Q1) Define performance appraisal. Also state its characteristics.    8

A1) Performance appraisal/management system is the systematic approach to measure the performance of employees. It is a process through which the organization aligns their mission, goals and objectives with available resources (e.g. Manpower, material etc), systems and set the priorities.

Characteristics of performance appraisal

(1) It should be simple and understandable by the employees. Any complications need to be avoidable.

(2) It should be suitable to be adopted for appraisal at regular intervals because periodic appraisal enables the employees to improve.

(3) It should create the atmosphere of mutual understanding and confidence.

(4) The system should be capable of giving equitable justice to all employees. Therefore it should be objective and free from personal bias

(5) The employees should be taken in confidence while preparing performance appraisal.

(6) The system should be suitable to the organisation from the points of its structure, needs and more essentially based on latest development in the area.

(7) It should be able to fulfill the desired purpose by locating potential for promotion, increments, placements, transfers etc.

(8) Special training is given to evaluated” for making him more impartial and free from bias.

(9) Negative appraisal of any employee should be immediately communicated to him so that he can adopt measures for improvement.

(10) The employee should be allowed to go in appeal in case his performance appraisal is negative if he is not satisfied. By this the management will win the confidence of the employees.

Q2) State the objectives of performance appraisal.    5

A2) The following main objectives of employee performance appraisal are:

i. To identify employee weaknesses and strengths;

Ii. To identify and meet training needs and aspirations;

Iii. To generate significant, relevant and valid information about employee;

Iv. To provide inputs to increments of rewards, transfers, promotion and salary administration.

v. To help in improving employee’s performance if he is not found to be suitable during the review period;

Vi. To create a desirable culture and tradition in the organisation;

Vii. To help in planning career development and human resources planning based on potentialities.

Viii. To provide ‘deadlock’ and research data for improving overall human resources information system.

Q3) Discuss the modern techniques of performance appraisal.      5

A3) The techniques of performance appraisal are discussed below-

Figure: Techniques of performance appraisal

1. The 360-Degree Appraisal

This method involves giving out a questionnaire with questions regarding the performance of a colleague and they need to fill it up. This feedback can be considered by the manager while evaluating the performance at the end of the quarter/year.

2. General Performance Appraisal

This method involves continuous interaction between the employee and his manager continuous setting of goals and achieving them. Whether the employee has been able to do justice the entire process or not is evaluated at the end of the year.

3. Technological/Administrative Performance Appraisal

This appraisal technique concentrates on technical more than any other aspect of performance on the job as the employees involved have specialized skills. They’re judged on the skills they possess and the activity they complete.

4. Manager Performance Appraisal

The performance of a manager should also be appraised and this includes not just his/her performance on the job but also relationship management with clients at his/her disposal. Generally, anonymous feedback forms are received which are then considered for appraisal.

5. Employee Self-Assessment

This method is very unpopular among employees as nobody can deal with rating himself or herself. The self-assessment sheet is compared with the one filled up by the manager and the differences are discussed.

6. Project Evaluation Review

This method involves performance appraisal of the team members involved at the end of every project and not at the end of every year. This helps the team and its members develop with each passing project.

7. Sales Performance Appraisal

A salesperson is evaluated on the basis of his/her sales skills and accomplishment of financial goals set previously. Goals set in case of sales should be realistic and ways of achieving them should be decided by the employee and the manager concerned.

Q4) What is potential appraisal? State its characteristics.      8

A4) The potential appraisal refers to the appraisal involving 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. For example, A good salesman need not be a good manager in the sales function since the job of a sales manager requires managerial qualities apart from selling skills.

Objectives of potential appraisal

The basic objectives of potential appraisal are to:

1. Identify the abilities of an employee in order to evaluate whether that employee is suitable for future assignments or otherwise, and

2. Occupy higher positions in the organizational hierarchy and undertake higher responsibilities because past performance may not be a good indicator for future and higher role.

3. Inform employees about their future roles;

4. Make suitable corrections in training efforts from time to time;

5. Inform employees about they must do something for their career prospects;

6. Help organization for suitable succession plan;

7. Improve quality and quantity of performance of an employee; and

8. Give proper feedback to the employees for their potential.

Q5) Discuss the mechanism of performance appraisal? Also highlight its objectives.  4+4

A5) The mechanisms that could be used for potential appraisal are discussed below:

(i) Rating by Superior – The potential of a candidate could be rated by the immediate supervisor who is acquainted with the candidate’s work and also his technical capabilities.

(ii) Psychological Tests – Managerial and behavioural dimensions can be measured through a battery of psychological tests.

(iii) Games – Simulation games and exercises (assessment centre, business games, in-basked, role play, etc.) could be used to uncover the potential of the candidate.

(iv) Performance Records – Performance records and ratings of the candidate on his previous jobs could be examined carefully on various dimensions such as initiative, creativity, risk-taking ability, etc., which might play a key role in discharging his duties in a new job.

The basic objectives of potential appraisal are to:

1. Identify the abilities of an employee in order to evaluate whether that employee is suitable for future assignments or otherwise, and

2. Occupy higher positions in the organizational hierarchy and undertake higher responsibilities because past performance may not be a good indicator for future and higher role.

3. Inform employees about their future roles;

4. Make suitable corrections in training efforts from time to time;

5. Inform employees about they must do something for their career prospects;

6. Help organization for suitable succession plan;

7. Improve quality and quantity of performance of an employee; and

8. Give proper feedback to the employees for their potential.

Q6) What is employee counselling? State its features.

A6) Counselling is the process of helping an individual facing a problem and to regain his lost confidence and self-esteem and put his mind in his job. Employee counselling has emerged as the latest HR tool to attract and retain the best employees and increase the quality of the workforce. In today’s fast-paced corporate world, there is virtually no organization free of stress or has employees who are stress-free. The employees can be stressed, depressed, suffering from too much anxiety arising out of workplace related issues like managing deadlines, meeting targets, lack of time to fulfil personal and family commitments, or bereaved and disturbed due to some personal problems.

Characteristics of employee counselling

Main Characteristics of Employee Counselling are:

(a) Service offered to employees.

(b) Service is conducted in organisation.

(c) Focus is on problems faced by employees.

(d) Objective of counselling is problem solution.

(e) Employee counselling serves all concerned.

(f) Employee counselling is a continuous process.

(g) Role of counsellor is important in counselling.

(h) Half knowledge is a dangerous thing, is completed through counselling.

Q7) State the importance of employee counselling.                    8

A7) The various importance of employee counselling are listed as under:

1. It provides employees with an atmosphere where they can share and discuss their tensions, conflicts, concerns, and problems with their supervisors.

2. It is a process of helping employees to realise their full potential by making them understand their strengths and weaknesses.

3. Counselling provides employees with the reassurance and cour­age to face the problems confidently.

4. Releasing emotional tension is an important function of counselling. Release of tension may not solve the entire problem but it removes mental blocks to the solution.

5. Counselling sessions also help employees to get an opportunity to understand the business environment and set realistic goals for further improvements.

6. It even gives the employer an opportunity to understand the employee’s perspective and set mutually agreeable goals for fu­ture.

7. It can even help the management decide about the need for train­ing and development programs to sharpen the employees skills and increase their level of confidence on the job.

8. A good counselling session generally helps in winning the trust and faith of the employees.

9. It provides more autonomy to employees and positively reinforces their desirable behaviour and tries to create conditions in which the employee is able to learn from his mistakes.

Q8) Discuss the types of employee counselling.     5

A8) The four types of employee counselling are:

Figure: Types of counselling

1. Performance Counselling:

If the performance of an employee starts declining at the workplace, the need for performance counselling arises. The counsellor should try to identify the underlying causes behind the employee’s poor performance. The reasons could be office stress, unachievable deadlines, problems in interpersonal relations with other employees, etc. After recognizing the problem, the counsellor can advise about how to deal with it.

2. Disciplinary Counselling:

This type of counselling takes place when an employee’s behaviour falls short of the standards expected. An employee may suddenly start picking up fights, become irritable, be absent from work for long, etc. The counsellor should interview the employee and confront him about his behavioural problems. He should try to analyze all the reasons that could be causing the behavioural lapses. An employee may be frustrated because of personal problems; high absenteeism may be due to bullying by co-workers in the office. The counsellor may give tips on how to face the situation and improve his behaviour.

3. Personal Counselling:

Workplace problems are not the only problems that employees face; personal and family problems also affect their performance. Families and friends are integral parts of any human being’s life; tension in a worker’s personal life affects his work performance adversely. Personal problems could include sickness of a family member, marital conflicts, dysfunctional family life, problem with children, family feuds, etc. The counsellor should lend a sympathetic ear to the employee’s personal problems and support them in resolving them so that the employee is able to concentrate on his job wholeheartedly.

4. Stress Management in Workplace:

Working in the modern job environment is very stressful with so many deadlines to meet and targets to achieve. Employees may become anxious and tense due to their high pressure workload. This not only affects their productivity on the job, but also their mental health. It is the duty of the organization to take care of the employees’ well-being and provide them guidelines for dealing with stress. Bigger organizations may engage experts for providing psychiatric counselling to employees as part of employee welfare programmes.

Q9) Explain the functions of employee counselling.              5

A9) The functions of employee counselling are discussed below-

Figure: Functions of employee counselling

1. Advice:

The simplest function in counselling is to provide advice to counselled on the matter because of which he is feeling the sense of mal-adjustment. Though giving an advice appears to be a simple function, in actual practice, it presents numerous problems. For a meaningful advice, the counsellor must be fully aware about the problem of the counselling and he must be able to diagnose its root causes so that the advice is relevant for removing those causes of the problem. Another problem in tendering advice emerges in the form of counsellor-counsellee relationship in which the latter may develop the feeling of inferiority if the former has not tackled the problem on the basis of equality.

2. Reassurance:

Reassurance involves giving a person courage and confidence to face a problem adequately. Many times, problems are over-emphasized out of proportion. As a result, the counsellee perceives himself unable to overcome these problems. In such a situation, he loses his self-confidence. This works as a vicious circle. A problem emerges, the person loses his confidence; the problem gets magnified, he loses his confidence further; and so on. Through reassurance, the counsellor can break this vicious circle. At the initial stage, he may counsel the counsellee to break the impasse at outer level and gradually move to the centre of the problem. At each stage, the counsellee can develop self-confidence.

3. Release of Emotional Tension:

Counselling provides an outlet for releasing emotional tension. This release of emotional tension is known as emotional catharsis which is the process of purification of emotions. Tension generates when a person feels dissatisfaction and finds himself helpless to remove the dissatisfaction. Sometimes, this feeling may be based on unjustified grounds. When the person gets an opportunity to convey his feelings to a sympathetic listener, he releases his tension and frustration. To the extent, the counsellor shows sympathetic and helpful attitudes to the counsellee, the latter is able to release his emotional tension.

4. Clarified Thinking:

Counselling functions to develop clarified thinking in the mind of counsellee. Clarified thinking tends to be a result of emotional release. However, a skilled counsellor can aid this process. In order to clarify the counsellee’s thinking, the counsellor serves as an aid only and refrains from telling the counsellee what is right. He merely puts forward the various alternatives with the likely implications of each alternative. This helps the counsellee to appreciate the problem in right perspective which helps him develop right thinking.

5. Reorientation:

Another function of counselling is reorientation which involves a change in the counsellee’s psychic self through a change in basic goals and values. Perhaps this is the most critical function of counselling as it involves a change in basic goals and values which is a gradual and painful process. When the problem of an employee increases beyond a certain proportion, he requires the help of a professional counsellor.

Q10) What is transfer? What are the types of transfer? 2+5

A10) Different types of transfer is classified as-

Figure: Types of transfer

1. Production Transfers: These transfers are resorted to when there is need of manpower in one department and there is surplus in another department.

2. Remedial Transfers: In case an employee does not feel comfortable on his job, he may be transferred to some other job

3. Job-Rotation Transfers: It is a common practice to train employees in different jobs with the aim of increasing their versatility and improving their chances of promotion.

4. Shift Transfers: In case of industrial firms, there are normally three shifts. Usually these shifts are rotating.

5. Inter-Plant Transfers: If a transfer is from one plant to another, it is known as inter-plant transfer.

Q11) Define compensation? Explain the elements of compensation. 12

A11) Compensation includes payments like bonuses, profit sharing, overtime pay, recognition rewards and sales commission, etc. Compensation can also include non-monetary perks like a company-paid car, company-paid housing and stock opportunities. Compensation is a vital part of human resource management, which helps in encouraging the employees and improving organizational effectiveness.

Compensation as a whole is made up of different components that work as an aid for an employee after retirement or in case of some accident or injury. The key elements or components that make compensation-

Figure: Elements of compensation

Wages mark hourly rates of pay, and salary marks the monthly rate of pay of an employee. It is irrelevant of the number of hours put in by an employee working in the firm. These are subject to annual increase.

2.     Allowances

Allowances can be defined as the amount of something that is allowed, especially within a set of rules and regulations or for a specified purpose. Various allowances are paid in addition to basic pay.

3.     Dearness Allowance − This allowance is given to protect real income of an employee against price rise. Dearness allowance (DA) is paid as a percentage of basic pay.

4.     House Rent Allowance − Companies who do not provide living accommodation to their employees pay house rent allowance (HRA) to employees. This allowance is calculated as a percentage of salary.

5.     City Compensatory Allowance − This allowance is paid basically to employees in metros and other big cities where cost of living is comparatively more. City compensatory allowance (CCA) is normally a fixed amount per month, like 30 per cent of basic pay in case of government employees.

6.     Transport Allowance/Conveyance Allowance − Some companies pay transport allowance (TA) that accommodates travel from the employee’s house to the office. A fixed amount is paid every month to cover a part of traveling expenses.

7.     Incentives and Performance Based Pay-Incentive compensation is performance-related remuneration paid with a view to encourage employees to work hard and do better. Both individual incentives and group incentives are applicable in most cases. Bonus, gain-sharing, commissions on sales are some examples of incentive compensation.

8.     Fringe Benefits/Perquisites- Fringe benefits include employee benefits like medical care, hospitalization, accident relief, health and group insurance, canteen, uniform, recreation and the likes. In recent years, a great deal of attention has been directed to the development of compensation systems that go beyond just money. We can say that all the components of compensation management play a very important role in the life of an employee.

9.     Rewards- Recognizing the efforts of employees and encouraging their morale results in increased productivity and decreased attrition rate. It is a documented fact that an encouraged and dedicated workforce can change the fate of a company. Establishing and executing a reward system needs careful analysis of the company policies and procedures. Deciding how to recognize employees’ efforts and what to provide them needs thorough analysis of duties and risks involved in a particular job.

10. Performance Linked Compensation- Performance-based compensation is an incentive-based form of compensation that can be paid to portfolio managers of investment funds. Regulated mutual funds with performance-based compensation may add approximately 0.20% to their management fees for performance-based incentives. Within the investment industry, hedge fund managers are most well-known for receiving high levels of performance-based compensation.

Q12) What is job evaluation? State the features of job evaluation.     5

A12) Job Evaluation is a systematic process of determining the worth of one job in relation to another job in the organisation. During job evaluation, the relative worth of various jobs are assessed so that wages can be paid depending upon the worth of the job. To improve the performance and maintain the high level of efficiency in work, employee should be compensated with wages and salaries depending upon the job he is performing.

Features of job evaluation

The main characteristics of job evaluation may be summed up as:

1. It is a method with a systematic approach.

2. It is an analysis of the work involved in its starting point.

3. It is an attempt to determine the requirements of the work involved for any incumbent.

4. It is a process by which jobs in an organisation are appraised.

5. It is a process of analysing and describing positions, grouping them, and determining their relative value by comparing the duties of different positions in terms of their different responsibilities and other requirements.

6. It is a system to deal exclusively with assessment of the job and not concerned with employees assigned to the job.

7. It is designed only to establish wage differentials and is not concerned with the absolute wage level.

Q13) Discuss the job evaluation process of an organisation.       5

A13) The job evaluation process involves following steps-

Figure: Job evaluation process

1. Job Analysis:

Job analysis is the process of collecting and evaluating relevant information about jobs. The data collected should clarify the nature of the work being performed (principal tasks, duties, and responsibilities) as well as the level of the work being performed. Information should include the types and extent of knowledge, skill, mental and physical efforts required, as well as the conditions under which the work is typically performed.

2. Job Documentation:

Job documentation is the process of recording job content information, usually in the form of a written job description, one of the most important products of job analysis. Most job description of the duties, examples of work typically performed, and a statement identifying the knowledge, abilities, skills, and other characteristics (KASOCs) that are required to satisfactorily perform the duties. The ideal job description for compensation reflects not just information concerning “what” a job does, but also the “how” and “why” the duties.

3. Rating the Job:

In the third step, a job’s assigned duties are assessed using the job evaluation plan, or instrument selected by the organisation. Discussions about job evaluation approaches focus attention on three basic models:

a. Job Ranking:

The oldest, fastest, and simplest method of job evaluation, job ranking involves ordering jobs from highest to lowest based on some definition of value or contribution. The job that evaluators believe to be the most valuable is placed first, the job that evaluators believe to be the least valuable is placed last and other jobs are ranked in a similar fashion in between, producing a hierarchy.

b. Job Classification:

This method was originally developed, and continues to be used by the government. Within this approach, each job is measured against a pre-existing set of job classes that have been designed to cover the full range of possible positions that would be employed by the government. Broad descriptions or specifications are designed in advance to delineate the characteristics of the jobs that would be placed within that category, within this method, job evaluation involves comparing a position with these generic descriptions and deciding where it fits best; that is, which job level of responsibility assigned to the job under review.

c. Point Factor Method:

Under a point factor plan, various factors are the basis for determining relative worth. Factors are the specific characteristics of jobs that will be measured. In choosing factors, the organisation decides – “what particular job components do we value? What job characteristics will we pay for?” Mental effort, responsibility, complexity of works physical demands, skill required, and working conditions are the most common factors. Factors chosen by a company for use in a job evaluation plan should be for four characteristics.

4. Creating the Job Hierarchy:

The result of a job evaluation plan is a hierarchical ordering of jobs in terms of their relative worth to the organisation. Whether it is created by totalling the points assigned to each position, the resulting top-down list should reflect an ordering of position that makes sense to and is meaningful for a particular organisation.

Before finalising this hierarchical list, it is important that the evaluation be studied carefully in relation to another. Consider this something of a “Sore throbbing” process that looks at the final results of the job evaluation and identifies positions that don’t appear to fit best where the job evaluation plan has placed them.

Q14) Discuss about different methods of wage payment.       5

A14) Different methods of wage payment are discussed below-

Figure: Wage payment method

1. Time-Rate:

Time-rate system is the oldest and the most common method of fixing wages. It refers to the payment of a pre-determined rate for normal time of work and relates to a time limit such as an hour, day, week or month. Broadly speaking, under this system, the basic rate for a job is fixed by negotiation, by reference to local rates, or by job evaluation and only varies with time, never with output or performance. This method is generally common for clerical, supervisory and managerial personnel. The characteristic of this method is that the production of a worker is not taken into consideration in fixing the wages. An employee is paid at the settled rate as soon as the time contracted for is spent. The minimum wage rate, the need-based minimum wage, for fair wage or the living wage is fixed by the government or the wage board or through collective bargaining mechanism are on time-rate principles.

2. Piece Rate:

The piece rate system is the earliest and the simplest of all the bonus plans. It is usually implemented as a production incentive scheme, where the objective is to encourage a specific group of workers to fulfill a certain target set by the company. Piece rate bonus plans are based on the physical output of the individual employee. As the output increases, the employee will also expect an increase in his salary. Individual incentive schemes such as the piece rate should be used when employees have to work independently without the need to coordinate their activities with other workers, where a high level of individual skill is required and where there are good measures of individual performance. When applied to an individual or a group consisting of a small number of individuals, the piece rate system is a form of payment in which visible performance is immediately rewarded through an increase in the monthly wages. Generally speaking, the piece rate has lost its attraction round the world. Such system forces the employee to focus his attention to the increase of the production volume without similar attention paid to quality. The practice of the piece rate system has also resulted in an increase of industrial accidents and a deterioration of employee’s health. Furthermore, employees are likely to oppose changes in the product, technology or tools used for the production process because it means that they have to spend time to learn the new method, thus causing a loss in their income. It is precisely due to these disadvantages that some companies have attempted to establish hybrids of the piece rate system. Piece rate can be converted into time rate by fixing an output norm.

3. Payment by Results (PBR):

There are many different systems of wage payment under which the worker’s earnings are related directly to some measurement of the work done either by himself or by the group or working unit to which he belongs. Such systems, known as payment by results, can be classified in four main groups such as- (i) in the same proportion as output; (ii) proportionately less that output; (iii) proportionately more than output; or (iv) in proportions which differ at different levels of output. Payment by results is a payment system under which money rewards vary with the measured changes in performance according to predetermined rules. The PBR system relates the pay or a part of the pay received by the worker to a number of items he produces or the time he takes to do a certain amount of work. Under this system, the worker is paid a wage which bears some fairly direct and continuous relation to his output or performance, or to the average output of the group of workers to which he belongs. Under this plan, the worker working in a given condition and with the given machinery, is paid exactly in proportion to his physical output. Under PBR, the workers’ pay during a given period is directly related to the levels of measured performance. The essential difference between PBR and time rate system is how performance is related to reward. The basic alternative to PBR is time payment. The PBR system varies with the variation in individual and group performance at the plant or enterprise as a whole. The most common scheme of payment by results which is purely individual in character is what is called straight piece work. A worker’s earning can be calculated on the basis of the number of pieces produced and the rate per piece. This means payment of a uniform price per unit of production, and it is most appropriate where production is repetitive in character and can easily be divided into similar units. There is also the differential piece work system where the wage cost per unit is adjusted in relation to output. Under this scheme, two piece rates may be fixed – one considerably higher than the going time wage for the job and the other somewhat lower than the time wage. The lower rate is paid when the workers fail to achieve the standard level of performance. The main idea behind establishing two differential piece rates has been to reward high production and to discourage low production. This system has been used mainly by firms with heavy non-labour costs. The main problem in applying this system is the difficulty of setting the standard and the amount of difference between the two piece rates. Further, it may lead to excessive speeding by some workers, who then get much higher earnings than others.

4. Balance or Debt Method:

This is a combination of time and piece rate. The worker is guaranteed an hourly or a day rate with an alternative piece rate. If the earnings of a worker calculated at the piece rate exceeds the amount which he would have earned if paid on the time basis, he gets credit for the balance, namely, the excess piece rate earnings over the time rate earnings. If the piece rate earnings are equal to his time rate earnings, the question of excess payment does not arise. Where piece rate earnings are less than time rate earnings, he is paid on the basis of the time rate; but the excess paid is carried forward as a debt against him to be recovered from any future balance of piece work earnings over time work earnings. This system pre-supposes the fixation of time and piece rates on a scientific basis. The obvious merit of this system is that an efficient worker gets an opportunity to improve his earning.

5. Incentive Rate:

Incentive Rates can be used more effectively in a production situation where output is measurable in homogeneous units, where product specifications do not change frequently, and where worker’s effort can directly influence output. Incentives are difficult to employ where output is fixed substantially by the requirements of production process and cannot be controlled by the workers. The most common type of incentive system is straight piece work, which simply means a constant rate of pay per unit of output. Bonus plans represent another method of incentive pay and involve, in general, the determination of standard tasks. Bonuses are paid for production above standard. A great many problems arise in connection with incentive plans. Of basic importance is the way in which production standards are determined under either straight piece work or bonus systems. Under bonus plans, the extent to which increased production will be rewarded must be decided. The question of incentive rate adjustment in the light of technical changes is also important. Another crucial area is the guarantee of minimum earnings under the incentive systems. A substantial amount of controversy between labour and management has arisen over the use of incentive pay methods. Organised labour does not, however, have a uniform position in the matter. Some unions are opposed in principle to the incentive plans; others accept wage incentives and are concerned primarily with the equitable determination of rates and prevention of abuses.

Q15) Explain about the incentives provided to the employees of an organisation.  12

A15) Different types of incentives are discussed below-

Figure: Types of incentives

Financial incentives

Such types of incentives are measurable in terms of money. Financial incentives includes-

(a) Profit sharing – It is often discussed that labour being the live factor in production, is entitled to share in the surplus earned by his firm. Employers often use this device to extort their loyalty and reduce the influence of trade unions. This provides group incentive to the workers for higher productivity and greater profitability.

(b) Co-partnership – Under this system, employees are offered company shares at a price lower than the market price. Thus, employees share the capital as well as profits. The workers get their usual wages, a share in the profits of the company and a share in the management of the company as well. When co-partnership operates with profit sharing, the employees are allowed to leave their bonus with the company as shares (bonus shares).

(c) Bonus – It is a reward that is offered on a one-time basis for high performance. A bonus may be in cash or in some other form, e.g., many sales organisations periodically offer prizes, such as trips, for their top sales people.

(d) Commission/Productivity linked wage incentives – Under this plan, a sales person be paid a guaranteed base salary plus a commission on sales. A commission plan has the advantage at relating rewards directly to performance.

(e) Pay and allowances – Salary is the top most priority/incentive for work to any employee in the organisation. If performance of an employee improves each year, then he may be rewarded by hike in salary and other allowances.

(f) Retirement benefits – Every employee wants to secure his life after retirement, therefore benefits like provident fund, pension, gratuity act as a motivator for employees.

(g) Perquisites – Employees feel motivated if the company provides benefits like housing, car allowance, etc.

Non-Financial Incentives:

Incentives which are not measurable in terms of money are known as non-financial incentives. They tend to satisfy the psychological, social and emotional needs of a person.

(a) Status – It means formal position in the organisation. Higher status motivates people by satisfying their ego needs as lot of perquisites and authority is attached to it.

(b) Career advancement opportunity – Most of the employees want to grow in their careers. If sound promotion policy and training programmes are implemented, it will help them to achieve promotions.

(c) Organisational climate – If management takes special efforts in maintaining better organisational climate in the form of better working conditions, consideration towards employees etc. as compared to other companies, it acts as motivating factor to an employee for better performance.

(d) Job security – In India, due to widespread unemployment, job security is very important. It ensures regular income in future and relieves them of worry. However, it may make them complacent.

(e) Job enrichment/Assignment of challenging jobs – It involves basic changes in the content and level of responsibility of a job so as to provide greater challenge to the employees. It gives the employees more authority and more control over the job situation. He is allowed to plan, decide, schedule, inspect and evaluate his own work activities. Job enrichment results in high internal work motivation, high ‘growth and development’ satisfaction, high work effectiveness and high commitment.

(f) Employee participation – Managers should encourage participation of subordinates in organisational matters even if the ultimate decision-­making power vests with the managers.

(g) Employee empowerment – Employees will use their skills and talents positively if they are given more powers and autonomy. It will improve their performance in the organisation.

(h) Recognition – Praise/appreciation has its greatest impact when given and received as recognition which helps in improving attitudes of employees and motivates them to perform better. People with positive attitude towards work perform better than those with negative attitude