Performance Appraisal

Employee performance should be evaluated regularly. Employees want feedback—they want to know what their supervisors think about their work. Regular performance evaluations not only provide feedback to employees, but also provide employees with an opportunity to correct deficiencies. Evaluations or reviews also help in making key personnel decisions, such as the following
• Justifying promotions, transfers, and terminations
• Identifying training needs
• Providing feedback to employees on their performance
• Determining necessary pay adjustments
Most organizations utilize employee evaluation systems; one such system is known as a performance appraisal. A performance appraisal is a formal, structured system designed to measure the actual job performance of an employee against designated performance standards. Although performance appraisals systems vary by organizations, all employee evaluations should have the following three components:
• Specific, job-related criteria against which performance can be compared
• A rating scale that lets employees know how well they're meeting the criteria
• Objective methods, forms, and procedures to determine the rating
Traditionally, an employee's immediate boss conducts his or her performance appraisal. However, some organizations use other devices, such as peer evaluations, self-appraisals, and even customer evaluations, for conducting this important task.
The latest approach to performance evaluation is the use of 360-degree feedback. The 360-degree feedback appraisal provides performance feedback from the full circle of daily contacts that an employee may have. This method of performance appraisal fits well into organizations that have introduced teams, employee involvement, and TQM programs

Compensating Employees
Employee compensation refers to all work-related payments, including wages, commissions, insurance, and time off.
Wages and salaries are the most obvious forms of compensation and are based on job evaluations that determine the relative values of jobs to the organization. Under the hourly wage system, employees are paid a fixed amount for each hour they work. The system is generally used for lower skilled occupations. Salaried employees receive a fixed sum per week or month, no matter how many hours they work. Most professional positions are salaried; the reality is that these jobholders typically work in excess of a “minimum” 40-hour workweek.
Some occupations are compensated through incentive pay programs. Salespeople typically receive commissions based upon the quantities of goods they sell. Some sales compensation plans contain elements of both a salary and commission. A production worker's pay may be based upon some combination of an hourly wage and an incentive for each “piece” he or she makes. Some employees are offered merit awards as a reward for sustained superior performance.
Employee benefits are supplements to wages or pay. Some benefits, such as unemployment and worker's compensation, are legally mandated. Other benefits are optional and help build employee loyalty to an organization, including the following:
• Health insurance
• Pension plans
• Employee discounts
• Vacation, sick, and personal days
• Bonuses (incentive money paid to employees in addition to their regular compensation)
• Profit-sharing (money from a portion of the company profits used to supplement regular compensation)
• Stock options (a plan that permits employees to buy shares of stock in the employee's firm at or below the present market value)
A top management executive is given benefits unique to his or her status. Additional executive benefits are termed perquisites (perks).
Teamwork Defined
The traditional workplace, with its emphasis on internal competition and individual star performers, is undergoing a transformation. In U.S. businesses, a strong movement toward the use of teams is occurring. Management experts and researchers suggest that a successful organization is characterized by effective teamwork and leadership rather than management. Organizations are realizing the importance of developing teams that can work in a coordinated, efficient, and creative manner
As a result, managers are responsible for creating, developing, and supporting the cooperative efforts of individuals under their influence. Compiling honest, clear-eyed evaluations of how these individuals interact is a critical first step to building cohesive, long-term working relationships. Interactions among employees can be characterized in three ways:
• Groups: A group exists almost anywhere two or more people interact or coexist. A group does not have a unified purpose. Many people mistakenly expect that simply working in close proximity to others is enough to allow an effective team to emerge. Not so. Although individuals may be close physically, don't assume that their thought processes or levels of commitment are in sync. Remember that an individual may work simply for a paycheck and exhibit a lack of concern for the organization, its activities, its mission, and its people that is obvious to even the most casual observer. These individuals do just enough to get by, but not enough to make a difference.
• Mobs: Unlike groups, mobs have a unified purpose. Mobs of employees often form with the focused intent to challenge, malign, or even sabotage the established order. Although many people think of mobs as chaotic, disorganized, and unstructured, they are actually very purposeful in their actions.
• Team: Teams share a common goal. A team is composed of two or more people who interact regularly and coordinate their work to accomplish a mutual objective. Some management experts believe that highest productivity results only when groups become teams.
• The major difference between groups and teams centers around how work gets done. Work groups emphasize individual work products, individual accountability, and even individual-centered leadership. In contrast, work teams share leadership roles, have both individual and mutual accountability, and create collective work products. In other words, a work group's performance is a function of what its members do as individuals, while a team's performance is based on collective results—what two or more workers accomplish jointly.