APPRAISAL AND REWARD

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APPRAISAL AND REWARD

• BT TRACK PRESENTATION

GROUP - 5
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PRESENTATION ITINERARY

• INTRODUCTION
• PRODUCTIVITY-FOCUSSED APPRAISAL
• POTENTIAL-FOCUSSED APPRAISAL
• TEAM-BASED APPRAISAL
• INCENTIVE-BASED APPRAISAL
• APPRAISAL AND REWARD TECHNIQUES

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NEED FOR APPRAISAL REWARD SYSTEMS

• ATTRACTING RETAINING BEST TALENT
• BOOSTING THE MORALE-MOTIVATIONAL TOOL
• CREATING COMPETITIVE ENVIRONMENT FOR BETTER
  PERFORMANCE
• PERMEATING A HEALTHY ORGANISATIONAL CULTURE
• IMPORTANT FOR SUSTENANCE OF FLATTER STRUCTURES

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PRODUCTIVITY-FOCUSSED APPRAISAL

• NEED FOR WELL-DEFINED OBJECTIVES
• SHOPFLOOR WORKERS PRODUCTIVITY
• MANAGERIAL PRODUCTIVITY- NOT TARGET-BASED
• EMPHASIS ON BOTH MEANS AND ENDS
• EVALUATION INVOLVES SUBJECTIVITY-
• Self evaluation by employees
• Assessment by heads of the employees
• BENCHMARKS TO MEASURE PRODUCTIVITY- RECKITT
  COLMAN, AMTREX, HINDUJA FINANCE

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RECKITT MODEL
Organizational objectives are set
Broken into functional objectives
Broken into individual objectives
Key result areas (KRAs) are identified
KRAs are broken into activities with pre-set
performance levels
Productivity is measured and periodic and final
assessments are done
Performance-review and development
document is generated and acts as
basis for annual increment
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PARAMETERS FOR EVALUATING MANAGERIAL PRODUCTIVITY

• SUPPLY CHAIN
• CUSTOMER SERVICE
• INTERACTION
• INNOVATION
• FINANCE
• HUMAN RESOURCE DEVELOPMENT

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BEST PRACTICES TO MEASURE PRODUCTIVITY

• ARTICULATION OF BUSINESS, FUNCTIONAL,
  DEPARTMENTAL AND INDIVIDUAL OBJECTIVES
• GRADATION OF EMPLOYEES ON OBJECTIVE AND
  TRANSPARENT PRODUCTIVITY PARAMETERS
• CREATION OF A SELF-APPRAISAL FOLLOWED BY
  SUPERVISORY AND TEAM APPRAISALS
• ESTABLISHMENT OF A CLEAR LINK BETWEEN REWARDS AND
  PRODUCTIVITY TO INCREASE MOTIVATION LEVELS
• MAKE EMPLOYEES FULLY AWARE ABOUT THE PARAMETERS
  USED TO EVALUATE THEIR PRODUCTIVITY

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POTENTIAL-FOCUSSED APPRAISAL

• Integral part of management development process
  and career planning
• Subjective, non-quantitative approach
• Focus on future rather than past performance
• Essential for grooming future leaders

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GENERIC COMPETENCES

• Job Knowledge
• Thinking Clearly
• Goal-setting planning
• Relationships
• Leadership
• Innovation

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PSYCHOMETRIC TESTS

• Personality tests to capture abilities such as
  logic, aptitude, deduction and inference
• Attribute appraisal
• Attitude
• Accountability
• Commitment
• Initiative
• Leadership
• Ethics

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POTENTIAL-FOCUSSED APPRAISAL
HIGH
POTENTIAL
THE PHILIPS MODEL
LOW
LOW
HIGH
PERFORMANCE
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POTENTIAL-FOCUSSED APPRAISAL CRITERIA

• INTERPERSONAL EFFECTIVENESS
• NETWORK DIRECTEDNESS
• NEGOTIATING POWER
• PERSONAL INFLUENCE
• VERBAL BEHAVIOUR

• CONCEPTUAL EFFECTIVENESS
• VISION
• BUSINESS ORIENTATION
• ENTREPRENEURIAL ORIENTATION
• SENSE OF REALITY

• OPERATIONAL EFFECTIVENESS
• RESULT ORIENTED
• EFFECTIVENESS
• RISK-TAKING
• CONTROL

• ACHIEVEMENT MOTIVATION
• DRIVE
• PROFESSIONAL AMBITION
• INNOVATIVENESS
• STABILITY

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BEST PRACTICES TO MEASURE POTENTIAL

• Separation of reward for potential from reward
  for past performance
• Evaluation and identification of past performance
• Transparency of evaluation and appraisal
  procedures
• Communication of potential assessment to each
  individual at regular intervals

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TEAM BASED APPRAISAL

• Appraisal system that splits employee
  compensation between company standards,
  individual merit team performance
• Along with team rewards, members have their
  annual bonus pegged to performance
• Individual reward systems are also present to
  retain star performers

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REWARD PROCEDURE
Define min. performance benchmark for team reward
Make team performance mandatory for individual
rewards
Award in proportion to basic pay of team member
Geometric rate of progression for each successive
stretch target
Award linked to basic pay of the grade of the
individual
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BEST PRACTICES

• Setting quantifiable targets when evaluating team
  performance
• Highest level of rewards earned by top performers
• Link-up of team performance with companys
  profits and financial health
• Avoiding subjectivity when evaluating performance
• Offering uniform non-team based increments to
  employees within each grade

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INCENTIVE BASED APPRAISAL

• Mainly to boost performance
• No graded salary structure
• Shop floor incentives
• Performance index-SMH/(AMH-(Idle Time
  Learning))
• Productivity index-SMH/(AMH - Learning)
• Managerial incentives
• Individual objectives
• Business objectives

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INCENTIVE BASED APPRAISAL
BOARD
THE SIEMENS MODEL
Performance targets
Productivity targets
Productivity index (eligibility 75)
Performance index (eligibility 60)
Performance bonus (celing130)
Productivity bonus (ceiling 120)
Individual /group incentive
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BEST PRACTICES

• Deployment of incentive pay systems for managers
  and workers at all levels
• Transparency of principles and workings
• Periodic review of specific objectives for every
  employee
• Incentives for performance and disincentives for
  non-performance
• Indexation of incentive pay for workers to
  customer satisfaction

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VARIOUS TECHNIQUES

• 360 Degree technique
• Assessment Centre technique
• Non-Monetary technique
• Stock Option technique

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360 Degree technique

• Evaluation of a managers approach to work
• Evaluation of quality of interaction with
  colleagues
• Method of application Administer structured
  questionnaire to colleagues
• Parameters Performance, behavior, effectiveness,
  communication and delegation skills,
  administrative skills, values, ethics, etc.

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MERITS

• Evaluation methods applied to achieve targets
• Reveals strengths and weaknesses in managing
  style
• Forces inflexible managers to initiate
  self-change
• Creates an atmosphere of teamwork and empowerment
• Unearths truths about organisation culture and
  ambience

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DEMERITS

• Ignores performance in terms of reaching goals
• Colleagues responses tend to be biased
• Assessees deny the truth of negative feedback
• The system can be utilized to humiliate people
• Linking findings to rewards can prove to be
  unfair

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360o v/s Other Appraisal Systems

• 360o lays emphasis on road taken while others
  judge outcome of managers efforts
• Focus on intrinsic qualities and not just on
  achievements like in normal systems
• Teamwork will thrive as assessment by peers is
  embedded in system fabric
• Bridges the gap between self-assessment and
  colleagues views

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ASSESSMENT CENTRE TECHNIQUE

• Intensive laboratory of tests to evaluate
  functional expertise, aptitude and skills
• Isolation of individual at an assessment centre
  and evaluate on basis of games of skills and
  interview
• Primarily designed to identify managerial fits
  for higher posts

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MERITS

• Provides detailed picture of high performers
  potential
• Ensures that wrong people are not elevated
• Facilitates inter-cadre promotion
• Identifies talented individuals
• Defines the criteria for promotion

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DEMERITS

• Creates a strong and unhealthy sense of
  competition
• Frustrates those who fail to pass the tests
• Not possible to be conducted frequently
• Test performance may sometimes be overemphasized
• Promotions assume extraordinary importance among
  employees

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NON MONETARY REWARD TECHNIQUES

• Method to increase Employee participation and
  Employee satisfaction
• Use of rewards, awards, and other benefits for
  both employees and their families
• Started in 1980s by American corporates
• Recognition is the driving force nowadays

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NEED FOR NON-MONETARY REWARDS

• For creating more value, company
  institutionalized non-monetary methods, rewards,
  and recognition system
• Used as a Motivational tool
• Recognition and Rewards-
• creates positive work culture
• Encourages to deliver quality
• Creates personal challenges
• Effective way of building loyalty
• Inspires to give their best

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TYPES OF NON MONETARY REWARDS

• Treats Free lunches, Picnics, Bday treats
• Knick-Knacks- Desk accessories, T-shirts
• Awards- Trophies, Certificates
• Social Acknowledgement- Informal recognition,
  Recreation clubs membership
• Office Environment- Flexible hours
• Tokens- Vacation trips, Allowances
• On the job- More responsibility, Training

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MERITS

• Motivates employees to perform better
• Costs your organization next to nothing
• Builds tremendous self-esteem among people
• Makes employees more loyal to company
• Creates an atmosphere where changer is not
  resented

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DEMERITS

• Demotivates if process is not transparent
• Could result in unhealthy competition among
  people
• May lead to short-sighted, hasty decision making
• Work intrudes on the home life of employees
• Will never work if monetary rewards are inadequate

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EMPLOYEE STOCK OPTIONS

• Hottest Pay for performance tool nowadays
• Offered to management as executive compensation
  package
• The technique links managers reward to
  efficiency
• Offer certain shares at todays price and have
  benefit from an increase in the value of the
  stocks in future
• The stocks price will go up depends on his
  performance

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Need of ESOs

• Motivation booster directly links performance
  to marketplace
• Benefit to employee like other investors
• A performance Enhancer
• Bonus or Perks
• Is often a call option

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Stock Option Contract

• Strike price is non-standardized
• Non-standardized quantity (varies)
• Duration, maturity period (Varies)
• Non-transferable
• Over the counter (private contract)
• Tax issues

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Trading Phenomenon

• The Transnational Formula
• Foreign trading is done by company on
  employee behalf
• The Indian Equation
• -offer shares from the promoters holdings
• -Preferential issue of new shares
• Option Trading also done by unlisted companies

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MERITS

• Links compensation package closely to performance
• Offers a way for you to retain your best
  employees
• Motivates recipients to perform even better
• Inculcates a sense of ownership and
  responsibility
• Establishes importance of team effort among
  employees

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DEMERITS

• Only profitable companies can use the tool
• Stock prices do not always reflect fundamentals
• Falling share price could mean losses for
  employees
• The inability to cash in quickly can dampen
  interest
• Lack of transparency can earn accusations of
  favoritism

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FUTURE.

• Maturity period needs to be decided
• To see only deserving gets the opportunity
• Translate ESOs into efforts
• Survival in strict environment

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THANK YOU