Performance Appraisal Tutorial | Methods of compensation

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Methods of compensation

Executive compensation is hot but the non-executive workers feel ignored and frustrated as they see the gap between executive and employee compensation widen with each passing year.

Several trends indicate a need for more focus on employee compensation. These include:

  • A continuing shortage of qualified professional, technical and administrative employees.
  • A growing need for employees who are multi-skilled and adaptable to change.
  • A decreasing level of long-term commitment by employees
  • An increasing need for balance between work and other facets of life.

Base salary, traditional benefits like health, welfare and retirement, and perhaps a profit-sharing plan are the basic compensation package that has been offered by many companies.

Following are examples of programs that tie directly to employee’s performance.

  • Time off Surprise: Give Supervisors a bank of days and/or afternoons off that they can reward to staff on the spot for meritorious service.
  • Behind-The-Scenes: Recognize employees yearly or periodically who are not usually in the limelight. An alternative, involves recognizing employees who take risks.
  • Cash for Ideas: Periodically ask employees to record ways the company could save money. Pay a nominal amount per idea. If the idea is implemented, pay an additional 10% of the savings. The Poster Ideas program involves hanging poster board at key locations within the company. Written at the top of each board is a problem that needs solving.
  • Travel Expense Gain sharing: Create a program for employees who save on travel . Allow them to keep half the cost difference between their choice of hotel or transportation and the company’s standard.

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