Performance mgmt strategies

UNIT-4
PERFORMANCE MANAGEMENT STRATEGIES
&
REWARD AND COMPENSATION STRATEGIES

KEY RESULT AREA(KRA)
• Key Result Areas refer to general areas of outputs or outcomes for which the department's role is
responsible.
• Key Performance Areas are the areas within the business unit, for which an individual or group is logically
responsible.
• Key Result Area(KRA) and Key Performance Area(KPA) , though the terms hold different meaning but are
often used interchangeably and more or less assumed to have same applicability . The purpose of this post is
to underline the basic differences between the concept of KRA and KPA.
• In relation to a job role, KRA defines the outcome or end result expected to be delivered while KPA defines
all the activities, not always result oriented, an individual has to perform being on job.
•
2Ayesha Khan (Asst.Prof)

KEY RESULT AREA(KRA)
• Key Result Area
• Key = crucial/main
• Result = outcome/end/consequence
• Area = space/range
• KEY RESULT AREA = crucial outcome space
• Point to note
• -KRA is not the result.
• -KRA is the area identified as important or crucial where a result will assist in the achievement of the set objectives or
goal.
• -KRA defines what a job is expected to accomplish.
• -KRA’s might fall within the scope of Key Performance Areas (KPA)

How KRA are derived??

Key Result Areas And Indicators of
Performance

RESULT BASED PERFORMANCE
• Results-based performance management (RBM) is a management
strategy which uses feedback loops to achieve strategic goals. All people
and organizations (actors) who contribute directly or indirectly to the
result, map out their business processes, products and services, showing how
they contribute to the outcome. This outcome may be a physical output, a
change, an impact or a contribution to a higher level goal. Information
(evidence) of the actual results is used for accountability, reporting and to
feedback into the design, resourcing and delivery of projects and
operational activities.
• Results Based Management is an example of a strategic control mechanism.
It has been shown to have strong similarities in its design and use to
the third-generation balanced scorecard

MERIT BASED PROMOTIONS
• Vacant positions are usually filled through competition with applicants
(current competitive service employees) being evaluated and ranked for the
position on the basis of their experience, education, competencies and
performance.

REWARD & COMPENSATION
STRATEGIES

What do you understand by reward and
compensation strategies?
• Like any other strategy it is a direct statement of how your company plans to pay
and reward its employees, both today and into the future. It typically will establish
parameters or benchmarks like:
• Where on a measurable scale your company plans to pay employee salaries versus
similar or select jobs or companies within the marketplace—usually stated as a
relative position within the market (say 50th percentile*).
• What amounts (levels) of total annual compensation (salary plus bonus) is the
company willing to pay its employees for various levels of achievement or
performance—generally also stated as a relative position within in the marketplace.

Developing a compensation rewards program
• A Compensation and Rewards Program is a tool used by employers to
effectively attract, retain and motivate employees. The program results in
equitable payment for performance of a service, in exchange for the work of
an employee. The following are elements an organization considers when
developing a compensation and rewards program.
• Compensation Philosophy
• Equity
• Compensation Components

Develop a compensation philosophy
• Developing a compensation philosophy can support an organization in developing a program that is in line with
the work culture an organization has or wants to create.
• Sample Compensation Philosphy
• While maintaining fiscal responsibility, our organization is committed to compensating staff in a manner that is
fair, consistent, reflective of the external market, and provides recognition for the achievement of individual
goals, corporate objectives and professional competency. Specifically, our goal is to achieve the following
objectives:
• Internal Equity
• External Equity
• Increased Performance and Productivity
• Compliance with Laws and Regulations
• Administrative Efficiency

Performance based pay scale
• Performance-related pay or pay for performance is a salary or wages paid
based on how well one works. Car salesmen or production line workers, for
example, may be paid in this way, or through commission.
• Many employers use this standards-based system for evaluating employees
and for setting salaries. Standards-based methods have been in de facto use for
centuries among commission-based sales staff: they receive more pay for
selling more, and low performers do not earn enough to make keeping the
job worthwhile even if they manage to keep the job.

Skill based Pay
• What Is SkillBased Pay?
Skill‐based pay (SBP) is a compensation system that rewards
employees with additional pay in exchange for formal certification
of the employee’s mastery of skills, knowledge, and/or
competencies. Skill is acquired and observable expertise in
performing tasks. Knowledge is acquired information used in
performing tasks. Competencies are more general skills or traits
needed to perform tasks, often in multiple jobs or roles.

Advantages of skill based pay
• Skill based pay allows companies to review market compensation data and
determine pay based on the assessed value an employee has within an organization.
Rather than establishing a set salary for every job description, the employee’s skills
and knowledge are taken into account.
• The following are a few advantages of implementing a skill based pay system:
• • Encourages the development of skills, which increases the value of a company
• • Increases flexibility of skills among employees
• • Rise in organizational performance levels, such as productivity and quality
• • Higher employee satisfaction

Pros and cons of skill based pay

Team based broad banding pay

Advantages and disadvantages of team- based broad
banding
• Broadbanding is the term applied to having extremely wide salary bands, much more encompassing
than with traditional salary structures. Whereas a typical salary band has a 40 percent difference in pay
between its minimum and maximum, broadbanding would typically have a 100 percent difference.
• Advantages:-
a) Streamlines Hierarchy
b) Facilitates Internal Movement
c) Puts Added Trust in Management

Team based broad banding pay
• Disadvantages:-
a) No Awareness of External Market Rates(With broadbanding, if a manager wants to pay at
the market midpoint, they are left baffled and guessing. There is no midpoint in a broad band)
b) May Lead to Inequities(Broadbanding’s flexibility and trust in management may or may not be warranted. In a
broadbanding system, it is relatively easy to have two people with the same responsibilities have earnings that are
thousands and thousands of dollars apart)
c) Lack of Cost Controls
d) Promotions( the absolute worst thing about broadbanding is the severe reduction in opportunities for promotions.
Fewer salary bands lead to fewer opportunities to climb to the next band)

Executive compensation
• The financial payments and non monetary benefits provided
to high level management in exchange for their work on behalf of an organization.
The types of employees that are typically paid with executive
compensation packages include corporate presidents, chief executive officers, chief financial
officers, vice presidents, managing directors and other senior executives.
• It is the role of the chief executive (CEO) and other executives to oversee the company's
strategy and operations. Obviously, these individuals require compensation for their work.

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Performance mgmt strategies