Nine metrics for job performance evaluations

by on June 2, 2009 · 0 Comment POSTED IN: HR Info Center

Job performance evaluations and their correlation to compensation

Performance pay schemes cover the various methods of linking pay to a measure of individual, group or organizational job performance evaluations. They all share the idea that where a worker can vary output according to effort the prospect of increased pay will lead to greater performance.

The most common types job performance evaluations related to pay
It can difficult to clearly distinguish where some individual job performance evaluations are related to pay.This is a quick outline to show some of the more popular metrics used in job performance evaluations

  1. Piecework
  2. a price is paid for each unit of output. This is the oldest form of performance pay and is still used in some companies.

  3. Payment by results
  4. bonus earnings depend on measured qualities or values of output for individuals or groups, usually based on work studied time units; this covers a range of bonus schemes and still form the main method of performance pay for manual workers.

  5. Organisation-wide incentives
  6. bonus earnings or pay levels based on measured quantities or values for the whole organization.

  7. Merit pay
  8. bonus earnings or pay levels usually based on general assessment of an employee’s contributions to performance; this is a less structured form of IPRP (see below).

  9. Individual performance related pay (IPRP)
  10. bonus earnings or pay levels based on the assessment or appraisal of an employee’s (or team’s) performance against previously set objectives, usually part of a performance management system.

  11. Profit related pay
  12. bonus or share options based on the organisation’s profit performance; this is becoming increasingly widespread in companies.

  13. Commission
  14. percentage payments on sales or turnover, paid on an individual or group basis; common in sales, retailing and other branches of distribution.

  15. Payment by time and output
  16. the distinction between payment by time and output has long been blurred. Although both systems still exist in their pure forms, a wide variety has been developed, incorporating elements of both.

  17. Measured day work
  18. one of the more important examples of a composite system. This occurs in a number of forms, but they all share the characteristics of pay linked on a single or stepped basis with measured output.

What is the key to job performance evaluations and compensation?
Performance related pay cannot be determined unless there is a measuring system in place to assess output. It also provides a limiting factor to the use and extension of incentive pay in instances where work is difficult to measure.

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