Question

Based on this course lectures, our previous F2F discussions, and your own opinion, answer the following questions:

1. Why is it a must that performance standards be derived from the company's strategic goals in addition to being based on job analysis and job description information? Provide an example.

2. To which extent do you believe that corporations should make their employees well-aware of how their pay structure is derived? Why?

3. What benefits can be achieved when H.R managers implement competency-based compensation programs that reward for skills, knowledge, and behaviors, such as problem solving?

"Your answers or replies should be supported enough by examples and explanations.

Answer 1

1. It is essential that the performance standards should be derived from the company's strategic goals other than the job analysis and job description because the employees perform to achieve those goals. Every process from employee recruitment to evaluating their performance is done ultimately to achieve the strategic goals of the business. If the performance standards are not aligned with those goals then no matter how good and effective they are, achieving the goals will be a challenge for the organization. The job analysis helps us to understand what the job requires an employee to do and job description describes his day to day duties to perform.

Performance standards should align with these two components so that the employees are able to perform efficiently and managers can evaluate their performance based on the standards compared with the job analysis and description. But if these standards are not aligned with the strategic goals then a high-performance environment will also not help in attaining the goals. For eg., the performance standard of a sales executive will include selling products to existing customers and making new potential customers. Aligning it with the strategic goals may define the number of customers to achieve or the sales target to achieve from those customers so that the performance standards help in not only maintaining the company position but growing it with the efficient performance of the sales executive.

Answer to Part 2)

Salaries of people across the globe have seen an increasing trend. This can largely be credited to the global revolution which has increased both the demand for and supply of commodities and services which has concurring effects on the salary of the staff respectively.

As employees become part of an organization which is not limited but rather involving, it becomes essential that they are well aware of their compensation structure and the expected variables from them.

Most companies have two kinds of measures on which payout is decided. One is the business measure and the other one is an individual measure. The business measure is how the company is performing and the importance of the function in which the employee currently is. This helps in deciding an upper limit of the salary which the employee in such a role would be getting. On the contrary the individual measure is how the staff actually performs as per the expected standards set in.

The main reason why these things should clearly be indicated to the employees is that it gives them a growth path to look at. They know well in advance of what is expected out of them and this helps them in competing in a better manner. The various items such as House & Rent Allowance, Dearness Allowance and other similar benefits should be clearly defined to the employee so that they are both aware and satisfied over what they will be getting and the expected standards.

Answer 3)

When HR managers implement competency based compensation programs, meaning that people exhibiting higher skills earn more for themselves, the following advantages or benefits become visible.

1) Increased Compensation for those that work hard.

Consider those employees that are highly competent and work hard every day. Yet if they receive lesser or same salary to those people who do not put their efforts towards growth of an organization it would be very harsh.

These programs therefore, offer higher salary benefits to those people that stick around in office.

2) Clearly Defined Goals

As an employee if you are aware that performing a certain task a certain way can get you better ratings and therefore better salary, it helps you in defining your goals and performing them in a better manner. Such strategy helps in employees in getting a sense of belongingness and the personal and organizational goals are thus aligned and help and organization to grow in a better manner.

3) Increased Productivity and Profits

An organization which sees more people performing positively would be able to increase overall productivity and therefore profits would also see an increase. When you link benefits to performance, people perform better and that is how you earn more profits.

4) Lesser Employee Turnover

Organizations which pay people well and have programs as indicated, tend to have lesser number of those that would want to leave office. This is because when you create a positive culture in the company it leads to a situation wherein employee turnovers are lesser.

5) Identification of Problems

If you have well laid down norms for conducting yourself in the office premises, you will be able to identify problems for business very easily. Those people that are not performing well can be identified trained and helped whenever possible. The remaining that still fail can be told to leave. This helps business owners in being fair and treating people equally while making sure that business operations are as smooth as possible.