The Function of Compensation

and Reward System in

Performance
Appraisal/Evaluation
 Competency
identify the policy guidelines on
compensation/wages and performance
evaluation/appraisal
discuss the importance of employee
relations, employee movements
 Reward System

It refers to all the monetary

and non-monetary payments that
an organization provide its
employees for the work they
perform.
 Types of Reward

1) Monetary Rewards – rewards that

pertain to money
Examples : Compensation(Salary,
benefits, incentives, etc.)
 Types of Reward

2. Non-monetary Rewards – refers to the

intrinsic rewards that are self granted
and which have a positive psychological
effect on the employees.
Examples: Award and praise
 Compensation
All forms of pay given by
employers to their employees
for the performance of their
job.
 Types of Compensation
Wage – (per hour)
Salary – (fixed amount)
Overtime pay
Allowance – (meal, travel)
Commission – (sales)
Compensation as a Motivational Factor
Compensation pay represents a reward
that an employee receives for good
performance that contributes to the
company's success. Compensation is
consider as a motivational factor for
employees, the following theory must be
considered:
 Equity Theory
It is a motivational theory which is related to
fairness. The pay that is given to the employee
must be equal to the value of the job that he/she
performed in order for him/her to be motivated,
it is also called pay equity.
 Expectancy Theory
A motivational theory which
predicts the that employee are
motivated to work well because of the
attractiveness of the rewards or benefits
that they may receive from the job
assignment.
 Performance Appraisal

It is a review of the employee's job

performance and overall contribution to
the company.
 Performance Appraisal

It evaluates an employee's skills,

achievements and growth or lack
thereof. It is also known as performance
review or performance evaluation.
Performance Appraisal Method

The following methods are the

commonly used as performance
evaluation by the companies.
Forced-choice method

It requires the employee to choose

from two statements purposely design to
distinguish between negative and positive
performance. Best example is Checklist
Method.
Checklist Method
It contains a list of
statements/questions that describe
the characteristics and performance of
employees on the job. Usually the
questions are answerable by yes or no.
 ABC Company
Performance Appraisal
Employee‘s name ___________
Position ___________________
Department ________________
Instruction: Check the box if it is a yes or no.
YES NO COMMENTS
The employee needs minimum
supervision in performing his/her job
The employee has in-depth knowledge
of his/her job.
Graphic Rating Scale

It contains lists desired traits

and behavior for each role then rates
workers on each of those on a
numbered scale.
 ABC Company
Performance Appraisal
Employee‘s name ___________
Position ___________________
Department ________________
Instruction: Put an X in the area which best describes the
employee's performance.
Attributes Above Average Average Below Expectation
Leadership
Ability
Takes Initiative
Behaviorally Anchored
Rating Scale
It is a tool for measuring
employee performance by measuring
them based on predetermined
behavioral patterns.
 ABC Company
Performance Appraisal
Employee‘s name ___________
Position ___________________
Department ________________
Instruction: Put a check on the given scale.
TASKS 5 4 3 2 1

1) Answering The The employee The employee The employee The employee
phone calls employee answers the answers the answers the answers the
cheerfully call in just one call after 2 call after 3-4 phone
answers the ring. rings with a rings. whenever he
call in just normal voice. wants with
one ring. irritated tone.
360 Degree Feedback
Appraisal
It is an employee performance
review process in which an employee
is collectively rated by subordinates,
co-workers, and managers.
 Rate

5 – Very Strong
4 – Strong
3 – Developed
2 – Under developed
1 – Not developed
 Leadership Skills: Very Strong (5)
"This person has great leadership potential."
"This person is very confident in their role as group
leader. They are able to get the most out of
everyone on the team."
"This person has the ability to lead small groups."
 "Highly effective at leading work groups. Able to
resolve conflicts among participants."
 Communication Skills: Very Strong (5)
 "Excellent verbal communication skills. This person
communicates very well on both a personal and
group level. They are not afraid to speak up when
necessary."
 "This person has above average presentation,
interpersonal and written communication skills."
"Great at relaying information to their peers in a
clear and concise manner."
 Creativity: Strong (4)
"This person has really helped when we've been
brainstorming new ideas for campaigns, events,
etc."
"This person has great creative skills. He/she is
able to bring fresh ideas to the table and come up
with solutions that are new and innovative."
"Great at generating unique ideas. He/she can
always think of original ways to solve problems."
 Reasons for using
Performance Appraisal
For promotion
For compensation
For employee development
For motivation
Effects of Rewards to Employees
Performance

Rewards Employees
*Monetary Performance
Rewards *Effectiveness
*Non-monetary *Efficiency
Rewards
Employee Relations
&
Employee Movement
Employee Relations
It is the organization's efforts to
create and maintain a positive
relationship with its employees.
Benefits of Strong Employee Relations
1. Productivity – a pleasant atmosphere within the
work environment increases motivation.
2. Employee Loyalty – having a pleasant and
productive environment encourages a loyal
workforce
3. Conflict Reduction – efficient and friendly
environment reduced the conflict within the
workplace.
 Three Types of Employees
Employees who work with passion
Engaged and feel a deep connection with
their company.
Employees who put time, but not
Not Engaged energy and passion into their work.

Employees who are not only

Actively Disengaged unhappy at work but also act out
their unhappiness.
Employee Movements
It is a series of action initiated by
employee groups toward an end of
specific goal. An example of employee
movement is Labor Union.
 Labor Union
It is a formal union of
employees/workers that deals with employers,
representing workers in the pursuit of justice
and fairness and in their fight for their collective
or common interests. (usually complaints about
financial needs, unfair management, and
leadership concerns)
 Metal Workers Alliance of the
Philippines (MWAP)

Labor union composed of metal workers in

the Philippines includes workers in electronics
industry.
In May 2014, NXP Semiconductors fired 24
MWAP officials working at a factory in a special
economic zone in Cabuyao, Laguna.
 Kilusang Mayo Uno

Kilusang Mayo Uno, or May First Labor

Movement (KMU) is an independent labor
center in the Philippines promoting fighting
for worker‘s rights KMU was created on May
1, 1980, during the Marcos regime.
End of our lesson!