Thursday, July 31, 2008

What are the components of an effective compensation system?

Compensation is the reward employees receive in exchange for performing organizational tasks. Compensation is direct and indirect wages.
Direct compensation includes wages, salaries and bonuses or commission.
Indirect compensation is paid as medical benefits, housing allowance and such others that are what part of direct compensation.
Design of a compensation program is significant in Personnel Management because of its direct influence on employees’ behavior and performance in the company. The components of an effective compensation system is, if salaries and perquisites are:
Adequate :In line with what is paid in similar companies in the same geographical area. Salaries and perquisites should be similar to what is paid in the other companies for the similar work e.g. people working in the night shifts and doing similar hours and in the same geographical area should be paid equally otherwise they will shift for better salary or facilities.
Equitable: Salaries and perquisites should commensurate with the effort put in not be less than the work and the ability used by the individual for hard work. Salaries should be equal to the work put in.
Balanced: The compensation includes a reasonable combination of direct and indirect benefits.
Cost Effective: Salaries and perquisites should be such that the company can afford to pay or should not exceed the benefits the company gets from the employees. The benefits should not be more than what they get, then only company will be able to make more profit.

Monday, July 28, 2008

What is succession planning. What information is necessary to evaluate the potential of an employee?

Succession Planning :It refers to the plans a company makes to fills most importance executive position .In practice the process involves a fairly complicated and integrated series of steps.

A most comprehensive definition of succession planning is that it is the process of ensuring a suitable supply of success or for current and future senior or key jobs arising in the business strategy, so that the career of individuals can be planned and managed to optimize the organization needs and the individual aspirations.

Succession planning is done in 3 time frames:

Immediate - within one year

Intermediate - one year to 3 years

Long Range - Beyond three years

Organizations gear most by their management succession activities to the immediate future. This is mostly because it is integrated closely with the annual budgets and business plans. However, the real succession plan should be geared towards intermediate and long-range time frames.

Elements of Succession Planning:

As a first step, management staffing plans should be developed. These plans should be prepared on an individual basis for all anticipating needs in the intermediate years ahead and for key position in the intermediate and long-range future. The potential effects by external factors, such as economic forecasts and overall manpower market forecasts should be received and considered. The business plans should be received to determine their effect all-managerial needs. As business plans for both the near and long term are developed, the organizations plans and human resources forecasts should be formed.

The Second Step concerns staffing and development. Staffing includes recruitment, selection and placement of candidates from the outside and inside the organization and development of managerial personnel should be ensured through approaches such as formal training both within the organization and outside, planned job rotation performance planning and appraisal, counseling and coaching.

The third step concerns needing a congenial environment, where people give their best. The organization’s environment should ensure the retention of the most desirable employee.

The Fourth Step consists of doing appraisals. Appraisals and analysis of results achieved should provide an organization with essential feedback on the performance of managers.

The Fifth Step is the S.P exercise in the preparation of management resource statutory consisting of the following:

Personal Data



Skills Career Goals

Career Plans

Potential appraisals are done to know the potential of the employees so that the employees who have more potential become eligible for promotions.

As assessment center is used to assess the potential of management candidates considered are asked to perform realistic tasks under observation of expert appraisers.

Simulated exercises in a typical assessment center includes:

In basket:

The candidate is given a number of reports, names, and notes on incoming phone calls, letters and the material collected in the in-basket of the simulated jobs he is supposed to take over. The candidate is asked to take appropriate actions on each of these materials.

Group Discussion:

A leaderless group discussion is given a topic for discussion and asked to arrive at a group discussion. The raters then evaluate each group member’s personal skills, acceptance by the group, leadership ability and individual inference.

Management Games:

Participants engage in realistic problem solving. E.g., as member of two more companies that are competing in the marketplace. Decisions would have to be made about matters like how to advertise and manufacture and how much inventory to keep in stock.

Individual Presentation:

A participant’s communication skill and persuasiveness evaluated by having the person take an oral presentation on an assigned topic.

Objective Tests:

Papers and pencil tests for personality, mental ability, interests and achievement may be conducted to measure the participant’s sense on factors to be assessed.


are conducted to determine the participant’s current interests, background, past performance and motivation.

Through these processes, the participant’s potential is assessed and management development and placement decisions taken. Potential of the existing candidates working with the company can be evaluated by their past performances with the company.

Source : Personnel Management Question & Answer by Amresh Anjan

Friday, July 25, 2008



If you can’t find the talent you want in your own country, there are recruitment firms and Internet Websites that will enable you to look beyond your nation’s borders. Likewise, these same resources can help you people overseas operations with nationals rather than use expatriates to staff them. Whether you use an international headhunter like Korn/Ferry International Inc.

or a Website that specializes in overseas jobs like Overseas Jobs Express ( which lists entry level to senior executive posts, your description of the job will influence the response you get from talented employees to your job opening. Here is what Peter D. Weddle, publisher of Weddle’s, the newsletter about online recruitment, suggests that you talk about.

Challenging work

Stay away from a list of requirements and responsibilities. Instead, describe the opening from an applicant’s perspective. So talk about the opportunities that the job will offer for the holder to be involved in important and meaningful work. Discuss the corporate mission and the value of that mission and then describe how the job holder will contribute to achievement of the mission.

Personal development

Yes, you will provide opportunities for additional training but that is expected, particularly if the job is in the IT area. The candidate is looking for development beyond that; that is, professional development that comes from an opportunity to be mentored by leaders in the organization and to participate in key decisions that impact the success of the company. Still, do mention if the company will subsidize higher education degrees and support involvement in professional associations.


Demonstrate that there are opportunities for upward mobility in your organization by posting examples on your own Website. This should catch the attention of foreign nationals willing to relocate to build their career. Let those hired to represent your firm abroad know, too, about specific examples of personal advancement within your company, ideally by others recruited abroad.

Collegial relationships

Let executive recruiters know about other superstars on your management team so they can mention them to prospective candidates. On your Website, play up these individuals. Says Weddle, ‘‘Include their picture and a description of their work, in their own words.’’ Update the site regularly with new profiles; you want prospective employees to see that your organization isn’t limited to one or two ‘‘names.’’


If you will be relocating a manager and family, you want to be sure that services are available to help them make the transition – physical and cultural. At the very least help them locate a home, even for the short term, and a local school for any children. Provide training in the language and career placement assistance for the spouse if that is an issue of interest. Depending on the position, mention should also be made about workplace resources like special computer systems, access to technical libraries or data, or information on new research that can make relocation seem worthwhile.


‘‘Competitive salary’’ or ‘‘salary commensurate with skills and experience,’’ says Weddle, will mean little to someone coming from another country, particularly someone whom you truly need on your staff. Don’t try to pay less because you are recruiting from a developing country. It will take little time for a new hire to understand how he or she stands financially to peers. If the pay and benefits aren’t comparable to that of colleagues, you are likely to lose your new hire to another firm quickly. Better to talk about stock options and base plus incentive early in the recruitment process. Certainly include that information in any international Internet postings. As Weddle’s research has found, salary information must appear in the first five lines of a job posting or most candidates will read no further. What about staffing overseas subsidiaries with nationals? The same rule applies. Big distinctions found between expatriate and local national pay, benefits, and bonuses can encourage the brightest local nationals to learn as much as they can from you, then move on.

Source : Recruiting & Retaining People .Florence Stone. 2002

Monday, July 7, 2008

Ten Tips to Maximize Your Performance Appraisal Documentation Skills (part 6 - End)

By Paul Falcone

Rule 10: Follow a few narrative-writing tips that will help you consistently strengthen your overall message.

First, be sure to avoid writing anything that could be interpreted as discriminatory. You may not document or reference anything protected by privacy or employee protection laws. For example, writing ‘‘Michael, you are performing well since you began your new medication to combat depression, and I encourage you to continue’’ could very well violate the protections afforded by the Americans with Disabilities Act if the individual is later denied a promotion or terminated for cause.

Similarly, if you reference an individual’s age, ethnicity, sexual or gender orientation, religious beliefs, medical history, or any other categories protected under Title VII of the Civil Rights Act or other state worker protection laws, then your own documentation could be used against you in a court of law.

Similarly, if an employee was on a leave of absence for a significant part of the review period, simply document that ‘‘Michael was on an approved leave of absence from May 10 to August 8’’ and leave it at that. The reason for the leave (pregnancy, workers comp injury, stress leave) is superfluous and should not be included as part of the formal record established by the performance review. It follows that all performance appraisals should be reviewed in advance by your HR or Legal departments before they are shared with your employees to ensure, among other things, that no discriminatory language exists.

Second, avoid the term attitude in your formal business communication with your subordinates. ‘‘Attitude’’ is a very subjective judgment that courts will typically dismiss because it is often associated with a mere difference of opinion or a personality conflict. Instead, be sure to describe the objective behaviors that create a negative perception of the employee in others’ eyes. Only behaviors and actions that can be observed and documented belong in work place discussions and

may be presented as evidence in court.

For example, replace an admonition like this:

‘‘As we have discussed throughout the year, you have received many complaints regarding your attitude. You need to demonstrate immediate improvement in this area.’’

with something concrete like this:

‘‘Peggy received a written warning on January 14 for raising her voice in anger and for using profane language directed at a coworker. The disciplinary warning specifically stated that if she ever again lost control of her temper, used profane language in the workplace, or demonstrated behavior that could be perceived as hostile or threatening, further disciplinary action up to and including termination could result.’’

Third, use the phrase ‘‘For example’’ at least three times in an individual performance appraisal. Managers often make sweeping comments about perceptions without documenting the factual circumstances that justify their points of view. You could therefore easily turn a perception statement like ‘‘Your planning and organizational skills are satisfactory, but you sometimes require additional assistance in this area’’ into something more concrete and instructional for the employee by including an example.

Fourth, use the terminology ‘‘needs improvement’’ cautiously in your narrative writing, as it may not convey the message you intend. The examples in our book are structured according to the following two criteria:

Meets/Exceeds Expectations

Needs Improvement

Note, though, that these are categories only for ease of use. In reality, stating that performance or behavior ‘‘needs improvement’’ is not the same as stating that it does not meet company standards or is unsatisfactory. Similarly, documenting that ‘‘Richard has been spoken to regarding excessive absenteeism and tardiness’’ does not convey that his performance was unacceptable. Don’t assume that the employee understood (or a jury would agree) that just because you spoke about performance which needed improvement, it was assumed to be substandard. Instead, clearly document when performance is unacceptable, unsatisfactory, or fails to meet standards.

Fifth, you should document the efforts you’ve made to help the employee meet performance standards throughout the review period. When writing annual performance appraisals, for example, you should include the fact that you gave the employee a copy of the attendance policy, paid for her to attend a workshop on dealing with interpersonal conflict in the work place, or encouraged her to take an accounting course at a local college. Such documentation will serve as evidence that you acted responsibly by attempting to proactively rehabilitate the worker.

Finally, when documenting core competency or technical issues, expand your basic ideas by employing a ‘‘by . . .’’ format, like this:

Regularly places support staff in positions of leadership by appointing them subject matter experts in particular technical areas or by selecting them for workshop/seminar facilitator roles.

Assumes responsibility for areas beyond his immediate control by preparing the monthly income statement, the comparative balance sheet, and overall general ledger maintenance.

Has done very little to maintain and advance his technical knowledge and skills by upgrading his software skills, attending educational workshops, establishing a professional network of peers, or participating

in professional societies.

Masters all phases of the project development life cycle by identifying and documenting requirements, technical processes and procedures, test documentation, and environment and deployment plans.

Successfully negotiates salary offers and preempts counteroffer possibilities by ‘‘pre-closing’’ and proactively engaging finalist candidates in discussions about their future career development.

Ensures that newly learned skills are repeated and enforced by following up with 30, 60, and 90 day quizzes and questionnaires.

Similarly, when documenting future development goals, you could easily strengthen the clarity of your message by applying the ‘‘I expect you to . . . by . . .’’ format. For example, it would be simple to turn a statement like:

‘‘In the upcoming review period, you must improve your client relations skills and better utilize your time.’’

into a more instructional, future-oriented statement by applying the ‘‘I expect you to . . . by . . .’’ structure, which would look like this:

‘‘I expect you to improve your client relations skills by following up with customers within two hours of their initial calls, by meeting them in their offices rather than asking them to come to yours, and by maintaining weekly contact regarding the status of their work order processing.’’

Of course, the examples themselves will easily stand on their own without the ‘‘by’’ predicate. Still, this structure should help to remind you to complete your thoughts and provide appropriate examples for your statements. Selectively added to the annual review at strategic points, it will add critical mass to the statements that you make and justify your perceptions. It will likewise help you clearly outline your performance expectations and how they will be concretely measured.

Clarity in your written message will not only protect your company from potential outside legal challenges; it will help build a shared sense of open communication, a greater sense of partnership, and increased accountability with your workers.

Source : 2600 phrases for effective performance reviews. Paul Falcone. 2005

Thursday, July 3, 2008

Ten Tips to Maximize Your Performance Appraisal Documentation Skills (part 5)

By Paul Falcone

Rule 8: Don’t formally document or otherwise discuss the merit (salary) increase during the performance review process.

If you document, ‘‘I believe Janet should receive a 5 percent merit increase this year based on her performance’’ or raise this issue verbally during the performance appraisal meeting, expect Janet to focus on salary from that point forward.

Whether she challenges your overall merit increase recommendation or simply spends the next few minutes of the meeting trying to determine how much that 5 percent uplift will impact her biweekly paycheck, the focus will shift away from performance. Since this is a performance review as opposed to a salary review meeting, keep merit increase discussions out of the meeting. They will only weaken your message and lessen your ability to bring about change in the individual’s performance levels over the upcoming review period.

Rule 9: You have the right to add disciplinary language to an annual performance review, turning it, in effect, into a written warning.

When managers confirm ongoing substandard performance issues in an annual appraisal, they often mistakenly believe that they must then wait an additional 30 or 60 days before initiating a formal written warning. In essence, the two steps may be combined to hasten the progressive discipline process.

Occasionally, it may be appropriate to add disciplinary language to the performance review itself, thereby turning the substandard performance appraisal into a formal written warning. Your narrative might look like this:

In addition to documenting that your overall performance for this review period does not meet company expectations, this annual appraisal will also serve as a formal written warning. Failure to demonstrate immediate and sustained improvement may result in further disciplinary action up to and including dismissal.

You’ll thereby have established a written record of communicating that the individual’s employment is in serious jeopardy of being lost.

Of course, this suggestion could seem a bit extreme, depending on your company’s policies and past practices, or a collective bargaining agreement may preclude such aggressive actions. Still, depending on the nature of the infraction as well as the employee’s tenure with the company and status as a protected worker, it could certainly be worth pursuing. When in doubt, speak with your HR department or qualified outside counsel, especially if this will be the first time your company will have engaged in this practice of combining annual reviews with formal written warnings.

Rule 10 : .......

Source : 2600 phrases for effective performance reviews. Paul Falcone. 2005

Tuesday, July 1, 2008

Ten Tips to Maximize Your Performance Appraisal Documentation Skills (part 4)

By Paul Falcone

Rule 7 : Whenever possible, shift the responsibility for evaluating performance back to your employees.

The reason most employees receive their evaluations late is because supervisors don’t have the time to collect the data necessary to write a good review. In addition, since relaying negative news can be confrontational (and we all know that the path of least resistance is avoidance), many supervisors postpone documenting sub par performance for fear of making matters worse with the staff.

You’ll find (much to your surprise!) that many employees will appreciate the opportunity to bring to your attention their perceptions of how they’ve done, what they plan to do, and how you could help. And that automatically puts you in the role of career mentor and coach—not unilateral decision maker and disciplinarian. You’ll also learn that the majority of workers will be harder on themselves than you would have ever been. That should take some of the stress off of you in terms of having to surface negative information. It works this way: About a week before you need to draft your staff appraisals, instruct your direct reports to address their overall performance in three critical areas:

1. Address your overall performance track record for this review period. Specifically address your achievements that have resulted in increased revenues, reduced expenses, or saved time. Why is XYZ Company a better place for your having worked here? How have you had to reinvent your

job in light of our department’s changing needs? And how would you grade yourself in terms of work quality, reliability, interpersonal communication, and technical skills?

2. In what area(s) do you feel you need additional support, structure, or direction? Specifically, where can I, as your supervisor, provide you with additional support in terms of acquiring new skills, strengthening your overall performance, and preparing you for your next move in career progression?

3. What are your performance goals for the next year? What are the measurable outcomes so that we’ll know that you’ll have reached those goals? Once you receive their initial feedback, you could then go on to draft your own staff appraisal. By allowing employees to take the first stab at outlining their goals and achievements, you’ll automatically capture what they feel are their most significant issues. You’ll be reminded of the achievements they’ve made throughout the year, and you’ll be in a much better position to draft a comprehensive and objective annual report.

Expect an ‘‘emotional involvement rate’’ of 20–70–10 in this exercise, as follows:

- 20 percent of your staff will love this exercise and provide you with all the bells and whistles—productivity graphs, cost savings spreadsheets, and copies of letters of recommendation they’ve received from customers throughout the review period. (This is the key target group for the


- 70 percent will do an adequate job in engaging themselves in the self-review process; however, their answers may be somewhat superficial or unsubstantiated.

- 10 percent may refuse to participate: They might argue that it’s your job to evaluate them and not theirs. But then again, that tells you a lot about their motivation and entitlement mentality, doesn’t it? Maybe their own refusal to participate should be incorporated into the narrative of the annual review as evidence of their overall work ethic.

On the other hand, you may naturally fear confrontation by allowing employees to initiate the process and have first say. For example, if you feel that one particular employee is a sub par performer, but that individual may think he’s the best thing since sliced bread, then you’re sure to invite conflict, right? Wrong! Remember, you write the actual review. This pre-review draft is not the actual appraisal form that will end up in the employee’s personnel file.

And if it turns out that you both have very different perceptions of the individual’s contributions, it’s okay to disagree. This will provide you a key opportunity to open up the lines of communication regarding reasons for the differences in your perceptions. After all, if you simply roll over the individual in the annual review process like a Sherman Tank with a one sided

diatribe, you’ll only initiate a paper war with a stark rebuttal. Talk first, then write. If you both agree to disagree, then so be it. In the end, you’ll keep control of the entire process, your authority will remain intact, and you’ll initiate a dialog to reach a mutual ground. If the employee follows your review with a rebuttal nonetheless, it will likely be milder and ‘‘less attacking’’ if there have been open discussions before anything was committed to writing.

One final thought: Some employees will request formal feedback on a more regular basis than once per year. (You know who they are.) Consider formally reviewing them twice a year or even possibly once per quarter by shifting the responsibility for data collection and initial review back to them. In essence, they’ll do all the legwork, and you’ll create an environment in which they could motivate themselves. It requires a minimal time investment on your part, and you’ll find that they’ll spread the good news about your enlightened management style with their peers. Objective feedback on a consistent basis is what it’s all about.

Rule 8 : .....

Source : 2600 phrases for effective performance reviews. Paul Falcone. 2005