UNIT 3

The potential appraisal refers to the appraisal i.e. identification of the hidden talents and skills of a person. The person might or might not be aware of them. Potential appraisal is a future oriented appraisal whose main objective is to identify and evaluate the potential of the employees to assume higher positions and responsibilities in the organizational hierarchy. Many organizations consider and use potential appraisal as a part of the performance appraisal processes.

 Potential

appraisal serve the following purposes: To advise employees about their overall career development and future prospects. Help the organization to chalk out succession plans. Motivate the employees to further develop their skills and competencies To identify the training needs.

Self appraisals. Peer appraisals. Superior appraisals. MBO Psychological and psychometric tests. Management games like role playing. Leadership exercises etc.

Potential Appraisal is forward looking process whether performance appraisal is backward looking process. Any good or worse assessment results of performance appraisal may not be a good factor for potential appraisal. But current performance of an employee could show evidence somewhere whether he/she is flexible for new working conditions.

Performance-related pay is money paid to someone relating to how well he or she works at the workplace. Performance related pay schemes are part of a pay systems aimed at encouraging greater inputs by workers into the production process. The main steps are: - Setting objectives - Appraisal results - Linking achievements to pay

To clarify objectives and engage employees with the organizations goals To motivate employees by linking pay to achievement of targets not length of service To reward achievement and identify under performance; foster teamwork and fairness. To contribute to overall improvements in productivity; To introduce more flexible pay systems or deal with recruitment and retention problems

 Transparency

Fairness

in operation Adequate appraisal Training

Staff motivation and moral A wide range of research has found schemes less effective than expected. In the public sector this is frequently due to cash limits making rewards for high performance ratings too small to motivate staff. Problems of poor training for managers and inadequate communication with staff have had a negative impact on staff morale.

Fairness -- Because performance related pay systems are based on appraisal of the individual worker, often by their line manager, bias and personal favoritism can influence the result of pay reviews. Instead of motivating workers, performance pay can undermine performance of both the individual and the organization by undermining team work, encouraging a short term focus and leading people to believe that pay is not related to performance, but to having the right relationships and an ingratiating personality.

Discrimination Recent research found that performance based pay systems often discriminate against women because: the appraisal process is subject to gender bias and stereotypes; womens skills are often undervalued by their managers; women especially those working part time -- have fewer opportunities for training, and managers are less likely to correctly assess womens training needs.

Competencies are the knowledge-skills and the attitude needed by any individual employee to carry out their job effectively. These can be incorporated into a pay system to reward individuals who positively contribute to the overall values and objectives of an organization. This is competency based pay: rewarding the way people work, not just recognizing what they can deliver

an employee appraisal process must exist. managers must be trained to assess competencies. staff should be made aware of the competencies required and how to demonstrate them when it comes to their appraisals. all employees must give their full commitment. the system must be fair so that all employees are included.

Employees can be developed by closely associating service objectives with remuneration.

Competencies are an effective way for an authority to spell out what it expects from its employees

It can be labor intensive in its introduction and sustainability and incur sizeable training and support costs. Competencies are difficult to define in writing and not easy to measure. There is the difficulty of making sure that managers do not distort the assessment criteria because this has the real danger of bias being introduced into an authority's pay systems.

Team based incentive plans reward all team members equally based on overall performance of team members. Team-based incentives encourage collaboration and cooperation to achieve shared goals. When a team paycheck is riding on the collective performance of several individuals, the stakes are such that a sense of companionship develops and team members feed off one anothers energy and enthusiasm for the project E.g. Godrej, Marks & Spencer, Ernst & Young.

 When

employees are committed to their work.

Where

it is possible to separate organizational work into self-contained, independent groups. team members are expected to complete most of their work with little dependence on supervisor or upper management.

Where

1.

PREISTMANS PRODUCTION BONUS A standard is fixed in terms of units or points.

If actual output, measured similarly exceeds the standards, the workers will receive bonus in proportion to the increase.
This system can operate in factory.

2. RUCKER PLAN

Employees receive a constant proportion of the added value. Added value means the change in market value resulting from an alternation in the form, location or availability of a product or service, excluding the cost of bought out materials or services. Ratio between earnings & added value is ascertained & any reduction to the ration of earnings to the added value will, result in proportionate bonus payment. Great deal of negotiations are required between management & workers.

3. CO-PARTNERSHIP

Employees gets their usual wages, a share in the profits of the company & a share in the management of the company as well. Employees share the capital as well as profits.
When co-partnership operates with profit sharing the employees are allowed to leave their bonus with the company as shares.

It also offers recognition of the claim of the dignity of labour as the worker is viewed as partner in the business. This creates a sense of belongingness among workers & stimulate them to contribute their best for the continued prosperity of the company.