Organization and

Management
Quarter 2 – Module 3:
The importance of compensation, wages and
performance evaluation, appraisal, reward system,
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employee relations and movement.
 Training and
Lesson Development,

1 Compensation/Wages and
Performance Evaluation; and
Employee Relations
Both training and development are essential to achieve success in today’s
organizations. In order to have an edge over their rival organizations, managers must
see to it that their human resources have the necessary knowledge and expertise;
training and development work toward this end by providing continuous learning
activities and opportunities. The typical scope of training covers the following
procedures:

Conducting the training needs assessment

Training needs assessment must be done systematically in order to ascertain

if there really is a need for training. Managers must first try to observe the business
condition and the economic, strategic and technological changes that are happening
in the organization’s environment before proceeding to the analyses of the
organization, task and persons ‘individuals, as all these are determinants of training
types required for the maintenance of the firm’s stability.

Examples of organization analyses include the analyses of effects of downsizing,

branching out conflicts with rival companies, and others that may require training or
retraining of employees.

` Task analysis involves, for example, a checking of job requirements to find out if all
these are being done to meet company goals. If not this may be a go-signal to train
or retrain personnel.

Person analysis determines who among the employees need training or retraining.
This is to avoid spending for the training of employees who no longer need it. For
example, a department manager pirated from a rival company to occupy a vacancy in
one of the organization’s departments in the same capacity (department manager)
may not need managerial skills training anymore.
 What are the different learning principles?

Modeling – the use of personal behavior to demonstrate the desired behavior or method to
be learned.

Feedback and reinforcement – learning by getting comments or feedback from trainees

themselves, from trainers, or fellow trainees, which can help the individual realize what they
are doing wrong; reinforcement is accomplished through verbal encouragement or by giving
rewards such as prizes, awards and others.

Massed v. distributed learning - learning by giving training through either few, long hours
of training (massed) or series of short hours of training (distributed).

Goal-setting – learning through the explanation of training goals and objectives by the
trainers to the trainees.

Individual differences – training programs that take into account and accommodate
the individual differences of the trainees in order to facilitate each person’s style and
rate of learning.

Active practice and repetition –learning through the giving of frequent opportunities to
trainees to do their job task properly.

Designing the Training Program

This phase involves stating the instructional objectives that describe the
knowledge, skills and attitudes that have to be acquired or enhanced to be able to
perform well. In short, these are performance-centered objectives that must be
aligned with the firm’s objectives. Another thing to be considered is trainee readiness
and motivation. This refers to the trainees’ background knowledge and experience,
so that the training to be given to them will not go to waste. Different learning
principles, like using modeling, feedback and reinforcement, massed vs. distributed
learning and others influence the training design’s effectiveness.

Implementing the Training Program

Various types of training program implementation include on-the-job training,

apprenticeship training classroom instruction, audio-visual method, simulation
method and e-learning.

Evaluating the Training

The positive effects of the training program may be seen by assessing the
participants’ reactions, their acquired learnings and their behavior after completing
the said training, the effects of training may also be reflected by measuring the return
on investment (ROI) or through the benefits reaped by the organization, which were
about by their training investment.
Employee Development

Developing employees is a part of an organizations’ career management

program and its goal is to match the individual employee must know himself or herself
well, identify his or her own knowledge, skills, abilities, values and interests, so that
he or she could also identify the career pathway that he or she would like to take.
Although he or she is encouraged to take responsibility for his or her own career, the
organization must, at regular intervals, provide him or her with the results of his or
her performance evaluations and the organization’s plans or direction that may be
related to his or her own career plans, this scheme establishes a favorable career
development climate for him or her, which may lead, ultimately, to the blending of his
or her career development goals with organizational goals.

COMPENSATION/WAGES AND PERFORMANCE

EVALUATION

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 external 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 may come in different forms, It may market indirect or nonfinancial.

TYPES OF COMPENSATION

Direct Compensation – include workers’ salaries, incentive pays, bonuses and commissions.

Indirect Compensation – includes benefits given by employers other than financial

remunerations; for example: travel, educational and health benefits and others.

Nonfinancial Compensation – includes recognition programs, being assigned to do

rewarding jobs or enjoying management support, ideal work environment and
convenient work hours.

CONNECTING COMPENSATION TO ORGANIZATIONAL OBJECTIVES

Worker compensation/wages had tremendously changed in the 21st century

date to increased market competitions (both local and global), required skills from
workers and changes in technology, among others. Along with these, organizations’
pay philosophies have also changed. 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. Wage experts now prepare compensation packages that
create value for both the organization and its employees.
 COMPENSATION: A MOTIVATIONAL FACTOR EMPLOYEES

Compensation pay presents a reward that an employee receives for good

performance that contributes to the company’s success. In relation to this, the
following must be considered:

Pay Equity – related to fairness; the Equity Theory is a motivation theory

focusing on employees’ response to the pay that they receive and the feeling that they
receive less or more that they deserve.

Employees generally feel that their pay must be commensurate to the effort
exerted in the performance of their job. In other words, pay equity is achieved when
the pay given to them by their employers is equal to the value of the job performed;
thus, this motivates them to perform well and to do their jobs to the best of their
abilities.

Expectancy Theory – another theory of motivation which predicts that

employees are motivated to work well because of the attractiveness of the rewards or
benefits that they may possibly receive from a job assignment.

The employee’s perception of the compensation or pay attached to a job

position is an important factor in ascertaining the motivational value of
compensation.

BASES FOR COMPENSATION

Employees may be compensated based on the following:

Piecework basis – when pay is computed according to the number of units produced.

Hourly basis – when pay is computed according to the number of work hours rendered.

Daily basis – when pay is computed according to the number of work days rendered.

Weekly basis – when pay is computed according to the number of work weeks rendered.
Monthly basis - when pay is computed according to the number of work months
rendered.

Compensation rates are influenced by internal and external factors, Among the
internal factors are the organization’s compensation policies, the importance of the
job, the employees’ qualifications in meeting the job requirements, and the employer’s
financial stability.

External factors, on the other hand, include local and global market conditions,
labor supply, area/regional wage rates, cost of living, collective bargaining
agreements, and national and international laws among others.
 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 is other purpose behind employee assessment that are beneficial to the
company and employees:

Administrative Purposes – These are fulfilled through appraisal/evaluation

programs that provide information that may be used as basis for compensation
decisions, promotions, transfers and termination.

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. Through this approach, the workers become more receptive to
the explanations given by the organization’s management regarding the importance
of having evaluations at regular intervals – that these are conducted to improve their
competencies in order to prepare them for future job assignments.

Different performance appraisal methods are used depending on the information on

evaluator aims to find out.

PERFORMANCE APPRAISAL METHODS

Methods of evaluating workers have undergone development in order to adapt

new legal employment requirements and technical changes. Some appraisal methods
used today are the following:
Trait methods – performance evaluation method designed to find out if the
employee possess important work characteristics such as conscientiousness,
creativity, emotional stability and others.

Graphic rating scales – performance appraisal method where each

characteristic to be evaluated is represented by a scale on which the evaluator or rater
indicates the degree to which an employee posse that characteristic

Forced-choice method- performance evaluation that requires the rater to

choose from tow statements purposely designed to distinguish between positive or
negative performance; for example: works seriously –works fast; shows leadership –
has initiative.

Behaviorally anchored rating scare (BARS) – a behavioral approach to

performance appraisal that includes five to ten vertical scales, one for each important
strategy for doing the job and numbered according to its importance.
 Behavior observation scale (BOS) – a behavioral approach to performance appraisal
that measure the frequency of observed behavior.

WHY SOME EVALUATION PROGRAMS FAIL

Performance appraisals (such as manager/supervisor appraisal, self-appraisal,

subordinate or 360- degree appraisal) may sometimes fail due to various reason
including the following:

♦inadequate orientation of the evaluates regarding the objectives of the program;

♦incomplete cooperation of the evaluates;

♦bias exhibited evaluators;

♦inadequate time for answering the evaluation forms.

EMPLOYEE RELATIONS
Employee relations applies to all phases of work activities in organizations, and
managers, to be effective, must be able to encourage good employee relations among
all human resources under his or her care. Employees/workers are social beings who
need connections or relations with other beings – other employees/workers – who are
capable of giving them social support as they carry out their tasks in the organization
where all of them belong. Talking to a coworker, perceived to be a friend or working
on a delicate task with others can be comforting during times of stress, fear or
loneliness, when these negative feelings are overcome, employees will be able to work
better toward the achievement of their organization’s goals.

EFFECTIVE EMPLOYER RELATIONS AND SOCIAL SUPPORT

Social support is the sum of perceived assistance or benefits that may result
from effective social employee relationships. The quantity and quality of an
employee’s relationship with others determine social support (esteem support,
informational support or financial support). In short, social support and effective
employee relations must always go together like “a horse and carriage,” were one
would be useless without the other. Therefore, without social support, effective
employee relations are not possible; and without effective social employee
relationships, social support likewise is not possible.
 THREE TYPES OF EMPLOYEES

1. ENGAGED – Employees who work with passion and feel a deep connection
with their company, they drive innovation and move the organization forward.

2. NOT ENGAGED – Employees who are essentially “checked out”, they put time,
but not energy or passion into their work.

3. ACTIVELY DISENGAGED – Employees who are not only unhappy at work,

but also act out their unhappiness, they undermine what their engaged coworkers
accomplish.

EMPLOYEE MOVEMENTS

A labor union is a formal union of employees/workers that deals with

employers, representing workers in their pursuit of justice and fairness and in their
fight for their collective or common interests.

Employers or workers unionize because of financial needs, unfair management practices

or social and leadership concerns.

a. Financial needs – complaints regarding wages or salaries and benefits

given to them by the management are the usual reasons why employees join labor
unions.

b. Unfair management practices – perceptions of employees regarding unfair

or biased managerial actions are also reason why they join mass movements;
examples of lack of fairness in management are favoritism related to promotion and
giving of training opportunities and exemption from disciplinary action.

c. Social and leadership concerns – some join for the satisfaction of their
need for affiliation with a group and for the prestige associated with coworkers’
recognition of one’s leadership qualities.

STEPS IN UNION ORGANIZING

Terry Moser, an expert union organizer, was credited by Snell and Bob lander (2011) for
the following union-organizing steps:

Step 1. Employee/union contact

Step 2. Initial organizational meeting

Step 3. Formation of in-house organizing committee

Step 4. If a sufficient number of employees support the union movement, the organizer
requests for a representation election or certification election

Step 5. End of union organizing

 When the sufficient number of votes is garnered, the NLRC certifies the union
as the legal bargaining representative of the employees. Contract negotiations or
collective bargaining agreement (CBA) negotiation follow the certification. The CBA
process involves the following procedures.

a. Prepare for negotiations.

b. Develop Strategies

c. Conduct negotiations

d. Formalize agreement

GRIEVANCE PROCEDURE

The grievance procedure is a formal procedure that authorizes the union to

represent its members in processing a grievance or complaint. Such grievance must
be expressed orally or in writing to the employee’s immediate supervisor and the union
steward. If the immediate supervisor shows willingness to discuss the complaint with
the employee and the union steward, the grievance may be resolved immediately.

This is possible especially if the supervisor has formal training in handling

grievances. If not resolved within ten work days, the employee forwards the grievance
to the department manager and the chief steward of the union. Again, resolution of
the grievance is possible at this point if the department manager is willing to discuss
the matter with the employee and the chief steward. However, if it remains unresolved,
the next step is for the employee to forward the complaint to the vice president for
labor relations and the local union president after 15 work days. Resolution of the
matter is possible, but if nothing happens within 30 work days, the employee may now
forward the complaint, with the aid of the local union president, to the NLRC for
arbitration. The arbitrator is neutral third party who resolves the grievance by issuing
a final decision which both parties – the employee, represented by the union president,
and the employer – have to follow.

REWARDS SYSTEM

Organization offer competitive rewards systems to attract knowledgeable and

skilled people and to keep them motivated and satisfied once they are employed in
their firm. Further, rewards promote personal growth and development and present
fast employee turnover. Managements offer different types of rewards. Monetary
reward- rewards which pertain to money, finance or currency.

a. pay/salary – financial remuneration given in exchange for work

performance that will help the organization attain its goals; examples, weekly,
monthly, or hourly pay, piecework compensation, etc.
b. benefits – indirect forms of compensation given to employees/workers
for the purpose of improving the quality of their work and personal lives; health care
benefits, retirement benefits, educational benefits, and others are examples of these.
 c. incentives – rewards that are based upon a pay-for-performance
philosophy; it establishes a baseline performance level that employees or groups of
employees must reach in order to be given such reward r payment; examples:
bonuses, merit pay, sales incentives etc.

d. executive pay – a compensation package for executives of organizations

which consists of five components: basic salary, bonuses, stock plans, benefits and
perquisites.

e. stock option – are plans that grant employees the right to buy a specific
number of shares of the organization’s stock at a guaranteed price during a selected period
of time.

Nonmonetary reward – rewards which do not pertain to money, finance or

currency; refer to intrinsic, rewards that are self-granted and which have a positive
psychological effect the employee who receives them.

a. award – nonmonetary reward that may be given to individual employees

or
groups/teams for meritorious service or outstanding performance; trophies, medals or
certificates of recognition may be given instead of cash or extrinsic rewards.

b. praise – a form of nonmonetary, intrinsic reward given by superiors to

their subordinates when they express oral or verbal appreciation for excellent job
performance.
 What’s In
Write TRUE if the statement is correct and FALSE if it is not correct.

_______1. Nonmonetary reward is a rewards which do not pertain to money, finance

or currency; refer to intrinsic, rewards that are self-granted and which have a positive
psychological effect the employee who receives them.

_______2. The grievance procedure is a formal procedure that authorizes the union to
represent its members in processing a grievance or complaint.

_______3. A labor union is a formal union of employees/workers that deals with

employers, representing workers in their pursuit of justice and fairness and in their
fight for their collective or common interests.

_______4. Executive pay is a rewards that are based upon a pay-for-performance

philosophy; it establishes a baseline performance level that employees or groups of
employees must reach in order to be given such reward r payment; examples:
bonuses, merit pay, sales incentives etc.

_________5. Unfair management practices – complaints regarding wages or salaries

and benefits given to them by the management are the usual reasons why employees
join labor unions.

Notes to the Teacher

This module will prepare the learners to analyze diagrams in

explaining how materials cycles in the environment.
 What’s New
What are the steps in union organizing?

Step 1
Step 2
Step 3
Step 4
Step 5
E

What is It
TRAINING – refers to learning given by organizations to its employees that
concentrates on short-term job performance and acquisition or improvement of
jobrelated skills.

DEVELOPMENT – refers to learning given by organizations to its employees that is

geared toward the individual’s acquisition and expansion of his or her skills in
preparation for future job appointments and other responsibilities

COMPENSATION/WAGES – all forms of pay given by employers to their employees for

the performance of their jobs.

PERFORMANCE EVALUATION – A process undertaken by the organization, usually done

once a year, designed to measure employees’ work performance.

EMPLOYEE RELATIONS – The connection created among employees/ workers as they do

their assigned task for the organization to which they belong.

EMPLOYEE MOVEMENTS – Series of actions initiated b employee groups toward an end

or specific goal.

UNIONISM – The principle of combination for unity of purpose and action.

REWARD – Gift, prize or recompense for merit, service or achievement, which may have a
motivating effect on the employee.

MONETARY REWARD – Refers to money, finance or currency reward, while

NON-MONETARY REWARD – Refers to intrinsic rewards which do not pertain to money
or finance.
 What’s More

MODIFIED TRUE OR FALSE. If the statement is correct, write True. If not, underline
the word which makes the statement incorrect, then write the correct answer on the
blanks provided before each number.

1. Benefits refers to the Gift, prize or recompense for merit, service or achievement,
which may have a motivating effect on the employee.

2. Not Engaged means - Employees who work with passion and feel a deep connection
with their company, they drive innovation and move the organization forward.

3. Indirect Compensation – includes benefits given by employers other than financial

remunerations; for example: travel, educational and health benefits and others.

4. Assessment- performance evaluation that requires the rater to choose from tow
statements purposely designed to distinguish between positive or negative performance; for
example: works seriously –works fast; shows leadership – has initiative.

5. Weekly basis - when pay is computed according to the number of work months
rendered.
 What I Have Learned

FILL IN the blank with WORD(S) that will complete the statements below.

GRIEVANCE PROCEDURE

The 1. is a formal procedure that authorizes the union to represent

its members in processing a grievance or complaint. Such grievance must be
expressed orally or in writing to the employee’s immediate supervisor and the union
steward. If the immediate supervisor shows willingness to discuss the complaint with
the employee and the union steward, the grievance may be resolved immediately.

This is possible especially if the supervisor has formal training in handling

grievances. If not resolved within 2. , the employee forwards the grievance to
the department manager and the chief steward of the union. Again, resolution of the
grievance is possible at this point if the department manager is willing to discuss the
matter with the employee and the 3 . However, if it remains unresolved, the next
step is for the employee to forward the complaint to the vice president for labor
relations and the local union president after 4. . Resolution of the matter is
possible, but if nothing happens within 30 work days, the employee may now forward
the complaint, with the aid of the local union president, to the 5. for 6. . The
arbitrator is 7. third party who resolves the grievance by issuing a 8. which
both parties – the employee, represented by the union president, and the employer –
have to follow.
 What I Can Do

Rearrange the jumbled letters to form the correct word(s) that

correspond to the meaning of the statement for each number. Write your answer on
the space provided after each item.

DRAWER
1. Gift, prize or recompense for merit, service or achievement, which may have a
motivating effect on the employee.

TRIDEC PENCOMNATIONS
2. include workers’ salaries, incentive pays, bonuses and commissions.

CENTIIVSE
3. rewards that are based upon a pay-for-performance philosophy; it establishes a
baseline performance level that employees or groups of employees must reach in
order to be given such reward r payment; examples: bonuses, merit pay, sales
incentives etc.

D S M T H E O T R T I A
4. Performance evaluation method designed to find out if the employee possesses
important work characteristics such as conscientiousness, creativity, emotional
stability and others.

L L G N M O E D I
5. The use of personal behavior to demonstrate the desired behavior or method to be
learned.
 Assessment
IDENTIFICATION: Write the correct answer on the space provided before the number.

___________1. learning through the explanation of training goals and objectives by the
trainers to the trainees.
___________2. Nonmonetary reward that may be given to individual employees or
groups/teams for meritorious service or outstanding performance; trophies, medals
or certificates of recognition may be given instead of cash or extrinsic rewards.

___________3. A _________ is a formal union of employees/workers that deals with

employers, representing workers in their pursuit of justice and fairness and in their
fight for their collective or common interests.

___________4. Perceptions of employees regarding unfair or biased managerial actions

are also reason why they join mass movements; examples of lack of fairness in
management are favoritism related to promotion and giving of training opportunities
and exemption from disciplinary action.

___________5. Training programs that take into account and accommodate the
individual differences of the trainees in order to facilitate each person’s style and rate
of learning.
___________6. Employees who are not only unhappy at work, but also act out their
unhappiness, they undermine what their engaged coworkers accomplish.

___________7. Related to fairness; the Equity Theory is a motivation theory focusing

on employees’ response to the pay that they receive and the feeling that they receive
less or more that they deserve.

___________8. It is the sum of perceived assistance or benefits that may result from effective
social employee relationships.

___________9. Some join for the satisfaction of their need for affiliation with a group
and for the prestige associated with coworkers’ recognition of one’s leadership
qualities.

___________10. These are fulfilled through appraisal/evaluation programs that provide

information that may be used as basis for compensation decisions, promotions,
transfers and termination
 Additional Activities

WORD POOL Complete the statements using the correct words given in the box. Write your
answer on the blank provided for every number.

♦ Grievance procedure
♦ actively disengaged
♦ indirect compensation
♦ training
♦ award
♦ nonfinancial compensation
♦staffing
♦ stock option
♦ nonmonetary reward
♦ feedback and reinforcement
♦development

_______________1. The is a formal procedure that authorizes the union to represent

its members in processing a grievance or complaint.

_______________2. Includes benefits given by employers other than financial remunerations; for
example: travel, educational and health benefits and others.

_______________3. Learning by getting comments or feedback from trainees

themselves, from trainers, or fellow trainees, which can help the individual realize
what they are doing wrong; reinforcement is accomplished through verbal
encouragement or by giving rewards such as prizes, awards and others.

_______________4. Includes recognition programs, being assigned to do rewarding jobs

or enjoying management support, ideal work environment and convenient work
hours.

_______________5. Employees who are not only unhappy at work, but also act out their
unhappiness, they undermine what their engaged coworkers accomplish.
_______________6. Refers to learning given by organizations to its employees that
concentrates on short-term job performance and acquisition or improvement of jobrelated
skills.

_______________7. Are plans that grant employees the right to buy a specific number
of shares of the organization’s stock at a guaranteed price during a selected period of
time.
_______________8.

Rewards which do not pertain to money, finance or currency; refer to intrinsic,

rewards that are self-granted and which have a positive psychological effect the
employee who receives them.

_______________9. Nonmonetary reward that may be given to individual employees or

groups/teams for meritorious service or outstanding performance; trophies, medals
or certificates of recognition may be given instead of cash or extrinsic rewards.

_______________10. Refers to learning given by organizations to its employees that is

geared toward the individual’s acquisition and expansion of his or her skills in
preparation for future job appointments and other responsibilities