HRM BACC REVIEWER

REWARDS MANAGEMENT
Involves the process of rewarding people. It is concerned with the design, implementation,
and maintenance of a rewards system containing compensation and benefits with the
intention of improving organizational and individual performance. Rewards management
includes financial and non-financial rewards.
The total reward model indicates the tangible aspects, i.e. compensation and benefits are
monetary in nature, and are usually more enticing than intangible ones if a company seeks to
recruit and retain personnel.
The three R’s, namely remuneration, rewards, and retention, are the tangible aspects of total
reward or compensation and benefits that are thoroughly discussed in this hand-out.
Rewards refers to all types of compensation and benefits that employees receive in exchange
foal l forms of work performance.
Retention is the ability to translate it into something that will increase an employee’s
satisfaction and loyalty to the organization.
Remuneration refers to the compensation and benefits plan made by the firm.
8 Common terminologies assigned to compensation and benefits…
1. Base Pay – it is the fixed and usually the largest component of the total compensation
package.
2. Incentive compensation – incentives or bonuses are given to employees who achieve
certain objectives set by the organization.
3. Allowances – these are temporary add-ons to the basic pay such as rice ration, transportation, and
meal allowances etc.

4. Overtime Pay – this is provided for work rendered beyond the normal work hours.
5. Risk Benefits – these are payments for medical, death, or disability cases that are provided
to employees depending on the risks involved in the type of jobs they perform.
6. Retirement Benefits – these are benefits provided to employees who have reached the
compulsory retirement age after serving a company for a certain number of years.
7. Equity Compensation –usually given to senior executives, this compensation comes in
the form of stock options.
8. Perquisites – these are extended to members of the senior management.
Compensation is a primary consideration in an employee’s work life.
1. Cost-containment - compensation should be based on the ability of the company to pay
right compensation package.
2. Objective – compensation should be based on the task being performed by the employee
as well as his/her skills and knowledge about the job.
 3. Motivating–compensation should boost the employee’s morale and encourage him/her to
always strive for better, if not the best performance.
4. Productivity-providing – compensation should ensure that employees are happy and
satisfied. These conditions result in greater productivity.
5. Equitable – compensation is fair to all if the pay is commensurate to the employee’s
contribution to the organization.
6. Non-discriminating – compensation should ensure that no one suffers discrimination.
7. Sustaining – compensation should provide for the employee’s needs and is concerned
with his/her welfare.
8. Adequate Legal Compliance – compensation should adhere to the law. It should not be
lower than the minimum wage.
9. Time-bound – compensation should be given on time. There should be no cause for
delay in the payment of salaries and wages.
10. Inducing loyalty – compensation should induce employees to stay in the company.
Generally, employees who are happy and satisfied in terms of compensation, benefits,
and work environment will not think of leaving their jobs.
11. Obligatory – companies have the obligation to pay their employees well. The
employment contract duly signed by the company representatives and the employees
indicates this particular responsibility.
12. No insecurity – the pay package should make the employee feel secure. He/she must
believe that what he/she will receive can satisfy his/her basic needs.

PERFORMANCE MANAGEMENT AND EMPLOYEE MOVEMENT

Performance management is the process by which managers, supervisors, and executives
assess the performance of employees to ensure that it accords with the company’s objectives.
Armstrong defines it as “a systematic process for improving organizational performance by
developing the performance of individuals and teams.”

Planning

Performance
Acting Management Monitoring
Cycle

Reviewing

1. Planning – this pertains to the setting of performance goals and expectations of groups
(departments and units) and individuals (subordinates and superiors).
2. Monitoring – monitoring provides the mechanisms by which performance will be
measured. It also entails giving constant feedback to employees regarding their progress in
achieving the goals of the organization.
3. Reviewing – performance is reviewed from time to time and compared with the
performance standards, goals, and expectations which were agreed upon during the planning
stage.

4. Acting – this includes activities based on the performance review.

Performance appraisal determines whether employees perform effectively and are on a par
with the company’s expectations.
Critical Incident Technique – in this technique, the rater or immediate supervisor keeps
track of all the critical or relevant behaviors of the subordinates.
Checklists and Weighted Checklists – the HR provides a list of descriptive statements with
corresponding weights.
Checklists and Weighted Checklists – the HR provides a list of descriptive statements with
corresponding weights.
Multiple Person Evaluation Needs
Forced Distribution. The forced distribution technique allows a supervisor to group his/her
subordinates at his/her own discretion.
Ranking. In this method, the supervisor rates all the employees from first to last
Paired Comparison Technique. The supervisor rates employees by pair.
Management by Objectives (MBO). This technique allows an employee to set his/her own
goals or objectives by himself/herself.
360-degree Feedback. As the term implies, immediate supervisors are not the only raters.

1. Halo effect – this usually happens when a rater uses one particular aspect of the
employee’s good traits.
2. Ambiguous Evaluation Standards – ambiguity occurs if one rater’s standard for
outstanding work performance contradicts that of another rater from a different department.
3. Stereotyping Effect – stereotypes may influence the rater’s decision as to who will garner
a high ranking and who will earn a low one.
4. Recency Effect – if recent events prior to the actual evaluation period are easily remembered and
given more weight than the accumulation of performance behaviors for the whole evaluation period,
the raters commit the recency effect.
5. Primacy Effect – raters may have first impressions of the employees that linger and
influence that ratings they give during an evaluation.

6. Hard/Easy to Please Tendencies – there are raters who are hard to please and feel that
employees do not meet their expectations in terms of performance.
7. Mirror Effect – this error happens when a rater gets affected or influenced by his/her,
immediately preceding performance assessment of an employee.
The Four (4) Main Types of Employee Movement

Promotion refers to an employee’s movement to a higher level or position.

Demotion refers to an employee’s movement to a lower level or position.
Resignation is an employee’s voluntary decision to leave the company.
Retirement is the end of an employee’s career in a company.

EMPLOYEE RELATIONS & DISCIPLINE

Employee relations encompasses the broad field of HRM that is concerned with balancing
employee satisfaction with employee productivity and efficiency in the attainment of
organizational goals. In understanding employee relations issues, a background of the
following four schools of thought is essential:
1. Mainstream Economics. This school of thought emphasizes the existence of free market
competition. Workers are free to resign if they do not like the working conditions in
the company they are working for.
2. Human Resources Management. HRM is formerly referred to as personnel
management. Human resources were merely essential factors of production. The
HRM school of thought stresses the idea of better management of human resources.
3. Industrial Relations. The great bargaining power of employers in determining workers’
wages and benefits always raises an issue. This school of thought asserts that this
considerable power, which breeds inequality, is the primary cause of labor problems.
4. Marxist Industrial Relations. The Marxist point of view opposes mainstream
economics. Therefore, it advocates the struggle of workers against capitalism (free
market) and perpetuates strong militant unions to help workers obtain better working
conditions, compensations, and benefits.

The three P’s in employee relations are policies, practices, and prevention. The context of
labor relations is tackled in POLICIES. Labor unions, together with collective bargaining
agreements (CBA) are discussed under PRACTICES. The last P, PREVENTION, explains
employee violations and corresponding disciplinary actions.
1. Drive for Commitment – when a company fosters a good relationship between
management and employees, the latter become loyal and committed to the
organization.
2. Harmonization of Terms and Conditions of Employment – when employees
believe that the terms and conditions stated in their employment contracts are adhered
to, the company can be assured that employees are satisfied.
3. Emphasis on Mutuality – this stresses teamwork. Employees must feel that
management is also a part of the group.
4. Policies and Practices for Communication – the concept of labor relations is the
maintenance of harmonious relationship between employees and the management.

Basic Rights of Employees and Employers

 1. Equal opportunities for all – all employees should be treated fairly and given work
opportunities regardless of gender, race, and religion, among others.
2. Security of tenure – no employee can be dismissed from work without due process. The
employee has the right to be heard before a decision for termination is made.
3. Work days and work hours – the normal number of hours of work in a day are eight (8)
hours.
4. Wage and wage-related benefits – all employees are entitled to wages and other benefits
as mandated by law.
5. Safe working conditions – employees should be provided with safe working conditions
which include appropriate seats, lighting and ventilation, adequate passageways, exits,
fire-fighting equipment, separate facilities for men and women, gears, masks, safety
shoes, coats and uniforms, medicine, medical supplies, and first aid kits.
6. Rest days and holidays – a rest day refers to at least a day off from work.
7. Leave – the three types of leave which should be enjoyed by the employees are the
following: service incentive leave, paternity leave, and maternity leave.
8. Right to self-organization and collective bargaining – an employee has the right to join
any legitimate worker’s association or union of his/her choice free from any
interference by the employer.
9. Workers’ participation and tripartism – employees and employers work in
partnership.
10. Social legislation – there are social benefits provided to workers such as pensions,
financial assistance or allowance for death or sickness, rehabilitation assistance for
work-related disability, etc.

Meanwhile, the rights or employers or firms are the following:

1. Closure of business – the employer may decide to close the business when needed, such
as when it goes bankrupt.
2. Transfer of workers – the management has the prerogative to transfer an employee from
one department to another.
3. Hire and fire – the employer has the right to accept or hire an applicant and at the same
time to fire an employee, provided the latter case arises from a just or authorized cause.
4. Impose employee discipline – any employee offense or violation of company standards
and code of conduct is dealt with by the employer through disciplinary measures.
5. Issue rules and regulations – the management has the right to implement rules and
regulations that employees must follow.
6. Management prerogatives – the management is given a leeway to administer the affairs
of the company to maximize profits.
EMPLOYEE POLICIES
1. Union recognition. The company should decide which union should represent employees.
2. Collective bargaining. The company should formulate policies on the coverage of
collective bargaining agreements.
3. Procedures on grievance handling and discipline. Policies and procedures on handling
grievance and discipline cases should be formulated and implemented.
4. Communication policies. The organization should design policies so that employees can
voice out their concerns and grievances.
5. Terms and conditions of employment. Policies on how terms and conditions of
employment are governed by collective bargaining agreements should be decided.
6. Employee handbook. Company policies should be stated and explained in the employee
handbook.
PROGRESSIVE DISCIPLINE
1. Oral Reprimand – this is a warning from the supervisor regarding a deficiency or
underperformance which needs to be corrected
2. Written Warning–if the employee commits the same offense or more problems crop
up, then the supervisor issues a written warning which states the objectionable
behavior together with the consequences in case the behavior continues.
3. Final Written Warning or Suspension – this depends on the employee’s violation.
A final written warning is issued both for underperformance or suspension for
sleeping while on duty. corresponding days that he/she is suspended.
4. Termination – if the employee keeps on committing a certain offense and the
punishment is the possible termination of an employee, then the case is thoroughly
reviewed prior to termination.

CRITERIA FOR AN EFFECTIVE COMPENSATION PLAN

EKE AKIT SORRY
OBJECTIVES OF EMPLOYEE BENEFIT PROVISIONS
The objectives of employee benefit provisions are the following:
1. To attract and retain highly-skilled or high-performing employees.
2. To promote employee commitment and loyalty to the organization
3. To fulfil some of the needs of employees

Employee benefits are divided into two main group:

Government-mandated benefits are those that firms are obliged to provide their
employees.

Voluntary benefits are those borne out of the firm’s generosity.

CAREER STAGES
THE FIVE CAREER STAGES
1. Formation Stage – the moment the individual gets hired by an organization signals
the start of his/her career. He/She begins to gather work experience and mingle with
co-workers. Adjustments need to be made during this stage. The employee’s age at
this stage ranges from 21-28 years..
2. Enterprising Stage – this is the stage when the employee sells his/her skills well.
This means that while honing his/her craft, he/she is also accumulating experience.
3. Maintenance Stage – this stage is marked by many achievements and recognition.
Promotions are not far behind. The employee’s doors are open to many possibilities
4. Mid-career Stage – this is often called the mid-career crisis. Nevertheless, this stage
really depends on the person. An employee who has successfully worked well at this
stage will definitely advance to the next level with ease.
5. Fulfillment Stage – this is the last leg of the career stage where the employee
contemplates on retirement and looks at his/her career as either a success or a failure.
The ideal age here is 48 to 60 years old. While a few may opt for early retirement at
50, many prefer to retire at 60 or even beyond 60. By 60 or beyond, the employee
most probably has already fulfilled his/her plans and goals in life.

STEPS IN SUCCESSION PLANNING PROCESS

Succession planning is the structured approach of identifying, developing, and retaining
employees to prepare them to fill key areas or positions that are critical to an
organization’s long-term goals.
The steps in the succession planning process are as follows:

1. Identify key areas and positions. Key positions are those that are critical to the
strategic objectives of the organization.
2. Identify capabilities for the identified key areas and positions. This is the
identification of knowledge, skills, and abilities needed for these key positions.
Knowledge consists of information that allows a person to successfully perform a
 task. Skill is a person’s level of proficiency in performing a task. Ability is an
enduring capacity to perform a task.
3. Identify employees who have potentials for these key positions. The purpose of
identifying the employees who have potentials to fill up key positions is for these
employees to acquire the skills and competencies they need once the positions
become available.
4. Develop and implement succession plans. Candidates for key positions can be
given assignments that go beyond their current abilities, such as being the head of a
particular committee or special project.
5. Evaluate effectiveness. As the last step, it is important to monitor succession
planning efforts and make adjustments when needed. It is critical to evaluate the
strength of the developmental efforts based on the employees’ learning plans.