BusinessManagement

Performance Evaluation Compensation And Benefits

Performance Evaluation Compensation And Benefits : In general, corporate stockholders play a distinctive role in America. Stockholders do not  take  benefits  out of  their  investments  till  all  other related parties  have  been paid for their part of total investments. For this reason, stockholders have  the  right  to establish the contributions to be made and rewards to be received by the corporation’s employees.

Performance Evaluation : Although maximizing  stockholder value  is  the foremost objective of profit oriented companies, employees are not naturally concerned with stockholder welfare. Therefore, incentives must be given to employees to motivate them to maximize their own capital while synchronously maximizing  that of  the stockholders.

In  the past, compensation was often based  exclusively on  individual performance and short-run  financial results.  Because of operational changes and shifts in managerial viewpoints, performance evaluation and their related rewards now involve group success, non-financial performance aspects, and long-run considerations. Some of the rewards offer short-run satisfaction like merit pay and bonuses, whereas others give  long-run satisfaction like common stock ownership or stock options.  Pay plans are available that encompass current compensation, deferred compensation, and perks.

Three important dimensions of pay plans are incentive effects, tax effects,  and  ethical  considerations.  Incentive effects differ from  plan  to  plan.  The periodic pay plan is the least effective in directly motivating employees to perform and provides the weakest link between performance and reward. At the other extreme, the piece rate pay plan affords a direct link between the work accomplished and  the employee reward, as  long as  it promotes quality and group cooperation.

Not-for-profit  organizations and  governmental  entity  employees  have  historically  been  dissatisfied with  their compensation plans. Some of  these organizations are now attempting in order to strengthen the association between compensation and performance to encourage retention of high-quality employees in public-sector careers during the performance evaluation.

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