- include all the monetary and

nonmonetary rewards provided by a

company to attract, motivate, and retain
employees
Top management and HR executives should
match total rewards systems and practices
with what the organization is trying to
accomplish. To do so, several decisions must
be made:
• Legal compliance with all appropriate laws and regulations
• Cost-effectiveness for the organization
• Internal, external, and individual equity for employees
• Performance enhancement for the organization
• Performance recognition and talent management for
employees
• Enhanced recruitment, involvement, and retention of
employees
Rewards can be either:
• Intrinsic Rewards - may include praise for completing a
project or meeting performance objectives
• Extrinsic Rewards - are tangible and take both monetary
and nonmonetary forms
Direct Compensation – tangible component of
compensation program whereby the employer
provides monetary rewards for work done and
performance results achieved
1. Base Pay – Basic compensation that an employee
receives, usually as a wage or salary.
(many organizations use two base pay categories,
hourly and salaried)
a. Wages - payments calculated directly from the
amount of time worked by employees
b. Salaries - consistent payments made each period
regardless of the number of hours worked.
2. Variable Pay – Compensation linked directly to individual,
team, or organizational performance.
The most common types of variable pay for most
employees are bonuses and incentive program
payments.
3. Benefits - indirect reward given to an employee or group
of employees as part of membership in the organization.
Examples:
- health insurance
- vacation pay
- retirement pension
series of activities designed to
ensure that the organization
gets the performance it needs
from its employees
process of determining how
well employees do their jobs
relative to a standard and
communicating that
information to them.
An effective performance
management system should do the
following:
• Make clear what the organization expects
• Provide performance information to employees
• Identify areas of success and needed
development
• Document performance for personnel records
Common employee performance measures include the
following:
• Quantity of output
• Quality of output
• Timeliness of output
• Presence/attendance on the job
• Efficiency of work completed
• Effectiveness of work completed
define the expected levels of employee
performance
used to assess an employee’s performance and provide
a platform for feedback about past, current, and future
performance expectations
• employee rating
• employee evaluation
• performance review
• performance evaluation
• Results appraisal
Performance appraisals can be conducted by
anyone familiar with the performance of individual
employees. Possible rating situations include the
following:
• Supervisors rating their employees
• Employees rating their superiors
• Team members rating each other
• Employees rating themselves
• Outside sources rating employees