Does Poor Compensation Affect Employee Performance?

This assignment explores whether poor compensation administration affects employee performance. It delves into the importance of compensation in retaining professional workers, the need for additional benefits beyond cash payments, and how insufficient benefits can lead to decreased satisfaction and increased absenteeism. The discussion also touches on the relevance of employee benefits in improving lives, with a focus on defined contribution plans and gainsharing as incentive methods. The assignment aims to provide insights into the significance of compensation administration in employee productivity and overall job satisfaction.

1. One alleged problem with performance appraisal is that most employees seem to
think they are above average and do not like to be told otherwise. Do you think
this is true, and, if so, how would you design an appraisal system that might
avoid this problem? (10 marks)
Confident workers have it going for them, since they are self-motivated and optimistic, they are
important assets for businesses. We have the qualities of leadership, do not fear taking chances
and are very reliable. Problems starts when employee’s confidence turns into over confidence
and gains arrogance (EMI, 2019). Turning a blind eye to the negative nature of others does not
change it (EMI, 2019). As team leader, it becomes necessary to direct this unreasonable
employee until their conduct affects the effectiveness in organisation (EMI, 2019).
Assessment programmes assess employee performance against previously established targets,
define strategic goals and offer feedback to employees about their growth and training needs
(Jones, 2017). This helps managers recognise productivity strengths and failures and offers a
roadmap for potential changes (Jones, 2017).
In the particular situation I would choose characteristic checklist as it describes the basic traits
and attributes of employees. It can calculate, timeliness, reliability, initiative, and interest. I may
assess unique organisational characteristics of workers, such as customer generosity (Jones,
2017). The key benefit of this approach is that it not only measures an individual's present
performance but also forecasts potential jobs results (Management, 2020).
In this system workers have to take part in social-simulation activities, including in-basket
simulations, informal meetings, fact-finding activities, decision-making issues, role-play
simulations, and other activities that ensure the involvement of a person in a task. Improve
awareness, encourage thinking, and improve employee performance (Management, 2020).
2. If one were to be introduced, which Organizational Performance Pay Plan would
be best for your most recent employer? Discuss also why the other options would
not be preferable. (If you are using a different employer than previously noted in
Test I and II, briefly introduce the employer) (10 marks)
“Organizational performance pays plans include employee profit-sharing plans, employee stock
plans, and other organizational pay plans” (Long & Singh, 2018).
Preferable plan for my position at e commerce company purchasekaro.com would be group
incentive plan as we work in team and I have always been a team player. The implementation of
group reward programmes can be used to address the difficulty and interdependence of
employees, the need for collaboration with a work group and the presence of working group

norms and also have a motivational opportunity for specific goals, consistent pay-to-performance
ties and fairly small pay increases (Milkovich & Wigdor, 1991). Many of today's community
benefits, such as opportunities to share income and benefit, are consistent with reward plans;
they are bound up with relative quantitative performance metrics, give comparatively large
payouts and do not include payouts in simple wages (Milkovich & Wigdor, 1991). Team
benefits are connected to more collective performance metrics – at the working group, facility /
plant / office or company level – in order to dramatically attenuate the relation between the
individual workers ' performance and compensation (Milkovich & Wigdor, 1991).
Including merit-based incentives, partial incentive schemes, various types of premium schemes
and commissions, a wide range of strategies can be found between individual incentive schemes
that could make employees work more individually and simply focus on pay and not for efficient
performance (Behavior, 2012). Most organisations have used company or corporate
compensation programmes to fix some of these deficiencies (Behavior, 2012). Group incentive
programmes base on group or organisational productivity at least some employees receive
(Behavior, 2012). Employees are therefore encouraged to collaborate with each other and the
company in order for every employee to support (Behavior, 2012). Initiatives such as income
sharing or revenue sharing systems are structured to connect the potential benefits and wealth of
workers to that of the company and reduce the antagonism between the two for years. The
outcome is often dramatic (Behavior, 2012).
3. Gain-sharing and goal-sharing programs have high discontinuation rates. Why do
you think this may be? (10 marks)
Gainsharing is better characterised as a management programme in which the engagement and
participation of its workers aims to achieve higher levels of success. For improved results,
workers share the benefit financially (Masternak, 2015). It is a team strategy, generally
involving all the workers at a site or project (Masternak, 2015). The standard company
Gainsharing tracks efficiency and transfers savings with all workers using a pre - specified
formula. The real performance of the organisation is compared to the minimum performance to
assess the sum of the profit (Masternak, 2015).
Goal Sharing is a system by which performance reward is related to particular goals that are met,
including bonus rewards for those responsible for the objectives that are accomplished
(Institute, 2020).

Typically, a weak or slow manufacturer is a root cause (Vitasek, 2016). Instead, companies
often come up with brilliant ideas after a contract has first been signed that contains a winning
clause (Vitasek, 2016). Some of them in other situations. The question is not the lack of
imagination but instead of the institutional deficiencies that prevent changes from gaining
momentum in the contract and governance system. Unfortunately, the Good Idea Graveyard will
take these thoughts (Vitasek, 2016). Gainsharing is not achieved because the issue is
outsourced, the working reach of the producer is not controlled and is limited and the term of
math is short (Vitasek, 2016).
4. “Defined contribution pension plans are nothing more than an attempt by
employers to shift risk from themselves to employees, who are much less able to
bear this risk.” Do you agree or disagree with this statement? Discuss why (10
marks)
I assume that, yes defined contribution plans in a way are an attempt by employers to shift risk
from themselves to employees, who are much less able to bear this risk. Employer should be
careful choosing retire plan for employee, he should opt for less risky plan. This would help
change employee’s perspective towards pension plans.
The employer and often the employee contribute annually to the pension plan of the employee.
Contributions are usually defined as a fixed portion of income, although that portion does not
need to be consistent in a profession (Bodie, Marcus, & Merton, 1988). The Defined
contribution pension plans calculation is simple, only the market value of the retirement plan
resources is calculated (Bodie, Marcus, & Merton, 1988). Nevertheless, the Defined
contribution pension plans is part of the framework that also provides employees a lifetime lump
sum that starts at a retirement age and which can be bought with a gain on their account in
various conditions as a reference for personal financial management (Bodie, Marcus, &
Merton, 1988). Clearly, the real value of the pension annuity would depend on the investment
performance of the pension fund, the retirement rate and the employee's final compensation
trajectory (Bodie, Marcus, & Merton, 1988).
Defined contribution pension plan providers are focused on cost savings and personalised
programmes, along with increased insights and investment. “Nonetheless, a defined contribution
plan has considerable legislative / regulatory risks, said Robert Landry, Chief Council Officer for
Aurora, Ontario based Magna International, Inc. with most of its employees on defined

contribution plans. Defined contribution plans also have significant legislative / regulatory risks”
(Gonzalez, 2007).
“Plan sponsors should take steps to reduce risks in defined benefit schemes, including details on
retirement planning for workers, said Mr. Mann. "Educating employees is necessary if you want
to minimise the legal risk on the road" (Gonzalez, 2007).
5. Does poor compensation administration affect employee performance? Discuss
why or why not, provide rationale for your answer. (10 marks)
Yes, poor compensation administration affects employee performance.
Clever companies are mindful of the need for the right pay and benefit plan to retain professional
workers (Leonard, 2019). Salaries, payments, incentives, and Commission arrangements shall
be included in the compensation (Leonard, 2019). The profit portion of the workers' pay and
benefits should not be overlooked by employers so because services are unexpectedly negotiated
with the expectations most staff require (Leonard, 2019).
Today's workers are unable to work for the cash alone, they want extra (Kelechi, 2016). This
addition is regarded as compensation for workers (Kelechi, 2016). Employee benefits are also
known as fringes, and in addition to cash payment they are given a form of compensation that
improves the lives of employees (Kelechi, 2016). Employee benefits in general have little
effect on employee efficiency, but insufficient benefits have a low level of satisfaction and
increase staff levels of absenteeism (DeCenzo and Robbins, 2007).

References
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Contribution Pension Plans: What are the real trade offs? Pensions in the U.S.
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from https://engineeringmanagementinstitute.org/4-ways-mentor-
overconfident-employee/
Gonzalez, G. (2007, September 23). Defined contribution plans see gains in
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defined-contribution-plans-see-gains-in-popularity#
Institute, E. R. (2020). Performance Sharing (Goal Sharing). Retrieved from
https://www.erieri.com/glossary/term/performance-sharing-goal-sharing
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https://www.breathehr.com/blog/what-is-an-appraisal-system
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EMPLOYEE PRODUCTIVITY.
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Retrieved from https://smallbusiness.chron.com/importance-compensation-
workplace-38470.html
Long, R. J., & Singh, P. (2018). Strategic Compensation in Canada, Sixth Edition.
Jackie Wood.

Management, P. (2020, May 11). 6 Practical Performance Appraisal Methods for the
Modern Workforce (With Examples). Retrieved from https://kissflow.com/hr-
process/performance-management/employee-performance-appraisal-method/
Masternak, R. L. (2015). Compensation: Incentive Plans: Gainsharing. Retrieved
from hr.guide: https://hr-guide.com/Compensation/Gainsharing.htm
Milkovich, G. T., & Wigdor, A. K. (1991). Pay for Performance.
Vitasek, K. (2016, November 21). Why Gainsharing Fails.