WEEKLY LEARNING ACTIVITY SHEETS

Organization and Management, Quarter 2, Week 4

FUNCTIONS AND IMPORTANCE OF COMPENSATION, WAGES AND PERFORMANCE

EVALUATION, APPRAISAL, REWARD SYSTEM, EMPLOYEE RELATIONS AND MOVEMENT

Name: ___________________________________________ Section: ____________________

Learning Objective:

 Examine the functions and importance of compensation, wages and performance

evaluation, appraisal, reward system, employee relations and movement

Time Allotment: 4 hours

Key Concept

A. Compensation
 Compensation is a vital part of human resource management, which helps in
encouraging the employees and improving organizational effectiveness. Compensation
packages with good pay and advantages can help attract and retain the employees.

B. Compensation and Benefits

 Compensation and benefits refer to the benefits a firm provides to its employees in
exchange for their labor. Compensation and benefits are thus a key part of Human
Resource Management.
 Compensation describes the cash rewards paid to employees in exchange for the
services they provide. It may include base salary, wages, incentives and commission.
Total compensation includes cash rewards as well as any other company benefits.

 Salary and Wages - A salary (or wage) is a fixed amount paid in exchange for an
employee’ service. For full time employees, salary is described in annual, monthly, bi-
weekly or weekly amounts. For part-time employees, it is described as an hourly
amount.
 Incentives: Drivers in attracting the best employees - Compensation can be
divided into salary, benefits, and incentives. While salary and benefits must be
competitive, incentives are the most likely drivers of attracting and retaining
employees in start-ups.

Three key types of Incentives

 Bonuses- Individuals are rewarded based on the attainment of performance-based

goals (Individual, team and company).
 Profit sharing- Payment is tied to company profits. A pre-determined percentage of
profit is shared among all employees. Profit-sharing bonuses are paid out once a
year in the form of cash or on a deferred basis.
 Commissions- Commissions are a common way to remunerate employees (sales-
people) for securing the sale of a product or service. The intent is to create a strong
incentive for the individual to invest the maximum effort of their work.

Author: Crisler R. Atibula

School/Station: Magllambing Integrated School
Division: Surigao del Sur
email address: crisler.atibula@deped.gov.ph
 C. Performance Appraisal

 Performance appraisal is the systematic evaluation of the performance of employees

and to understand the abilities of a person for further growth and development.
Performance evaluation is done in systematic ways which are as follows:
1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisors analyses the factors behind work performances of employees.
3. The employers are in a position to guide the employees for better performance.

Advantages of Performance Appraisal

Promotion Performance appraisal helps the supervisors to chalk out the

promotion programs for efficient employees
Compensation Performance appraisal help in chalking out compensation packages for
employees
Employees The systematic procedure of performance appraisal helps the
Development supervisors to frame training policies and programs
Selection Performance appraisal helps the supervisors to understand the validity
Validation and importance of the selection procedure.
Motivation Performance appraisal serves as a motivation tool. Through evaluating
the performance of employess, a person’s efficiency can be determined
if the tragets are achieved.

D. Employee Relations
 Employee relations refers to an organization’s effort to create and maintain a
positive relationship with its employees.By maintaining positive, constructive
employee relations, organizations hope to keep employees loyal and more engaged in
their work
 Maintaining a strong employer and employee relationship can be the key to the
ultimate success of an organization, the results are advantageous. It is known that
if a string relationship is to place employees will be more productive, more efficient ,
create less conflict and will be more loyal. Taking this into consideration, is your
company operating at its peak performance? Is this because you lack a healthy
relationship with your employees?

The Benefits of Strong Employment Relations

 Having strong employer and employee relations reaps a lot of benefits for your
business. The three most advantageous are listed below:
 Productivity- Strong employment relations create a pleasant atmosphere within the
work environment. It increases the employee motivation and can also be increased
through improved employee morale.
 Employee Loyalty – Creating the productive and pleasant work environment has a
drastic effect on an employee’s commitment to the firm, it encourages a loyal
workforce. Having such a labor force improves employee retention, in doing so the
cost of recruitment, hiring and training are cut drastically.
 Conflict Reduction – When a work environment is efficient and friendly, the extent
of conflict within the workforce is reduced. Fewer conflict results in the employees
being able to concentrate on the tasks at hand and they are therefore more
productive. All the research and statistics lead to one conclusion, ‘A happy
workforce is a productive workforce’. Creating a sound and efficient work
environment with excellent management and a strong employer-employee relation
can be the vital key to any businesses success or failure.

Author: Crisler R. Atibula

School/Station: Magllambing Integrated School
Division: Surigao del Sur
email address: crisler.atibula@deped.gov.ph
 E. Rewards System
 In a broadest sense of the word, performance evaluation and reward systems are
designed for employee development and raising motivation with the purpose of
achieving better and visible results. Goals are reached by giving systematic
feedback while the effects of subjectivity and the errors that come from it
(sympathy, halo effect) are minimized. The aim of the whole process is to boost
productivity and work quality in the entire organization.
 Reward systems refer to programs set up by a company to reward performance and
motivate employees on individual and/or group levels. They are normally
considered separate from salary but may be monetary in nature or otherwise have
a cost to the company.
 The Total Reward System comprises the extrinsic and intrinsic reward
mechanisms available to an employer to motivate, attract and retain employees.
Different combinations of rewards will generate different employer-employee
relationships. Figure 1 shows the variety of reward mechanisms organizations may
use.

TOTAL REWARDS

EXTRINSIC INTRINSIC
 Compensation  Meaningfulness
(fixed pay,  Choice or
variable pay) autonomy
 Benefits  Growth
(income- (competence and
protection, paid progress)
time-off, well-  Community
being, work life)
 Work
environment
and conditions
 Recognitions
 Learning and
development
 Promotions
 Leadership

Attitudes, behaviors, performance and well-being

Organizational sustainability

Figure 1. Shows the variety of reward mechanisms organizations

It is useful to think about the relationship between extrinsic and intrinsic rewards in
terms of foreground and background. Extrinsic rewards come into the foreground when
employees are in need of economic resources, when issues of unfairness arise or when they
face major life choices. Extrinsic rewards fade into the background the rest of the time
whilst intrinsic rewards take the foreground in day-to-day.

Author: Crisler R. Atibula

School/Station: Magllambing Integrated School
Division: Surigao del Sur
email address: crisler.atibula@deped.gov.ph
  Extrinsic rewards - these are controlled and distributed directly by the organization
and are of a tangible nature. Extrinsic rewards can be categorized into seven groups:
compensation, benefits, workplace environment, recognition, development and
feedback, promotion and career opportunities, and leadership.
1. Compensation - Compensation refers to those financial returns (in cash or shares) that
employees receive directly from their employers as part of their contractual
relationship.

Two types of Compensation

a. Fixed Pay - Fixed pay (also referred to as based pay or salary) is the cash compensation
that an employer pays in return for the work performed by an employee.
b. Variable Pay - Variable pay (also known as pay at risk) is a payment in cash or equity
contingent on individual, group or organizational performance assessed objectively or
by discretion.
2. Benefits - Benefits are non-cash or services that employees receive in exchange from
their employment .

 Income-Protection - These benefits are meant to protect employees from the financial
risks inherent in their lives. Some examples of this type of benefit are: retirement plans,
medical plans, life insurance, etc. Due to economies of scale, organizations can provide
these protections to their employees at a lower cost than employees can get them for
themselves.

3. Workplace Environment and Working Conditions - The key purpose of this reward
mechanism is to provide a safe and comfortable environment for employees. Normally,
this element of the reward package refers to the physical setting in which employees
work.
4. Recognition - Recognition reward programs provide a formal acknowledgment or give
particular attention in the form of cash or non-cash awards
5. Learning and Development -Organizations also offer their employees learning and
development opportunities. The purpose of this form of reward is to support employees’
sense of competence, self-efficacy and achievement as well as encourage their
motivation.
6. Promotions- A promotion refers to the advancement of an employee from one rank or
position to the next one in the hierarchy system. A promotion is usually desirable to
the employee
because it brings higher compensation, internal and external status, greater autonomy,
interesting challenges and the like.
7. Leadership - Leadership, understood as the process whereby an individual influences
the behavior of a group of individuals towards common goals, can also be interpreted
as a form of reward.
8. Intrinsic Rewards - Intrinsic rewards are based on positively valued experiences that
an employee gets when performing his/her job.
Four types of Intrinsic Rewards
 Sense of meaningfulness - the degree of importance of the purpose an
employee is trying to fulfill and the significance of the work he/she is performing.
 Sense of choice - the positive feelings generated when an employee has the autonomy
or discretion to choose how to accomplish his/her work.
 Sense of growth - the degree to which an employee feels that he/she can perform
his/her work skillfully, and due to his/her competence and efforts is accomplishing
something important.
 Sense of community - the positive feelings of belongingness within a group.

Author: Crisler R. Atibula

School/Station: Magllambing Integrated School
Division: Surigao del Sur
email address: crisler.atibula@deped.gov.ph
Activity No. 1: Tell Me!
What you need: Pen and Paper
What to do: Read each statement carefully. Write T if the statement is correct and F if the
statement is false. Write your answers in the space provided.
1. Compensation is the total cash and non-cash payments that you give to an
employee in exchange for the work they do for your business.
2. Performance appraisal is the systematic evaluation of the performance of
employees and to understand the abilities of a person for further growth and
development.
3. Intrinsic rewards are controlled and distributed directly by the organization and
are of a tangible nature.
4. Extrinsic rewards are based on positively valued experiences that an employee
gets when performing his/her job.
5. Having a strong employer and employee relations reaps a lot of benefits for your
business.
6. The supervisor analyses the factors behind work performances of employees.
7. The employers measure the pay of employees and compare it with targets and
plans.
8. Reward systems are designed for employee development and raising motivation
with the purpose of achieving better and more visible results.
9. Creating a productive and pleasant work environment has a drastic effect on an
employee’s commitment to the firm.
10. When a work environment is efficient and friendly, the extent of conflict within
the workforce is reduced.

Activity No. 2: Multiple Choice

What you need: Pen and Paper
What to do: Read each statement carefully. Choose only the letter that corresponds to the
correct answer.
1. It describes the cash rewards paid to employees in exchange for the services they provide.
a. Benefits b. compensation c. Incentives d. Bonus
2. A systematic evaluation of the performance of employees for further growth and development.
a. Employee relations c. Employee development
b. Performance appraisal d. Selection Validation
3. Who will identify members who have direct and indirect interaction with the applicant in the
course of their job?
a. HR coordinator b. Hiring manager c. Supervisor d. Department Head
4. The following are the advantages of performance appraisal EXCEPT:
a. Performance appraisal helps in chalking out the promotion programs
b. Performance appraisal helps the supervisors to frame training policies
c. Performance appraisal serves as motivational tool
d. Performance appraisal creates clatters among members
5. Human Resource managers use a variety of types of training to develop a holistic employee.
Which of the following does NOT belong to training and development?
a. Managerial training b. Team training c. Performance training d. Technology training
6. Position title, pay grade and position level belong to what content of job description?
a. position purpose c. general information
b.preferred qualifications d. minimum requirements
7. A type of training meant to teach new employee the technological aspects of the job.
a. technical training b. quality training c. team training d. Managerial training

8. It is a process that empowers teams to improve decision-making, problem-solving, and team-

development skills to achieve business results.
a. technical training b. quality training c. team training d. Managerial training

Author: Crisler R. Atibula

School/Station: Magllambing Integrated School
Division: Surigao del Sur
email address: crisler.atibula@deped.gov.ph
9. Which of the following steps in recruitment and selection process should be prioritized first?
a. Develop recruitment plan c. Identify vacancy and evaluate the need
b. Develop job description d. Select search committee
10. Which is the most crucial part in recruiting and selecting an applicant?
a. select hire c. Select search committee
b. finalize recruitment d. Conduct interviews

Reflection
If you were one of the hiring committees, what are the skills that you will look for a
candidate? Why?

Author: Crisler R. Atibula

School/Station: Magllambing Integrated School
Division: Surigao del Sur
email address: crisler.atibula@deped.gov.ph
References for learners

Enriquez, E.G.(2016).Organization and Management. JFS Publishing Services

“(PDF) Reward Systems”.2020.Researchgate.

https://www.researchgate.net/publication/304570009_Reward_Systems

Answer Key

Activity No. 1:
1. T
2. T
3. F
4. F
5. T
6. T
7. F
8. T
9. T
10.T

Activity No. 2:
1. B
2. B
3. B
4. D
5. C
6. C
7. A
8. D
9. C
10.D

Author: Crisler R. Atibula

School/Station: Magllambing Integrated School
Division: Surigao del Sur
email address: crisler.atibula@deped.gov.ph