Math 12 ABM Organization MGT Q2 Week 4
Math 12 ABM Organization MGT Q2 Week 4
Math 12 ABM Organization MGT Q2 Week 4
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FOREWORD
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LESSON THE FUNCTIONS AND IMPORTANCE OF
COMPENSATION, WAGES AND PERFORMANCE
EVALUATION, APPRAISAL, REWARD SYSTEM,
EMPLOYEE RELATIONS AND MOVEMENT
OBJECTIVES:
K: Identify the policy guidelines on compensation
and wages and performance evaluation or
appraisal;
S: Discuss the importance of employees relations
and differentiate various employee movements;
A: Realize the importance of adopting an effective
rewards system.
I. WHAT HAPPENED
PRE-TEST:
Direction: Unscramble the letters below, based on the definition provided in
each number. Write your answers in your activity notebook.
1. CASONMOPIETN - all forms of pay given by employers to their
employees for the performance of their jobs
2. ERFOPRMCAEN VTIELNUAOA - a process undertaken by the
organization, usually done once a year, designed to measure
employees’ work performance
3. MEPLYEOE ERLTIAOSN - the connection created among
employees/workers as they do their assigned tasks for the
organization to which they belong
4. PELMOEYE EOVMEMTSN - series of actions initiated by employee
groups toward an end or specific goal
5. NUIMNIOS – the principle of combination for unity of purpose and
action
6. WRADRE - gift, prize, or recompense for merit, service, or
achievement, which may have a motivating effect on the employee
7. OMNTERYA WERADR - refers to money, finance, or currency reward
8. NNOMAOETRYN AERDWR - refers to intrinsic rewards which do not
pertain to money or finance
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II. WHAT YOU NEED TO KNOW
DISCUSSION
COMPENSATION/WAGES and PERFORMANCE EVALUATION
Compensation/wages and performance evaluation are related to
each other because the employees’ excellent or poor performance also
determines the compensation given to them, after considering other internal
and external factors like the actual worth of the job, compensation strategy of
the organization, conditions of the labor market, cost of living, and area wage
rates, among others.
Compensation may come in different forms. It may be direct, indirect,
or nonfinancial.
Types of Compensation
Direct compensation – includes workers’ salaries, incentive pays,
bonuses, and commission
Indirect compensation – includes benefits given by employers other than
financial remunerations; for example travel, educational and health benefits,
and others
Nonfinancial compensation – includes recognition programs, being
assigned to do rewarding jobs, or enjoying management support, ideal work
environment, and convenient work hours
Figure 1
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compensation packages to create values for both the organization and its
employees.
Source: (Latte, 2018)
Figure 1. Pay equity is among the important considerations in preparing compensation
packages. As illustrated in this diagram, pay equity is based on the idea that an employee’s
pay must be commensurate to his or her effort.
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Purposes of Performance Evaluation: Administrative and Developmental
Improving individual job performance through performance evaluation is just
one of the reasons why employees are subjected to assessments continuously.
There are other purposes behind employee assessment that are beneficial to
the company and employees.
Administrative Purposes – These are fulfilled through appraisal/
evaluation programs that provide information that may be used as a basis for
compensation decisions, promotions, transfers, and terminations.
Human resource planning may also make use of it for the recruitment
and selection of potential employees.
Developmental Purposes – These are fulfilled through appraisal/
evaluation programs that provide information about employees’ performance
and their strengths and weaknesses that may be used as a basis for identifying
their training and developmental needs. Through this approach, the workers
become more receptive to explanations given by the organization’s
management regarding the importance of having evaluations at regular
intervals – that these are conducted to improve their competencies to prepare
them for future job assignments.
Different performance appraisal methods are used depending on the
information an evaluator aim to find out.
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Advantages of Performance Appraisal
It is said that performance appraisal is an investment for the company
which can be justified by the following advantages: (Enriquez, 2016)
➢ Promotion: Performance Appraisal helps the supervisors to chalk out
the promotion programs for efficient employees. In this regard,
inefficient workers can be dismissed or demoted in case.
➢ Compensation: Performance Appraisal helps in chalking out
compensation packages for employees. Merit rating is possible
through performance appraisal. Performance appraisal tries to give
worth to performance. Compensation packages which include
bonuses, high salary rates, extra benefits, allowances, and pre-
requisites are dependent on performance appraisal. The criteria
should be merit rather than seniority.
➢ Employees Development: The systematic procedure of performance
appraisal helps the supervisors to frame training policies and
programs. It contributes to analyzing the strengths and weaknesses
of employees so that new jobs can be designed for efficient
employees. It also helps in framing future development programs.
➢ Selection Validation: Performance Appraisal helps the supervisors to
understand the validity and importance of the selection procedure.
The supervisors come to know the validity and thereby the strengths
and weaknesses of the selection procedure. Future changes in
selection methods can be made in this regard.
➢ Motivation: Performance Appraisal serves as a motivation tool.
Through evaluating the performance of employees, a person’s
efficiency can be determined if the targets are achieved. This very
well motivates a person for a better job and helps him to improve his
performance in the future.
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• the unhealthy personality of the evaluator; and
• the evaluator may be influenced by organizational politics.
REWARD SYSTEM
Organizations offer competitive rewards systems to attract
knowledgeable and skilled people and to keep them motivated and satisfied
once they are employed in their firm. Further, rewards promote personal
growth and development and present fast employee turnover. Management
offers different types of rewards:
Monetary rewards – rewards that pertain to money, finance, or currency.
a. Pay/Salary – financial remuneration is given in exchange for work
performance that will help the organization attain its goals; examples:
weekly, monthly, or hourly pay, piecework compensation, etc.
b. Benefits – indirect forms of compensation given to employees/
workers to improve the quality of their work and personal lives; health
care benefits, retirement benefits, educational benefits, and others
are examples of these
c. Incentives – rewards that are based upon pay-for-performance
philosophy; it establishes a baseline performance level that
employees or groups of employees must reach to be given such
reward or payment; examples; bonuses, merit pay, sales incentives,
etc.
d. Executive Pay – a compensation package for executives of
organizations which consists of
➢ A research on effective
five components: basic salary,
rewards systems by the Center for
bonuses, stock plans, benefits, Effective Organizations revealed
and perquisites that rewards systems can influence
e. Stock Options – are plans that six factors or areas that impact
grant employees the right to buy organization effectiveness. These
a specific number of shares of are:
the organization’s stocks at a • attention and knowledge;
guaranteed price during a • motivation of performance;
• skills and knowledge;
selected period
• culture;
• reinforce and define structure; and
Nonmonetary Rewards – rewards cost.
that do not pertain to money, finance, or
currency; refer to intrinsic rewards that are Read the research text at
self-granted and which have a positive http://ceo.usc.edu/pdf/G935225.pdf
psychological effect on the employee
who receives them.
a. Award – a nonmonetary reward that may be given to individual
employees or groups/teams for meritorious service or outstanding
performance; trophies, medals, or certificates of recognition may
be given instead of cash or extrinsic rewards
b. Praise – a form of nonmonetary, intrinsic reward given by superiors
to their subordinates when they express oral or verbal appreciation
for excellent job performance
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EMPLOYEE RELATIONS
Employee relationships apply to all phases of work activities in
organizations, and managers to be effective, must be able to encourage
good employee relations among all human resources under his or her care.
Employees/workers are social beings who need connections or relations with
other beings – other employees/workers – who can give them social support
as they carry out their tasks in the organization where all of them belong.
Talking to a co-worker, perceived to be a friend, or working on a delicate task
with others can be comforting during times of stress, fear, or loneliness. When
these negative feelings are overcome, employees will be able to work better
toward the achievement of their organization’s goal.
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The Benefits of Strong Employment Relations
Having strong employer and employee relations reaps a lot of benefits
for your business. The most advantages are listed below: (Enriquez, 2016)
1.Productivity
Strong employment relations create a pleasant atmosphere within the work
environment; it increases employee motivation and can also be increased
through improved employee morale. Companies that have invested in
employee relations programs have experienced an increase in productivity,
and therefore, the increased productivity leads to increases in profits for the
business.
2. Employee Loyalty
Creating a productive and pleasant work environment has a drastic effect on
an employee’s commitment to the firm, it encourages a loyal workforce.
Having such a labor force improves employee retention, in doing so the cost
of recruitment, hiring, and training are cut drastically. For most businesses, the
high cost of employee turnover outweighs the cost of the employee relations
program that they have in place. Another benefit is that when the employee
turnover is low, it ensures that the employer has a trained and skilled set of
employees.
3. Conflict Reduction
When a work environment is efficient and friendly, the extent of conflict within
the workplace is reduced. Fewer conflict results in the employees being to
concentrate on the tasks at hand and they are therefore more productive. All
the research and statistics lead to one conclusion, ‘A happy workforce is a
productive workforce.’ Creating a sound and efficient work environment with
excellent management and a strong employer-employee relation can be the
vital key to any business success or failure.
Actively • employees who are not only unhappy at work but also
Disengaged act out their unhappiness
• they undermine what their engaged coworkers
accomplish
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EMPLOYEE MOVEMENTS
A labor union is a formal union of employees/workers that deals with
employers, representing workers in their pursuit of justice and fairness and their
fight for their collective or common interests.
Employees or workers unionize because of financial needs, unfair
management practices, or social and leadership concerns.
a. Financial needs – complaints regarding wages or salaries and
benefits given to them by the management are the usual reasons
why employees join labor unions
b. Unfair management practices – perceptions of employees regarding
unfair or biased managerial actions are also the reason why they join
mass movements; examples of lack of fairness in management are
favoritism related to promotion and giving of training opportunities
and exemption from disciplinary action
c. Social and leadership concerns – some join unions for the satisfaction
of their needs for affiliation with a group and foe prestige associated
with coworkers’ recognition of one’s leadership qualities
Figure 2. Company owners have to make sure that they make their employees
satisfied to prevent a labor strike.
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Step 2. Initial organizational meeting – This is conducted to attract more
supporters and select potential leaders among the employees who can help
the union organizers. Information or data obtained in Step 1 will be used by the
organizers to meet the employees’ need to explain the means to accomplish
their goals.
Figure 3. The Collective Bargaining Process
Step 3. Formation of the in-house organizing committee – this starts with the
identification of employees who are ready to act as leaders in campaigning
for their goals, in trying to get the interests of the other employees to join their
movement, and in convincing employees to sign an authorization card to
show their willingness to be represented by a labor union in collective
bargaining with their employer. The strength of the union is shown by the
number of employees who signed the authorization card. At least 30
employees must sign the said card before the National Labor Relations
Commission (NLRC) approves the holding representation election.
Step 4. If a sufficient number of employees support the union movement, the
organizer requests for a representation election or certification election – a
representation petition is filed with the NLRC asking for the holding of a secret
ballot election to determine the employees’ desire for unionization. Before the
election, leaders campaign for employees’ support for the election and
encourage them to cast their votes. Intense emotions are shown by
employees, the labor group, and the employers during this period.
Step 5. End of union organizing – when a sufficient number of votes is garnered,
the NLRC certifies the union as the legal bargaining representative of the
employees. Contract negotiation or collective bargaining agreement (CBA)
negotiations follow the certification. The CBA process involves the following
procedures:
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a. Prepare for negotiations – data to support bargaining proposals are
collected and arranged in an orderly manner by both parties – the
union and the employer’s groups. This is followed by the selection of
the members of their respective bargaining teams. Usually, each side
has four to six representatives at the
bargaining table. The chief negotiator ➢ The National Labor
Relations Commission
for the union is the union president
(NLRC) is an attached
while the chief negotiator for agency of the DOLE. The
management is the organization’s vice NLRC is a quasi-judicial
president of the labor relations body that is tasked to
manager. Supporting data to back up resolve disputes between
the positions of each group are the labor force and
gathered. Economic data are very management in order to
important. Other internal organization preserve industrial
data needed include records of peace.
promotions, transfer, overtime work, grievances, disciplinary actions,
and arbitration.
b. Develop strategies – management proposals are developed and
limits of concessions are determined, while also considering the
union’s goals and their possible strike plans. The union, on the other
hand, tried to develop better strategies to convince the
management group to accept its proposals.
c. Conduct Negotiations – this consists of bargaining, analyzing
proposals, resolving issues related to the proposals, and
remembering to stay within their respective bargaining zone. If no
agreement is reached at this point, a deadlock may result.
The union’s bargaining power may be exercised by holding a
strike, picketing, or boycotting the employer’s products or services.
The management’s bargaining power, on the other hand, may be
exercised either by continuing operations or shutting down
operations. Another method is by a lockout of its employees or
denying the employees the opportunity to work.
Unions and employers may try to resolve bargaining deadlocks by
mediation or arbitration. Mediation is the use of a neutral third party
to reach a compromise decision in employment disputes. Arbitration
also uses a neutral third party who resolves the labor dispute by
issuing a final decision in the disagreement.
d. Formalize agreement – after the negotiation process, the union and
the management group have to formalize their agreement. This
agreement is a formal binding document that lists down the terms,
conditions, and rules under which employees and managers agree
to operate; clear language must be used in the contract, which has
to be ratified by the majority of the employees. After ratification, all
the members of the union and the management bargaining teams,
as well as the president or chief executive officer of the organization,
must sign the document before its dissemination to all parties
concerned.
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CBA activities, ideally, must be a continuous process (although it is held
every five years in many companies). Right after the formalization of the
agreement and its ratification and signing, preparations for negotiations on the
next CBA must begin again. This will allow negotiations to review weaknesses
and mistakes committed during the previous negotiations while these are still
fresh in their minds.
Grievance Procedure
The grievance procedure is a formal procedure that authorizes the union to
represent its members in processing a grievance or complaint. Such grievance
must be expressed orally or in writing to the employee’s immediate supervisor
and the union steward. If the immediate supervisor shows a willingness to
discuss the complaint with the employee and the union steward, the
grievance may be resolved immediately.
This is possible especially if the supervisor has formal training in handling
grievances. If not resolved within ten working days, the employee forwards the
grievance to the department manager and the chief steward of the union.
Again, the resolution of the grievance is possible at this point if the department
manager is willing to discuss the matter with the employee and the chief
steward. However, if this remains unresolved, the next step is for the employee
to forward the complaint to the vice president for labor relations and the local
union president after 15 workdays. Resolution of the matter is possible, but if
nothing happens within 30 workdays, the employee may now forward the
complaint, with the aid of the local union president, to the NLRC arbitration.
The arbitrator is a neutral third party who resolves the grievance by issuing a
final decision which both parties – the employee, represented by the union
president, and the employer – have to follow.
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III. WHAT HAVE I LEARNED
EVALUATION:
A. Direction: Choose the correct word(s)/term(s) from the box that is being
described in the statements below. Write only the letter of the best answer
in your activity notebook.
A. Compensation G. Graphic Rating Scales
B. Direct Compensation H. Grievance procedure
C. Employee Relations I. Trait methods
D. Engaged Employees J. National Wages & Productivity
E. Expectancy Theory Commission
F. Financial needs K. Weekly basis
1. These are all forms of pay given by employers to their employees for
the performance of their jobs.
2. This theory predicts that employees are motivated to work well
because of the attractiveness of the rewards or salary that they may
receive from a job assignment.
3. A compensation that includes worker’s salaries, incentive pays,
bonuses, and commissions.
4. This is the connection created among employees as they do their
assigned tasks for the organization to which they belong.
5. A formal procedure that authorizes the union to represent its
members in processing a complaint.
6. A government agency that is concerned with minimum wage
determination in the country.
7. A performance method where each characteristic to be evaluated
in represented by a scale.
8. A performance evaluation method designed to find out if the
employee possesses important work characteristics.
9. A complaint regarding wages or salaries and benefits given to the
employees by the management.
10. These are employees who work with passion and feel a deep
connection with their company.
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REFERENCES
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SYNOPSIS AND ABOUT THE AUTHOR
AUTHOR
MARGIE A. QUINDO finished her bachelor’s
degree in Business Administration major in
Management at Silliman University,
Dumaguete City in October 2003. She earned
42 units in Bachelor of Science in Secondary
Education – Crash Program at Foundation
University, Dumaguete City in March 2015 and
passed the Licensure Examination for
Professional Teachers on the same year.
Currently, she is a SHS-Teacher at Giligaon High
School of Siaton 4 District in the Division of
Negros Oriental from 2017 up to present.
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DEPARTMENT OF EDUCATION
SCHOOLS DIVISION OF NEGROS ORIENTAL
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MARGIE A. QUINDO
Writer
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DISCLAIMER
The information, activities and assessments used in this material are designed to provide accessible learning modality to the
teachers and learners of the Division of Negros Oriental. The contents of this module are carefully researched, chosen, and e valuated to
comply with the set learning competencies. The writers and evaluator were clearly instructed to give cr edits to information and illustrations
used to substantiate this material. All content is subject to copyright and may not be reproduced in any form without expressed written consent
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