Page 155 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Performance Management System

Notes 9. Performance linked reward systems reduce …………………, result in increase in real
wages and motivate performance.
10. ……………. include the direct monetary rewards in terms of cash for their work and
achievements.

State whether the following statements are true or false:
11. Reward system generally treats employees as jobholders and how well they perform their
jobs.
12. Employee’s performance depends on mainly three factors – skill, knowledge &
motivation.

13. Performance-based compensation affirms the idea that pay raises should be given for
performance accomplishments rather than for seniority.
14. A performance orientation requires a variable pay approach in which pay goes up or down
based on a measure of performance.

15. Rewards reinforce what the organization values and wants to be strengthened.
12.8 Review Questions

1. Should organizations go for performance based pay? What are its benefi ts?
2. Why do you think that the organizations are going for more & more for variable pay?
3. “The enthusiasm that many employers have for variable pay is not shared universally by
workers.” Justify.
4. “Employees getting merit awards cannot visualise a proportionate relationship between
their performance and reward.” Discuss.

5. What are non-compensation rewards? How are they useful?
6. “Performance management is concerned with creating a culture in which organisational
and individual learning and development are continuous process.” Discuss.
7. What are the key questions which should be considered while designing a performance
linked reward system?
8. Why has performance-linked reward management attracted increased attention in the
recent years?
9. “A performance orientation requires a variable pay approach in which pay goes up or
down based on a measure of performance.” Discuss.
10. Why is it that many organisations have no yet instituted a performance linked reward
system? State the key reasons with your suggestions?

Answers: Self Assessment

1. human capital 2. skills, knowledge and motivation
3. loyalty 4. traditional compensation
5. Variable Pay/Incentives 6. variable performance

7. Rewards 8. culture
9. labour cost 10. Financial rewards

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