Source:
E-mail dt. 26 August 2011
Empowering Performance
Management with Employees in IT Industries
Dr. A. Lakshmi
Director,
School of Management, K.S.Rangasamy College of
Technology, Tiruchengode.
and
M. Maheswari
Assistant
Professor and Research Scholar, School of Management,
K.S.Rangasamy College
of Technology,Tiruchengode, Tamilnadu, India.
Abstract
Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined and ends when an employee leaves the organization. Performance is the sum of behavior plus results. Performance management has two goals, the first goal is to create competency in people and the second goal is to create growth in employees. Compensation is a systematic approach for providing monetary value to employees in exchange for work performed. It may be given for several purposes namely assisting in recruitment, job performance and job satisfaction. It is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness. Performance based pay is a type of compensation system where it has two major types i.e., pay for group performance and pay for individual performance. According to Development Dimensions International (DDI), performance management systems are active in 91% of 3,600+ organizations studied. The current trends in Performance use the Strategic HR which is the link between Employee Performance Management and Organizational Performance. A number of common practices emerged in Industries and Software-aided performance management systems are uniquely suited to enable organizations to meet challenge. The best practices are Simplicity, Alignment with Business Objectives and Strategy, Decentralized Control, Training, Less Emphasis on Rating, Employee Participation and "Ownership", competencies, team-based objectives in individual performance plans, Flexibility, measurement process and Employee development. Organization must use compensation as one of their most important communication tools. It can be utilized to send a message about the organization’s expectations and goal achievement rewards to the employees. It should include measurement system for awarding variable pay.
Introduction
An effective strategy is to align the goals of the organization with the practice by creating a more direct relationship between performance and compensation. Performance based plan is a development process utilizing a strategy of inclusion, participate in every step, implement a developed plan with the highest possible level and incorporates adequate incentives to enhance the desired behaviors.
An organization review various compensation plans.
Selection of an appropriate plan is highly dependent on the specific
characteristics. Performance can improve by step procedure i)
survey ii) reward iii) standardize iv) communicate. Performance
is the sum of behavior plus results, Performance = behavior + results. Compensation is an
integral part of human resource management which helps in motivating the
employees and improving organizational effectiveness.
Compensation structure is comprised of three levels i) foundation range ii) career range iii) expert range. Human performance improvement is a powerful tool that can be used to help build intellectual capital, establish and maintain a high performance workplace, enhance profitability and encourage productivity.
Definition of
Performance
Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organization.
Definition of compensation
Compensation is the remuneration
received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the
work-employee relation by providing monetary and non-monetary benefits to
employees. Compensation is a systematic approach to providing monetary
value to employees in exchange for work performed.
Needs of performance and Compensation Management
A good compensation package is important to motivate the
employees to increase the organizational productivity. It helps in running an
organization effectively and accomplishing its goals. The most competitive
compensation will help the Organization to attract and sustain the best talent.
The components of a compensation system include: Job Descriptions, Job Analysis, Job Evaluation, Pay
Structures, Salary Surveys and Policies and Regulations. The Different types of
compensation include: Base Pay, Commissions, Overtime Pay, Bonuses, Profit
Sharing, Merit Pa, Stock Options, Travel/Meal/Housing Allowance and Benefits including
dental, insurance, medical, vacation, leaves, retirement, taxes.
Current Trends in
Performance and Compensation Management
Most of the organizations are utilizing performance
management systems / performance management software. The current trends in
performance are Strategic HR - The Link between Employee Performance Management
and Organizational Performance and 90% of companies surveyed, perceive improved
management of their workforce as key to gaining competitive advantage. Organizations
are aligning their employee performance goals with corporate performance goals
through technology solutions. Increased
Integration of HR Functions and Increased Automation of Performance Management
and HR Functions.
Online performance
management systems
HR executives identify improvement of HCM (Human
Capital Management) technology as a key response to their business challenges.
The main areas of focus are hiring management
solutions, pre-employment assessment, employee self-service and performance
management. Most of the organizations are stuck in paper-based performance
evaluation systems with annual reviews.
As companies transition to online performance management systems, some key
ingredients are: Scalability, Employee self-service and Integration.
Web - Based Solutions
Halogen
Software offers E-Compensation, a leading web-based solution that helps
streamline the compensation process by: Suggesting pay adjustments based on
appraisal scores and other criteria, Providing convenient access to key
background information on every employee, Automatically verifying all recommendations
against established budgets and pay guidelines and flagging those outside
corporate policy and Automating workflow and reminders to keep the whole
process moving until final approvals are in place
Best
Practices in Industries
The ideally suited to support performance management
best practices are software-based systems. Understanding and implementing the
following practices becomes the challenge for performance-focused
organizations. They are Simplicity, Alignment with Business Objectives and
Strategy, Decentralized Control, Training, Less Emphasis on Rating and Employee
Participation and "Ownership".
Best compensation management practices are part of
an overall employee performance management strategy and it include:
Establishing pay and classification practices that enable the organization to
attract and retain qualified, high quality employees, Rewarding sustained high
performance, Ensuring compliance with any local or federal regulations,
Supporting managers in achieving organizational goals and Training and advising
supervisors on compensation and management concepts.
Great
10 Reasons for Managing Compensation:
Required
and Missing in an Organization
Each and every organization is following the
practice of performance analysis at the beginning state of the work. Based on
the performance the compensation is provided either in the form of monetary or
non monetary. After that the practice is slowly flawed. Because of the reason
the performance of the employees in organization gets down and leads to less
productivity. The analysis of performance and compensation is required in all
stages and at all work. It should be a continuous process in all organization.
An example of the good performing organization is TVS
because it follows the continuous process of analyzing performance and
providing compensation. The worst performing organization is Life Insurance
Companies, because they are not following the process.
Conclusion
Performance based pay is a type of compensation
system where it has two major types: pay for group performance, pay for
individual performance. Organization must understand the performance standards
necessary to achieve the desired level of compensation and must be provided
with accurate information. The reality is each individual brings a unique
contribution to his / her job. The ability of performance
system to recognize how work is accomplished as well as what is accomplished.
Unfortunately in many organizations today performance management process is
flawed. To succeed in competitive and demanding global environment, every
organization must continuously improve their performance using performance
system and accordingly compensation has to be provided.
References
1.
Total compensation
management, taming cost and rewarding employees by Aberdeen Group, April 2008.
2.
Innovative Trends and Strategies in Compensation and Performance
Management by standard Chartered, 18th July 2006.
3. New Approaches to Compensation Management for Information Technology Professionals by Marsha Benenson-Farley & McKenzie Hall, Celeste Giunta.
4.
Implementing a performance based compensation plan – the secret is in the
development process by jonathan
M.Stern.
5.
Performance Management: Impacts and Trends by Roger Sumlin.
6.
Case
study: Creating a high performance culture in Siemens.