40 x $10 or $400.
3. Daily Basis
Instead of being paid a salary or an hourly rate, day-rate employees are compensated on a per-day basis.
Even though day-rate employees are paid a fixed rate for the whole day, if they work more than 40 hours
per week, you must pay them overtime.
4. Weekly Basis
Weekly base pay refers to a permanent employee's regular weekly compensation or paycheck, excluding
overtime, bonuses, living or other allowances and payments.
5. Monthly Basis
When compensation is paid on a monthly basis, it is based on the number of months a person actually
works.
 06
Purposes of Performance
Evaluation: Administrative and
Developmental
-Magondacan-
 Purposes of Performance Evaluation: Administrative and
Developmental
1. Administrative Purposes
These are fulfilled through appraisal/evaluation programs that provide
information that may be used as basis for compensation decisions,
promotions, transfers, and terminations.
2. 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 a basis for identifying their training and
development needs.
 07
Performance Appraisal
Methods
-Estrada-
 Performance Appraisal Methods
•Trait Methods
•Graphic Rating Scales
•Forced-choice method
•Behaviorally Anchored Rating Scale
(BARS)
•Behavior Observation Scale (BOS)
 08
Why some Evaluation
Programs Fail?
-Magondacan-
Performance appraisals such as supervisors, subordinate appraisals, customer appraisals, and
peer appraisals are the people who give evaluation to the employees performance.
Performance appraisals may sometimes fail due to the various reasons including the
following:
Incomplete cooperation of the evaluatees. Example is the improper answering of evaluation
questionnaires. Next is the unhealthy personality and bias exhibition of the evaluators.
Example of this is when the evaluate is a close peer. And when the evaluators appraisal is
more focused on the employees personality and not the performance.

—Previous Meeting
Thank You!
-Except sa mga Aquarius, Virgo, at Gemini-