Human Resource Management (HRM) II Ass. Prof. Dr. Özgür KÖKALAN İstanbul Sabahattin Zaim University

Chapter Objectives Define what HRM Classify functions of HRM Define how an employee is selected and trained Chapter Objectives

HR Performance Appraisal Performance appraisal can be described as the process by which organizations evaluate the performances of their employees on their jobs. Performance appraisal system in the organization intends to identify the employees’ actual past performances and their potentail improvements. Performance appraisal system gives some benefits for both organization and employees. These are: It improves overall communication and productivity Managers may objectively indentify their subordinates’ performance People at work get positive or negative feedback about their own tasks

Sometimes performance appriasal is done by a group of managers. In the organization performance appraisal is mostly done by manager (superior) Sometimes performance appriasal is done by a group of managers. There are many performance appraisal method like Self – appraisal methods: subordinates evaluate themselves Peer appraisal methods: coleagues make the assessment Appraisal by subordinates methods: subordinates assess the manager.

Performance Appraisal Methods There are three important approaches in performance appriasal. These are: Absolute standards Relative standards Objectives How can we decide which program (method) to select for our organization?

The criteria that are used when appropriate performance appraisal method is selected; The job Time Cost of method Potential rating errors of method Acceptibility Usefulness of the methods for promotion, punishment, rewards etc…

Performance Appriasal Methods Using Absolute Standards In this approach subordinates performance is measured against some pre- established standards. The performance is not compared with other individual’s performances Some examples of this method are as follows; Essay method: the rater writes a special report that describes the subordinates Checklist method: a list is given to the rater and he is asked to check items that presents the features of the subordinate.

Critical incident method: the supervisor monitors the subordinate and focuses on key behavior and incidents that make him effective or ineffective in his job. Forced choice method: opposite spesifications are given to the rater. He is asked to choose one of items that suits subordinate’s work behavior. Rating scale method: It is the oldest and widely used method. The rater determines the subordinates performance along a scale from low to high

Performance Appraisal Methods Using Relative Standards In this approach, an individual’s performance under assessment is compared against other individual’s performance. The popular methods using relative standards are as follows: Individual rating method: The rater ranks subordinates according to their performance from best to poorest without giving any weight. Point allocation method, manager rates subordinate by allocating fixed number of points for each out of a total 100 points Paired comparison method, manager compares subordinates performance with each other

Performance Appriasal Method Using Objectives In this future oriented appraisal method, employees are evaluated by how well they accomplish a specific set of critical objectives in successful completion of their jobs.

HR Compensation Management Wage represent compensation based on an hourly pay rate or the amount of output produced. Salary can be defined as compensation calculated on a weekly, monthly or annual basis. Incentive is any extra allowance offered by the employer to an employee to encourge him to increase his efforts in performing his taks.

Compensation In Organization COMPENSATIONS IN ORGANIZATIONS WAGE SALARY INCENTIVE ------------------ DIRECT COMPENSATION FRINGE BENEFITS BENEFITS AS LEGAL OBLIGATION ------------------ INDIRECT COMPENSATION

Direct Compensation The HR department is responsible for setting an effective and efficient compensation program in the organizations. In compensation program, there should be equity among employees. There are two types of equity in compensation External equity; job in the organization should be fairly compensated in comparison with similar jobs in the labor market. Qualified and better employee should take more. Internal equity: employees who work in similar position in the organization should take same or similar compensation.

Job Evaluation Job evaluation is systematic procedures to compare jobs in order to determine the worth one job relative to other existing job. The most widely used job evaluation techniques utilize the points-rating system under which each job is examined in terms of factors such as skills, efforts, accountibility, responsibility, creativity and so on. The basic factors that jobs have in common, but in different amounts are called the compensable factors. These factors determine the defination of job content.

Steps of Job Evaluation OBTAIN AND RECORD INFORMATION ABOUT JOB DETERMINE THE SIGNIFICANT COMPENSABLE FACTORS DEVELOP AND CHOOSE A PROPER JOB EVALUATION METHOD COMPARE AND EVALUATE THE JOBS ESTABLISH THE JOB HIERARCHY

Incentives Incentive is any extra allowance offered by the employer to an employee to encourge him to increase his effort in performing in his task. Incentive are based on pay- for- performance. There are three main types of incentives. These are: Individual incentive plans: provide income above the base salary Group- based incentive plans: are created to prevent competition to encourge coorperation and team spirit among the employees. Company – based incentive plans: cover all working people and groups in the organization to receive an extra payment for overalll performance of organization.

Some examples of the various widely used individual, group- based and company- based incentive plans : Piecework plans; earnings are very much related to what the worker produces. Time based plans: an employee obtains a bonus if he accomplishes the standard hour’s work in less than an hour. Commision plans; it combines base salary and and extra payment that presents a percentage of his sum of sales. Annual bonus plans: they can be designed that are closely tied to organization’s profitability at the end of fiscal year. The eligibilty and size of bonus differ according to the significance of the managerial position.

Profit sharing plans: this plan gives employes a portion of company profits, determined according to a specially made agreement. Stock option plans: they gives especially manager the right of purchase of a company’s share at a pre- determined price. This price is usually set below the current market value. Employee stock ownership plans(ESOP): a corporation voluntarily contributes some shares of its own stock or money to a special trust that is established to buy shares of the organizations’s stock for employees.

Indirect Compensation Indirect compensation includes non cash items such as benefits and services offered voluntarily by the organization. It is also includes such requirements as security, safety and health, legally mandated by government. Indirect compensation could be given in financial or non- financial form Organizations provide non – financial voluntary benefits and services that are called as Fringe Benefits

There are many reasons why an organization use fringe benefits There are many reasons why an organization use fringe benefits. These are: Increase competition among the companies Hire effective and qualified employees Changed attitudes of the employees Demand from employee unions Increase loyalty

Types of Fringe Benefits Some of the fringe benefits utilized in organizations can be listed as follows: Payment made for time and worked: employees are provided some free time off – the job while receiving their full wages or salaries. Paid holidays, vacations, sick leave, unemployment insurance… Protection aganist hazard: an organization provides its employees economical protection when facing hazards such as extended illnesses, permanent or temporary disability.

Retirement benefits: Organization in some circumtances provides employees some compensation on retirement. Services as fringe benefits: some extra benefits are given by organizations to their employees such as eating facilities, company car for managers, shutte service for employees, educational services, shopping discount tickets, flexible working hour, housing and so on.

Security, Safety, and Health Benefits and Services Legally Mandated By Government Organization should also be concerned with health and safety programs for its employees. They have legak responsibilities to ensure these kinds of benefits.