Performance Appraisal & Reward System

Performance Appraisal & Reward System

Employees and the organization can benefit from a performance appraisal and reward system. The company gets more work from its employees, and employees get more rewards for working harder. Regular raises and merit pay are not included in these incentives. Employees are more likely to work on company goals if they have a good performance appraisal and reward system in place.

 

 

What to Reward?

An incentive system is only effective if it rewards the right things. A good system ties the rewards and recognition into one or more of your business goals, such as:

• Boosting sales revenue
• Increasing productivity
• Improving quality of work and eliminating defects
• Following safety protocols
• Perfect attendance
• Coming up with cost-saving ideas

You can offer different rewards for meeting different benchmarks. The goals for your performance appraisal and reward system need to be concrete and measurable. Employees need to know for what they are shooting, and they need to see that the reward winners really earned it.

How to Reward Employees

The next step is to decide just what rewards you're going to offer. The two big categories are cash incentives and recognition awards. There are several ways to reward with money:

• Incentive pay separate from the regular pay-raise cycle: This can be a strong motivator provided that the bar isn't set so high that employees can't achieve it. You want to challenge them, not frustrate them.
  
  
• Bonuses: These may only motivate employees in the short term, though.
  
  
• Profit sharing: Give employees a percentage of the profits at the end of the year.
  
  
• Stock options: This only works if your company is a corporation, but it's becoming more common for employees outside the C-suite.

Recognizing the Team

Recognition awards can have a cash value, such as a day at the spa or a dinner out. They are, however, never actual cash. Recognizing an employee or a team's performance can actually be a more effective motivator than money.

• Recognition programs may have regular events, such as a monthly breakfast where you announce the winners in front of their colleagues.
  
  
• Informal recognition gives employees privileges such as working from home, coming in late or taking a long lunch break.
  
  
• Empowering employees is another type of recognition. Give them more authority, more training or a greater choice of assignments.
  
  
• Symbolic recognition such as an inscribed coffee mug can also be effective.

Unlike monetary rewards, it costs very little to run a recognition program. If you're a small startup, employees will probably accept that symbolic recognition is all the company can afford. If you're a thriving company, running recognition programs on the cheap will not impress your staff.

 

 

References

Armstrong, M., 2010. A Handbook of Performance Management. New Delhi: Kogan Page Limited.

Holzer, H. J., Stoll, M. A. & Wisoker, D., 2001. Job performance and retention among welfare recipients. Washington, DC: The Urban Institute.

Jones, M. D., 2006. Which is a better predictor of job performance: job satisfaction or life satisfaction?. Journal of Behavioral and Applied Management, pp. 20-42.