Chapter 6

A sound human resource management program requires knowing the

different a comprehensive picture of each job in his organizationager
anvolves what each worker does, how he does it, why he does it and under
what conditions he performs his job and what special qualifications each
worker must possess to perform his job satisfactory.

Analysis of the organizational structure is the vertical and horizontal

interconnections among jobs. We must have a thorough understanding of
how one job relates to those above the organization and those down the line
of the organization and those at the same level of the functional areas.
Analysis of the organization structure can be a leverage to gain a
competitive advantage for the company, but how one does this depends on
the firm's strategy and its competitive environment.

A major quality program is the need to identify clearly the output

requirement for a particular type of job. To design work systems that are
maximally efficient, a manager needs to understand the processes required
in the development of the products for their work units. Without a clear
understanding of the tasks necessary to the production of the desired output,
it would be difficult to determine whether the work is under-staff or over-
staff.

The Rationale for Job Analysis

The conduct of job analysis has behind it several reasons that are vital to
human resource management and the supervision of the work to be done by
the workers in the shop or the office. It is considered as the building block of
anything that human resource management does, as any personnel action
requires information that is gleaned from job analysis.

The following are the uses of job analysis:

1. To specify he duties and responsibilities of the position. It examines what

the employee will perform, what skills are needed the condition which work
shall be done and the range of difficulty or complexity of the action.
2. To provide job-oriented recruitment and selection guides. Those in the
recruitment and election of employees must be familiar with the duties and
responsibilities of the vacant position. To identify which applicant is most
qualified, it is necessary to determine the tasks that will be performed by the
individual hired as to skills, knowledge and abilities.

3. To provide guides in operation-based compensation determination the

process of job evaluation involves the relative peso value of each job to the
organization to set up equitable pay structures. To get the peso value on
jobs, is necessary to get information about different jobs, which job deserves
higher pay than others.

4. To provide information and tools for career planning and counselling.

Career planning entails matching individual skills and aspirations that are or
may become available in the organization. This matching process requires
that those in charge of career planning know the skill requirements of the
various jobs. This allows them to guide individuals into job that will fit into
their qualifications and where they will be happy and satisfied. Counselling
refers to the giving of advice and problems that the employees meet in the
performance of their tasks and duties in the positions where they are
assigned.

5. To have a guide in the construction of performance evaluation criteria.

Performance criteria deals with getting information about how well each
employee is performing his job in order to reward those who effective. The
information generated by job analysis unveils the aspect of the jobs that are
measurable and should logically be evaluated in the performance appraisal
of the employee.

6. To serve as guide in methods improvement. Job designs consist of different

steps or processes. Job analysis provides the information to design the work
process most effective in carrying out the tasks. This involves improving
methods and developing more efficient systems at work.
7. To obtain background information about working conditions. The
environment of work positively affects the productivity and morale of the
workers. This information is available in job analysis and could be used by
management in positively identifying the hazards and other conditions that
affect job performance.

8. To serve as guide in the development of training programs. Almost all

employees hired by an organization will require training in their jobs. Some
training programs may be more extensive than others. Job analysis provides
the required information to ensure that the training program will prepare the
individual to perform the job effectively.

9. To assist supervisor in the supervision of the employees. Supervisors are

provided with precise and detailed description of the jobs under their
respective areas or departments and they can make this serve as bases for
judging their performance.

10 To provide the conceptual basis for position classifications to the

employee who will occupy the position. The bases of any position title are
the tasks, duties and responsibilities of the job. Managers without proper job
analysis might assign position titles that are not related to the functions of
the position.

The Job Analysis Program and Organizational Structure

Job analysis starts with a careful study of organizational structure. This would
reveal the relationships of jobs within the organization. Organizational
structure is often seen in organizational charts that convey the vertical and
horizontal relationship of the two. The type of organizational structure has
implications on the design of the jobs. A functional structure needs
specialization and the responsibility is focused on specialized skills hence
supervision and decision-making become minimal. In a divisional structure,
jobs are holistic and people are working in teams that tend to have greater
decision-making and authority.

Job analysis is the process of getting detailed information about the tasks,
duties and responsibilities of the job as seen in the organizational structure.
For the company to succeed, it must have detailed information about the
requirements of the jobs through careful job analysis program. It must ensure
that a match exist between job requirements and the individual aptitudes
and qualities to fit into the position in the organization. Management must
understand that it is great importance for an organization to match job
requirements and people to achieve high-quality performance to be more
competitive in today's global marketplace.

Job analysis is a continuing program. Organizational structure changes do to

the introduction of new technology in order to be competitive in the global
economy. Any changes in structure carry additional duties and
responsibilities or simplifications of functions. These changes need job
redesigning to conform to organizational needs for greater efficiency and
productivity.

The Role of Human Resources in Job Evaluation

Job analysis is not the sole responsibility of the Human Resource Department
but a cooperative effort of all operating departments. While it is more of
personnel functions, the greater bulk of information must come from the
persons who are jobholders of the position. The supervisor or manager must
immediately inform the HRD of any changes in the duties and responsibilities
of the position due to the introduction of new technology or changes in the
production process that improve production efficiency. This will entail job
redesigning or reclassifying of the position that may involve a total change in
pay structure due to increased responsibility or exposure to elements of
hazard or working conditions.

Some companies get the services of management consultants to conduct a

job analysis program to be more objective. Management consultant is more
objective as they have more experience in conducting the job analysis
program due to their exposure to different organizational systems. Another
reason is that there are managers who try to overstate the functions and
duties of the different positions, as they know that they have great
implications in the company's pay scale. The other reason is that some HR
practitioners are not very much knowledgeable in conducting job analysis as
this is a more specialized activity that involves careful study.
The Gathering of Job Information

Job Analyst

The study of jobs is the responsibility of the personnel department thru the
job analyst who is trained to conduct the job evaluation program. The job
analyst studies the duties, responsibilities, and the specification
requirements of the job. This involves careful understanding of the conditions
around the functions and tasks of the positions.

A good job analyst must have the following qualifications:

1. Good knowledge of organizational system.

2. Good intelligence and analytical skills.

3. Good judgment and acumen.

4. Clarity and facility of language.

5. Familiarity with organizational and company policies.

6. Good personality and good relationships with others in the organization.

7. Tact and diplomacy in getting along with others.

Getting Process in job information

Job analysis starts with a careful understanding of the relationship of the jobs
understanding in the organizational structure. This relationship is concerned
with the details of the job rather than with the worker who is assigned to do
the job.

The following factors are important considerations in job analysis:

1. What the job requires the employee to do. Job requirements involves the
activities that workers have to do the importance of the duties or activities.
The amount of time that is involved in doing the job and other minor duties
required of the job.
2. How effectively does the employee perform his assigned duties and
responsibilities? This involves the detail on how the workers perform the
assigned tasks, the materials and essential tools and equipment required to
do the job, the skills required and the methods and procedures involved in
doing the work.

3. Why should the worker do the job? This covers the reason why the
employee has to do the tasks assigned to him and the purpose of the job in
relation with those of other jobs in the organization. The tasks should justify
its contributions to the effective and efficient functions in the organizational
work systems.

4. Supervision required in the job. The details in supervision requires the

amount of supervision involved or the assistance needed in carrying out the
job, the extent of employee's authority in carrying out the functions and the
extent of relationships of the job with those others in the organizational
setup.

5. Working environmental conditions. This deals with the conditions

prevailing in the work place, like exposure to hazards, heat, or other
elements that affect the performance of the job. This may involve in the
conditions of comfort or discomfort while the employee is performing the
tasks assigned to him.

The Importance of a Job Title

The correct title of a particular job is very important in the organization.

Similar jobs performing similar duties and responsibilities must have the
same job titles. The title of the job must show clearly the area of job activity
and must show its relationships with the other jobs in the unit or de autofit.
The job relationships will provide better job placements in the organizational
ladder thereby job inconsistencies can be avoided The specific titles will
clarity he employees' line of movement in the organizational structure and
they should be grouped in job families in the line and staff organization,
Job titles must reflect the major job functions. The company must prepare a
list of titles of all jobs and it must use standard terms for easy identification.

The following are suggested guidelines in job title selection:

1. The title must be standard used in the industry.

2. It must be suggestive of the nature and function of the jobs.

3. It must be different from other jobs based on major duties of employees

who hold the position.

4. The job titles must be brief but suggestive of its functions.

The Nature of Job Analysis Information

Job analysis focuses on the two important data or information that managers
must have the right information about the nature of the employees' job. This
information is reflective of what the employee does daily, weekly, monthly or
annually. It also reflects the conditions or the working environment in the
organization. These two important factors are:

1. The Job Description

The result of any job analysis program is the writing of the job description.
The job description contains the tasks, duties, and responsibilities that the
job entails. This information is derived from the job analysis report.

The following are the uses of job descriptions:

a. It helps identify and distinguish one job from other jobs.

b. It is used as a tool in the proper employee recruitment, selection and

training.

c. It helps establish job relationships within the salary bracket.

d. It serves as a guide in structural departmentalization.

e. It could be used as a guide in the horizontal and vertical promotion of

employee's thereby developing and promoting morale.
2. Job Specification

The job specification contains information about the employee's

qualifications and traits required in the effective performance of the work
assigned. It specifies the qualifications as to education, training, experience
and the statement as to the nature of the environment where the employee
is assigned.

This information could be used in the following personnel activities:

a. It serves as a guide in interviewing applicants.

b. It is a guide in the proper selection of the employee as to his qualifications

for the proposed vacant positions.

c. It is used in the assessment of employees for training and development.

JOB DESCRIPTION

Position Title - Human Resource Assistant

Job Code-HR 002

Department- Human Resources

Salary Grade-Pay grade 5

Job Summary

Under the direct supervision of the Human Resource Manager assist in the
general functions in the recruitment, selection, training, benefits
administration, performance appraisal and other related duties inherent in
the function of the department.

Specific Duties and Responsibilities

1. Assists in the processing of application by conducting preliminary

interviews to applicants to determine their initial qualification for the position
being applied.
2. Determines the qualification requirement for the positions and makes
reports to the immediate supervisor for the applicants that meet the initial
evaluation.

3. Assist in the giving of examination to applicants to determine their

suitability to the position being applied for and makes reports of the results.

4. Assist in the orientation program to ascertain that the new employees are
properly oriented with company rules and regulations and other company
policies.

5. Prepare reports to the Social Security System, Pag-Ibig Fund, Philhealth

and other government instrumentalities to comply with government
requirements as directed by the immediate superior.

6. Assist in the periodic Performance Evaluation of employees and makes

records in their HIRS or 201 file for references in terms of salary adjustments
or promotion.

7. Assist in Job Evaluation program conducted by the department through the

distribution and retrieval of questionnaires for further analysis of the Job
Analyst.

8. Coordinates with other department on employees' requirements such as

leave of absence, sick leave notices, maternity leave and other benefits.

9. Does other related duties and assignments that may be required from
time to time

JOB SPECIFICATIONS
1. Education - College Graduate Major in Human Resource or Psychology

2. Training On the Job training at the HRD for at least 500 hours

3. Job Location-HRD at usually in air conditioned room

4. Assignments - May be assigned to liaison work with government offices

and may be exposed to traffic and dust

Job Analysis Methods

There is no best method in job analysis. The method to use depends upon
the purpose of the analysis, the time element devoted to it and the amount
of money that the company would like to spend for the activity.

1. The Job Questionnaire Method

The accuracy of job information is necessary. The job analyst prepares the
questionnaire based on the purpose of the job analysis. The form to be used
is carefully prepared based on the simple understanding of the employees
who will answer them. The set of questions contains information as to its
purpose, clear-cut instructions and the procedure on how to accomplish the
questionnaire.

The questionnaire is distributed to the supervisor who will then require the
employee concerned to answer it, the supervisor then reviews the
information as to its accuracy. He talks with the employee concerned with
the information employee which he thinks does not conform to his judgment.
The corrected questionnaire is then forwarded to the HRD for finalization of
the job description. The study of the job information should be continuing
process.
The duties and responsibilities change due to changes in technology and
other needs of the organization. Job descriptions should be reviewed
annually.

2. The Interview Method

The interview method is commonly used for blue-collar jobs, as the employee
may not be able to answer the questionnaire. The job analyst gets the
information by interviewing the employee about his job or the immediate
supervisor. To get the more specific data the analyst is guided by a set of
facts about the job and records or take notes in the information given by the
employee. The analyst gathers information and acquires a personal
impression about the job and later these will contribute to the accuracy of his
job description. A well-trained job analyst gives the feeling that the job is
properly evaluated and the employee is satisfied.

3. The Combination of Interview and Questionnaire Methods

Under this method, the job analyst gives the questionnaire and then
conducts interview later. The analyst verifies the information from the
employees' immediate supervisor thru a structural interview. To verify further
information, the analyst interviews the employee concerned. The contents of
the questionnaire and the verified information are the bases for the writing of
the job description.

4. Observation and Interview Method

This method is involved in the observation of the worker at the job site and in
their station. The observation is noted while the employee is performing the
tasks assigned to him. Oftentimes, time and motion study is involved in this
activity. After the observation the job analyst interviews both the worker and
the supervisor to verify the information gathered through observation and
the results of the time and motion study. The results of the interview,
observation and time motion study are the bases of the written job
description, which will be sent to the supervisor and the employee concerned
for final review and final printing.
Chapter 8

Performance appraisal is one of the major keys to effective management. It

is basis for determining who should be promoted to a higher position.
Performance appraisal is a process of evaluating an individual in order to
arrive at an objective human resource decision. It is also important for
management development because if an employee's strengths and
weaknesses are not established, it is quite difficult to determine whether
development efforts of the organization are aimed at the right direction.
Appraisal is truly an integral part of the total system or management. If a
business corporation a government agency, a religious institution or a
university is to reach its goals and objectives, ways of accurate
measurement of performance must be identified, established and
implemented.

Effective performance appraisal should be focused on the legitimate desire of

employees for progress in their professions. One way of integrating
organizational demands and individual needs is through career
advancement, which can be a part of the performance appraisal. The
appraisal serves different organizational and individual needs.

The Purposes of Performance Appraisal

1. Strategic Purpose

The performance management system should link employee activities with

the organizations goals and objectives. These strategies are implemented
through defining results, behavior and to some extent employee
characteristics that are necessary for carrying out the predetermined goals
and objectives. Management should then develop the measuring instruments
and the feedback systems necessary for carrying out strategic purposes that
exhibit the characteristics engaged in the behaviors and the produced
results. To achieve this strategic purpose, the system must be flexible
because, when goals and strategies change the results, behaviors and
employee characteristics usually need to change correspondingly. While
these performance strategies are definitive of organizational effectiveness,
the system focuses more on administrative and developmental purposes.
 2. Administrative Purpose

Performance management information relative to performance appraisal

points to the use of evaluation in decisions for salary adjustments,
promotion, retention and termination, lay off and recognition of individual
performance. The purpose of the evaluation and appraisal program is usually
hampered by the human element of compassion and many times supervisors
and managers see the process as a necessary evil to fulfil their job
requirements. They tend to evaluate everyone high or at least rate them
average making the appraisal information relatively useless.

3. Developmental Purpose

The third purpose of performance management is to develop employees who

are effective in their jobs. When employees are not performing as well as
they should, performance management seeks to improve their performance.
The feedback given during the performance evaluation process often
pinpoints the employees’ weaknesses. Ideally, however the performance
management system must identify not only the deficient aspects of the
employees performance but also the relative causes of these deficiencies,
like lack of skills in performing the tasks, the motivational problem in the
work place, and some related problems with employees holding back
efficient performance.

The Criteria in the Development of a Measuring Instrument

The value of a performance rating depends upon the factors to be measured

and the extent of its validity and reliability. Care and judicious selection traits
or characteristics and other observable factors to be used as bases for
evaluating the employees’ performance are basic in designing the rating
form to be adopted. The instruments must measure what they intend to
measure. The traits or characteristics must be clearly defined so that the
raters will have no doubt about what the traits mean.

1. Validity- is the extent to which the performance measure assesses all

the relevant aspects of the performance. Often it is referred to as
content validity. Ratings are valid if they are accurate measures of the
 employees’ performance. It refers to the accuracy of the ratings in
differentiating each employee in a group in terms of actual job
performance. The rating scale must be able to show the degree of the
employees’ efficiency in the performance of his assigned tasks or
duties and responsibilities. It is not quite easy to develop the
performance rating instruments because we have to set standards
against which to compare results. We have to compare the employees’
records and work performance which are not usually available or
available only in certain kinds of jobs. In some cases, they are not
expressed in measurable terms.

2. Reliability- Rating may be considered reliable if they are consistent.

They are consistent if the individual employee in a group receives
essentially the same ratings when evaluated at least twice by the
same rate at different times or by different raters who are familiar with
the work of the employee and have observed him perform his job.

The same supervisor should rate the employee twice without reference to
the previous ratings and compare the results later to find out if the rating
riven is almost similar or closely the same, thereby determining the
consistency of the evaluation. The other test of consistency is when the
supervisor and the manager rate the same person and the results are not
very far from each other.

3. Acceptability- refers to whether the people who use the performance

measure accept it. Many very elaborate performance measures are
extremely valid and reliable yet many managers and supervisors do
not want to use them as they consume so much time. Other
employees may not want to be evaluated with the set of rating
instrument, as they have to submit a lot of paper work to prove their
ratings.

4. Specificity- is the extent to which the performance measure gives

specific guidelines to employees about what is expected of them and
how they can meet these expectations. Specificity is relevant to both
 the strategic and developmental purposes of performance
management. If the measure does not specify what the employee must
do to help the company achieve its strategic goals, it becomes difficult
to achieve its strategic purpose. The instrument must be able to
pinpoint the employees’ performance problems or it becomes
impossible for the employees to correct their performance.

The development of a performance appraisal system must be properly

studied by the HRD and the instruments must be pilot-tested on the basis of
the above criteria. The panel of the committee must be involved in the test
run of the instrument.

Developing and Administering an Appraisal Plan

Performance appraisal is a line responsibility to be met with the assistance of

the human resource management and his staff. Any plan will be worthless if
it lacks the support of top management, if supervisors are poorly trained in
systematic appraisal or are not convinced of its value, if discussions of
results are badly handled, or If appraisals are not properly used for the
purpose which they are intended. These and other difficulties often prevent
the successful operation of the systematic program. There are certain
guidelines in developing and understanding an appraisal plan using the
following steps:

1. Secure full agreement of line managers about the need for a formal
performance appraisal plan and for the purpose in which it will be
used. A choice has to be made among several types of appraisal plans.

2. Secure plans of their companies and existing literature on the subject

to develop a plan best suited for the needs of the particular
organization. The HRD should study all other plans and make a careful
analysis as to their suitability into the organization. Complicated plans
should be avoided.
 3. Enlist the cooperation of the supervisor in drawing up the appraisal
plan. Discuss the factors to be used and the uniform descriptions or
instructions to be followed.

4. Make sure that the purposes and nature of the performance appraisal
plan are explained to those who will make the appraisal. These are the
first level supervisors and department heads and those who will be
affected by the

Appraisal.

5. Provide training to those who will use the instruments. Training will
provide enough knowledge on how the rating scale will be used to
avoid biases and provide uniform appraisal of the employees.

6. Develop and achieve line and staff coordination. There should exist a
mutual checking of employees’ performance appraisal in order to be
consistent and to provide uniform within and between departments.

7. Arrange for periodic discussion of the performance appraisal.

Supervisors and their subordinates should discuss the good points, the
difficulties and the lapses in the performance appraisal. Supervisors
should encourage better performance. The employee has the right to
know his standing in the organization and to know his progress in his
performance.

8. The appraisal system should be carefully used in selecting employees

for possible promotions.
 9. Provide for challenges and review of performance appraisal. The
grievance procedure should be put in place if the employee is not
satisfied with the rating given to him. In case there is a company
union, the union representative should be entitled to challenge
personnel decisions.

A systematic performance appraisal plan helps supervisors to thoroughly

review the performance of their employees, and this probably is the greatest
value in any organization. Line managers should participate from the start of
the development of the program, for it is their line responsibility to evaluate
employee performance.

Approaches to Performance Management

There are various approaches to the development of performance

instruments that could be used by different organizations depending on their
goals and objectives. Some performance instruments focus on employee
attributes, behavior, and results and some are focused on overall comparison
of individual, performance. Other organizations focus on quality and quantity
of work performed and some observable characteristics in the performance
of their jobs. The following are the approaches used by various organizations:

1. Comparative Approach

The comparative approach of performance measurement consists of

techniques that require the rater to compare the individual’s performance
with that of others. This approach usually uses some overall assessment of
the individual's performance or worth, and seek to develop some ranking of
the individual within a given work group. The following are the techniques
under this approach:

a. Ranking- This method provides a comparison of the

relative qualities of performance among all the
employees in a group or unit. The employees to be rated
are ranked from the most efficient to the less capable in
each traits or quality used judging the employees’
performance. Some of the traits or qualities are: quality of
 work, dependability, judgment, attendance and attitude
toward the job. The employees are ranked for each trait
and as many times as there are traits on which the
employees are to be rated. Thus the employee may be
ranked first in quality of work accomplished, second in
reliability, third in judgment and so on.

b. Forced Distribution Technique- this system uses a five-point job

performance scale in rating employees who are doing similar jobs. Under this
method, it is assumed that a normal group or workers doing similar jobs fall
into some such levels as Superior, Above Average, Average, Below Average
and Poor. The common group percentage would be 5-20-50-20-5. This means
that 5 of his subordinates are superior, 20 are above average, 50 are
average, 20 are below average and 5 are poor.

c. Paired Comparison Method- Under this method the name of each

employee who is to be rated is written on the card. Each employee to be
rated is then off paired with every other employee in the same unit. In the
process, the person rating the employee determines which of the two
employees in each pair is superior in terms of the trait being considered. The
pairing may be made for such traits as quantity of work output, quality of
work done, cooperation, and job attitude. The pairing is repeated for each
trait and for all employees in the unit. Cards are used for convenience in
pairing, each card bearing the name of an employee. To determine the
ranking of the employee, a tally is scale. The employees are evaluated
individually and the rater circles the number that signifies how many traits or
characteristics the individual has. The highest point is five (5) representing
superior, four (4) above average, three (3) average, two (2) below average
and one (1) as poor.

d. The Checklist Method- This rating method provides a number of traits or

factors with corresponding definitions for evaluating the employees written
in the left hand column of the form such as quantity of work done, quality of
work, attitude towards work, judgment, reliability, cooperation, punctuality
and others. The rater checks the statements that most nearly describe the
performance of the employee being rated during the rating period. Some
companies using this method assign point values for each trait or factor,
making a combination of the descriptive phase and the numerical scale.
Each statement may be given a corresponding weighted point. The sum of
these weighted points corresponding to the statements checked constitutes
the employees’ scores.

2. Behavioral Approach

The behavioral approach of performance management attempts to define

the behavior an employee exhibits to be effective in the job. The various
techniques define these behaviors and then require managers to assess the
extent to which an employee exhibits them.

A. The Critical Incident- The Critical Incident approach requires

managers to keep a record of specific examples of effective and
ineffective performances on the part of each employee. It is a
narrative report of incidents or occurrences that involve the
employee. These incidents are used to give feedback on
employees about what they do very well and those that they do
poorly. The observation reports could be tied up with the
companys’ strategy for effective performance and productivity.
The problem related to this technique is that managers have to
log weekly or daily the incidents and compare employees with
one another.

b. The Behavioral Anchored Rating Scale- This builds on the critical incidents
approach. It is designed to specifically define performance dimensions by
developing behavioral anchors associated with different levels of
performance. In developing the behavioral anchored rating scale, the
manager gathers a large number of critical incidents that represent effective
and ineffective performance dimensions. The manager and the employee
agree on particular incidents and use these anchors in the rating of the
employees’ performance. The advantage is that they can increase inter-rater
reliability by providing precise and complete definition of the performance
dimensions. The disadvantage is that it can provide a biased recall of the
incident.
c. The Organizational Behavior Modification- This entails managing the
behavior of the employees through a formal system of behavioral feedback
and reinforcement. It builds on the behaviorist’s view of motivation, which
holds that the individuals’ future behavior is determined by past behaviors
that have been positively reinforced. It has the following components:

• They define a set of key behaviors necessary for job performance.

• They use a measurement system to assess whether these behaviors are

exhibited.

• The manager informs the employees of those behaviors and sets goals for
achievement.

• Feedback and reinforcement are provided to the employee.

3. The Result Approach

The result approach focuses on managing the objectives, measurable results

of a job or work group. This approach assumes that subjectivity can be
eliminated from the measurement process and that results are the closest
indicators of one’s contribution to the organizational effectiveness. We will
examine two performance management systems that use results:

A. Management by Objectives (MBO)- Management by Objectives is

used in most companies who believe in results as bases of
performance management. Under this system, the top
management defines the companys’ strategic goals and
objectives and passes it on to the next level of management and
down the line. The manager and subordinates agree on
performance indicators and these performance goals are then
the points that will be evaluated at the end of a specified period.
A good MBO evaluation criterion is when the manager and the
supervisor first agree and make clear goals and procedures to
 follow in a work or a task to be done to get into the realization of
the strategic goals. The management provides all necessary
support and subordinates make the necessary commitment
toward the accomplishment of the set goals and objectives.

b. Productivity Measurement and Evaluation System (PROMES)- the goal of

this system of measurement is to motivate the employees to go for a higher
level of productivity. It is a means of measuring and feeding back
productivity information to personnel. The following are the steps in the
accomplishment of this evaluation process:

• The manager and subordinates identify the product and the process of
accomplishing the evaluation, plus the level of quality of performance.

• The indicators are established and will be made as bases for management
evaluation.

• The staff establishes the contingencies and possible problems related to

indicators and the level of evaluation associated with them.

• A feedback system is developed providing the employees and work group

with information about their specific levels of performance on each of the
indicators.

Problems of Management Appraisal

Whatever performance appraisal the organization decides to use, there are

problems related to its implementation. The organizational culture among
our Filipino managers reveals some problems in the strict implementation of
the performance appraisal system.

Some managers are reluctant to appraise their subordinates. People want to

know their abilities and how well they are performing. The disillusionment
that is still so widespread with respect to managerial performance appraisal
comes from the practice of measuring and evaluating, and this causes
controversies and misgivings The problem appears from the things being
measured, the standard used and the manner of measurement being done.

Another problem of measurement appraisal is the assumption of traits that is

open to question. The connection between performance and possession of
specific traits is doubtful. Traits appraisal substitutes someones’ opinion of
the individual for what an individual really is. Many supervisors look at these
traits ratings as only paperwork exercises that must be done because it is
the company policy. Others believe that trait appraisal is vague and
confusing, since raters could not observe all the time the employees' traits
and characteristics. Traits evaluation provides few intangible things

There are many possible sources of errors in the performance of the

appraisal process. One of the major sources of error is the lack of careful
understanding of the rates on the real purpose of management appraisal.
There is no simple solution to completely eliminate these errors, but making
raters aware through training is usually helpful.

To correct some of the fears in the management appraisal system, the

following errors should be studied very carefully:

1. Problems of Varying Standards – The manager should avoid using

different standards among employees performing similar jobs. This
could trigger anger from employees.

2. Recent Effect the error in which the rater gives greater weight to
recent events when appraising an individual performance. This is very
true when employees are about to be evaluated; they are early in
coming to work and are more prudent in the performance of the
assigned tasks.

3. Central Tendency occurs when employees are incorrectly rated near

the average or middle scale. The supervisors who play safe in giving
performance ratings usually commit this error.
 4. Rater’s Bias occurs when the rater’s value distorts the rating. It may be
unconsciously or quite unintentionally. If a manager has a strong dislike
of a certain ethnic group, this bias is likely the result. Regional
groupings, age, sex and other arbitrary classifications may be reflected
in appraisal if they are not properly designed. Review of the next level
manager may help correct this problem.

5. Halo Effect occurs when a manager rates an employee high or low on

all items because of one characteristic. For example, if a worker has
few absences, the supervisor might give her a high rating in all other
areas of work including quantity and quality of output because of her
attendance. The manager may not really think about the employee’s
other characteristics separately.

6. Contrast Error – it is the tendency to rate people relatively with other

people rather than the performance standards. The rating should
reflect performance against the job requirement not against other
people

The Performance Management Appraisal Feedback

Feedback on employees’ performance is an important component of

performance management. After appraisals have been completed, it is
important to communicate them to the employees so that they have a clear
understanding of how they stand in the eyes of their immediate superiors
and the organization. It is imperative that managers and supervisors discuss
their appraisals with employees,

The following should be undertaken to give employees feedback:

1. Feedback as a System
a. Data – are factual information regarding observed actions or
consequences of actions. These are facts that report what happened.

b. Evaluation – is the way the feedback system reacts to the fact and
requires performance standards.

c. Action – a system in which data and evaluation influence action. The

manager gives specific suggestions regarding future actions the employee
must take.

2. The Appraisal Interview

The appraisal interview presents an opportunity for the manager to talk

about the employees’ potential and also their weaknesses. It could be an
emotional experience for the manager and the employees because manager
must communicate both the praises and the constructive criticisms in the
evaluation. In this process, the manager should emphasize more on
counselling and development rather than the poor performance of the
employees. It should be handled tactfully as employees may feel resentment
and conflicts may result which could be reflected in future work relationship.

Effective Performance Management System

Regardless of what appraisal system is used, an understanding of what

performance management is supposed to do is critical. When performance
appraisal is used to develop employees as resources for the companys’
profitability and advancement and as instruments for employees’
development, then it will work to the advantage of both management and
employees. The key is not which evaluation or appraisal form was used, but
whether managers and employees understand the purposes. An effective
performance management system must be:

1. Consistent with the strategic mission and goals of the organization.

2. Beneficial as a development tool.

3. Useful as an administrative tool of management

4. Legal and job related.

5. Generally fair and acceptable by the supervisor and the employees,

6. Useful as documentary evidence in all personnel actions.

Viewed from this perspective performance managemerit evaluation and
appraisal is still considered as a tool effectively developed for a functional
organizational system, directed to its growth and development.
Organizations, formal or informal need a system of appraisal and an
instrument of control. It is therefore important For organizations or
companies to develop a well-studied appraisal system that is accepted by
the workers and managers and approved by top management.

Chapter 9

The Beginning of the Fringe Benefit Concept

The paternalistic concept of the fringe benefit started as welfare work by

employers among their employees and their families. The early process
gained the employees loyalty to the company, cooperation and goodwill and
inspired them to work more efficiently. These concepts regarded the
employée as dependent members of one big family and the company kept
them satisfied in their jobs. This was when the company was a small group
that considered the employee as a member of the family. Some companies
then gave free meals to their workers, provided them with family quarters
near their work area and other services. Some big corporations then
provided housing facilities, hospitals, recreational facilities and other
amenities for the employees use.

For some time, this paternalistic concept worked well, especially when the
company was small and the employees were few. The management then,
who were the owners themselves knew all their employees and their
dependents. They were considered as the "Big "Big Brother", one who
provided for family emergency needs and was highly respected by all.

As the firm expanded from the small family owned business to a larger
corporation, and the company workforce increased tremendously due to the
expansion of the business operation, the granting of fringe benefits became
less and less as corporate organization became aware of the expenditures
for the granting of the usual benefits. On the other hand, some employees
who had not developed their loyalty to the organization considered these
benefits as dole-outs, as special concessions to low wages paid by the
company. Those employees who continued to give their loyal service to the
company received their regular benefits. Those who were to the company,
were not given any. They considered the granting of benefits as inequalities
of treatment. There were then no clear-cut policies and guidelines in the
granting of company benefits and services.

The formation of the company unions resulted in the active quest for the fair
treatment of all employees in the granting of benefits and services. Due to
this active movement of the unions, management became more prudent in
the treatment of benefits. The granting of benefits is now covered by specific
company guidelines. and procedures as management realizes that employee
services and benefits should be based on sound management principles of
coexistence with the employees organization.

The Concept of Benefits

Benefits are anything that is not covered by regular salaries and wages. It is
anything that contributes to the improvement of the conditions of work, and
that motivates the employees to do good work. Benefits are additional
compensations that the employees receive regularly at an interval stipulated
in the company policies and guidelines.

Benefits are granted to employees to assist them and facilities are provided
so that they will enjoy their stay in the company. The main purpose is to
develop greater commitment and loyalty and to keep good employees in the
company roster.

Management social conscience has shifted to recognize that employees are

partners in to hazards of work and economic problems brought about by the
rising cost of living the cost of hospitalization and other social life problems.
Management is now more concerned with their employees' welfare and share
in the social responsibility and community activities. The government on one
hand, has recognized that the employee as contributor to the economic
development of the country has to be taken care of by passing legislation
that offers more benefits to the employees. The objectives of the company in
granting fringe benefits are:

1. To provide additional protection and comfort to their employees and their

families as they consider them as members of the team.

2. To maintain and develop employees as an effective work force duly

committed to their corporate mission and vision.

3. To develop productive and happy employees and develop greater loyalty

and commitment to motivate them to remain in the employment of the
company.

4. To develop greater partnership in the development of quality products and

services to their customers and clients.

5. To develop satisfied employees and more concerned workers to avoid

activism in the workplace that will interfere with company production.

6. To develop partnership with labor unions and employees associations.

The Governing Philosophy in Granting Fringe Benefits

Company benefits are additional costs in the company operations. They

should be administered appropriately and be based on a sound company
philosophy in granting additional benefits. Such philosophy must consider
the company's ability to pay and contributions to the profitability of the
organization. It must also be mutual benefit to the giver and the receiver of
benefits. Along these lines, the company benefits should focus along the
following principles:
1. Company benefits should be based on the financial conditions and the
capability of management to pay additional cost of operations, as benefits
granted cannot withdrawn when already granted. Benefits are humanitarian
grants of management and the capability to pay must be carefully studied.
Additional cost may mean additional financial loses to the company that may
lead to company bankruptcy. Employees should not expect much at a time of
financial crisis.

2. Benefits granted should not interfere with company operation and

management has the prerogative to control the same. As an example,
additional leave credits cannot be availed of without proper management
approval, especially if it will interfere with production schedules. Shifting
schedules are controlled by management to take care of continuous
company operation, Goods must be shipped to customers on time as delays
may cause company problems. Additional leave credits may be enjoyed
during company shutdown or on scheduled maintenance break or on an
Inventory period.

3. Benefits should be fair to all employees of equal rank and position, and
should be capable of uniform implementation. Example, if rank and file
employees ate entitled to a rice allowance of one sack per month, then all
must be given the same. If all serior managers are given car allowances then
all the others must enjoy the same benefits. Equal treatment will avoid
jealousy among managers thereby greater cooperation is maintained. Equal
ranks must get the same, benefits.

4. The benefits must have mutual value to both employers and the
employees concerned. Example: Car plans are given by companies to
managerial employees to gain representation for the company and for them
to go to the office in convenience but it should not be abused by the
employees concerned for coming late or going home early. Managers usually
enjoy flexible time schedules but they are not paid overtime work.

On the other hand, additional leaves are provided by management to give

the employees a break from work and let them enjoy time off with their
families, but they are expected to be more refreshed; and when they go back
to their work they are expected to be more productive and could work
efficiently. Employees must understand that the company paid for their
additional leaves without employees work output but they must consider this
as an investment in their personal welfare and benefits

There are companies that provide additional sick leave credits for a specified
number of days the employee can avail of this leave credits with pay when
they get sick or any immediate member of the family is in distress. Others
still have sickness welfare funds that employees can avail in case of
sickness. Some companies provide health insurance programs that can be
used in case of confinement or medical consultations. With these programs,
employees are relieved of worry in time of emergency and are sure that they
are not deducted their daily earnings and the company assumes the burden
of paying medical bills that are not covered by the usual government medical
programs. Since employees are free from these personal stresses they feel
more secure in their jobs hence greater efficiency is expected.

5. The employee must understand the costs benefit implementation and they
should work hard so that the company will maintain its ability to pay the
added fringes. In time of financial crisis and the company is in the point of
reversals, the employee should not expect the company to be benevolent to
implement some of those that are not usually given like company outing and
Christmas bonanzas.

In Japan, when the company is in its reversal period, the employees

themselves opt to forego some benefits granted by management. That is the
time that they work harder for the company to advance further its recovery
program and for them to enjoy later the suspended benefits. This partnership
brings about healthier management relations hence further company
reversals are avoided.

Our company unions and various organisations must understand that dhe
cannot give what one does not have enough to spate. Benevolence is
hampered by ones capacity to give
Benefits must be measured in terms of employees' services to the company.
While benefits should be uniformly implemented, there must be a
measurement in the policy guidelines on those who should receive the
benefits in terms of the following criteria

a. Length of service- the following company guidelines may be of help in the

granting of leave credits:

• Employees who have one year of service are entitled to the mandatory
leave of five days per year.

• The employees enjoy an additional two-day leave for every year of service
but not to exceed (15 days thereafter. That is, if the employees serve the
company for another five years then they can enjoy the maximum 15 days
leave credit per year.

• The employee may initially enjoy five days sick leave after one year of
service, and then an additional leave of one day per year of service until he
enjoys the full fifteen days leave.

• Additional leave may be granted depending on the company's capability to

pay,

b. Retirement Benefits:

• Some companies pay retirement benefits outside of those given by the

Social Security System. Usually employees are paid 15 days for every year of
service. Some companies pay an additional retirement benefit of one day
after five years of additional service. That is, when the employee has served
for another ten years or total of 15 years, he gets the full one month in
separation pay.

• Other companies pay as much as two months in retirement benefits for

every year of service. Others pay more depending on 'their collective
bargaining agreements.

• Other companies provide pension plans, either participatory or non-

participatory. That is meant to relieve the company of paying a huge amount
of money when employees retire from employment.
c. Other Benefit Programs- company insurance plans covering the employees
and their dependents may be given depending on the services of the
employees.

The granting of measurable benefits is a come-on perk for employees to stay

longer with the company and provide loyal and efficient services to satisfy
customer demands and develop employee morale. Anticipation of greater
company benefits based on the number of year of service prevents
employees from resigning and looking for other jobs thereby lessening
employees' turnover rate.

7. Benefit programs should be a cooperative effort of top management and

employees. Recreational programs and athletic activities are fringe benefits
of the company. Such programs should be coordinated and participated in by
all employees concerned and participation should be to the maximum.
Planning the program and assignment of the chairman and committee
members should be handled by the Human Resources Department.
Consultations with the different heads and those with the talent and
expertise in all these activities should be top priority for the success of the
program. Department uniforms should be charged against department
budget allocations. The committee should decide the color of the uniforms,
with less management intervention, to avoid disgruntlement.

The athletic and recreational programs are company benefits. They aim to
develop esprit de corps and boost employees' morale. When handled
properly, this incentives and benefit program can boost efficiency and
increase production.

The Classification of Benefits

Benefits could be classified under the following:

1. Statutory Benefits - are benefits mandated by law such as:

a. 13th month pay given half in June and half in December

b. Five-day incentive leave

c. Birthday leave

d. Maternity leave with pay for married women

e. Paternity leave with pay when husband's wife gives birth

f. Pag-ibig Fund-housing loans through employer-employee contributions

g. Medicare Fund- for medical expenses of employees and dependents

h. Social Security Benefits retirement, pension, death, burial, disability,

sickness, medical rehabilitation, employee compensation in case of accident
in the performance of work

i. Cost of living allowance

2. Company Benefits - These are benefits granted by the company outside of

those mandated by law. These benefits could be through a collective
bargaining agreement and those that are given unilaterally by management.

a. Vacation leave with pay this varies from company to company

b. Sick Leave with pay

c. Bereavement leave

d. Hospitalization plan

e. Sickness and accident insurance plan

f. Life insurance and pension plans

g. Christmas and mid-year bonus

h. Housing equity assistance

i. Educational plan

j. Recreational and fitness facilities

k. Legal aid

l. Car plan
m. Company Service and transportation

n. Stock option plan

o. Management Bonus

p. Emergency leave

q. Personal leave

r. Union leave

s. Production sharing plan

t. Profit-sharing

Profit-Sharing Plans

Profit-sharing is an incentive plan under which an employer agrees to share

with his personnel a specified portion of the net profits of his business at the
end of each fiscal period or over a given period. It is not a pension or a
bonus. It provides payment of current or deferred sums based on the
profitability of the enterprise as a whole.

Purpose of Profit-Sharing

1. It is believed that employees would feel they have stake in the company if
they get a direct share in the profits of the enterprise in which they work.

2. It aims to modify employees' attitudes to achieve greater employee

efficiency, productivity and loyalty to the firm and keener interest in its
welfare.

3. Employers who subscribe to the concept of profit-sharing look upon their

workers as partners or co-workers of the enterprise.

Types of Plans

1. The Cash Plan - also known as the Current Distribution Plan. This provides
for payment of the employee's share in the profit in cash based on his salary
or wage. Shares under this agreement are generally paid quarterly, semi-
annually or annually.

2. The Deferred Distribution Plan - this program establishes a trust fund to

provide employees with future payment. The distribution of profits is
withheld until the employees' retirement, death or disability.

3. The Purchase Plan - Under this plan, participating employees are

permitted to purchase often through payroll deductions, shares of company
stock, either or less than the prevailing market price or at par value.

The scope and nature of benefits are so varied as enumerated above but
such benefits can be further classified into four major categories:

1. Economical and financial benefits

2. Recreational, social and athletic services

3. Health and medical services

4. Professional services

The benefits derived from these company services are immeasurable, since
they are intangible. Nevertheless, their value cannot be underestimated as
they contribute greatly in making the company a good place to spend the
best years of the employees' productive life.

Managing Benefits: Planning and Administration

Managing a fringe benefits program is an administrative and a financial

problem to the employer. This needs to be handled very carefully as this may
mean sour relations between management and the employees. Careful
planning of the benefit programs could develop healthy administrative
relations between the workers and management. It should be both beneficial
to the employer and the employee as well. It should be wisely managed by a
competent staff that knows the feeling of the employees and understand
management benefits program philosophy.

Before any benefit program can be implemented, the management must

look into the working conditions, hours of work, salaries and wages. The
basic necessities of the labor force must be met first before any benefit
program is to be implemented. Employees will only appreciate benefits if the
basic requirements of wages and working conditions are met by the
management. Benefits must be operated with minimum financial
expenditures as workers may see it as a ploy of management in place of
higher wages. Wages are still the basic intrinsic factors that drive the
employees to be productive and efficient in the performance of their task.
Benefits are additional perks of management and their effects are only
appreciated at the time they enjoy the program, therefore they are
considered as extrinsic motivators.

Strategic Benefit Implementation

Management has to analyze the benefit payoff of any benefits management

program. Employees expect management to provide them benefits but, on
the other hand, job performance remains the same. Benevolent
management on the other hand expects employees to contribute to the
companies productivity and profitability and the end game should be of
mutual benefits to both the employer and the employees. Since benefits are
expenses and the results are not usually immediately appreciated, a
strategic management in its implementation must be considered.

1. Benefit Survey and Benchmarking - Benefits should be within the level of

the industry in the community and those of the competitors in business as
any added cost should affect product-pricing strategy. Cost information is
necessary as product competition affects company sales strategy and
programs/

This could also be related to employees turnover rate. When benefits are not
properly benchmarked with the same or similar firms, then the percentage of
employee turnover may affect production. Some information may be
available from the Bureau of Statistics Office under the Department of Trade
and Industry, and the Department of Labor and Employment. With
information at hand, management needs to evaluate first the probable
payoff of any benefit program. This evaluation needs to focus and recognize
that the employees have come to expect certain things from the employers.
The employees must feel that the employer is committed to their welfare, so
that they will also be committed to the objectives of the company.

There is much room in evaluating benefits decisions. Benefits are tax-exempt

and tax deductible from their operating profits. The company must find the
right formula on what financial and non-financial incentives to give the
employees before any added benefits is to be implemented. Anything given
by the right hand cannot be taken back by the left hand.

2. Cost Control Strategy -In thinking about cost control strategy, several
factors can be successful. It is assumed that the larger the cost of benefits
category, the greater the opportunity for savings. We must also consider the
growth trajectory of the benefit category as its cost impact may run out of
control in the future. Cost containment effort can only work to the extent that
the employer has significant discretion and control in choosing how much
they spend in the benefit category. Statutory cost varies as government
policies change over time and this is beyond control by management, and
therefore a tie-up study must be taken into course.

3.Staffing Cost Strategy-employers may change staffing practices to control

benefit costs. Benefit costs are fixed and spent per employee. The company
may require the employees to work more hours and pay overtime premiums.
The overtime premium should be computed against expenses for employees
benefits. If the resultant factors are more than savings without sacrificing
production performance. Then such plan could be implemented. This
condition will also be favorable to the employees as it will increase their
home pay, which is more important especially for heads of the family.

The hiring of contractual or temporary employees will greatly reduce cost on

benefits. Usually the regular employees enjoy company benefits. The
personnel roster should be studied very carefully, the workload must be
properly distributed and should maintain only the regular work force
performing regular functions. This is the primary reason why most companies
resort to such personnel arrangements.

Job contractors may be employed on production activities that could be done

outside the plant operations Outside of benefit cost reductions, other
expenses could be avoided. While jobbers may gain profits for their
operations, the company of additional benefits. Nevertheless, cost benefit
analysis should also be considered along this line in terms of company
productivity and quality index.

4. The Demographic Composition Cost Strategy

The employer must also consider the demographic factors such as age, sex
and status of their work force. The benefits must be designed along thee
demographic need of the human resources to be more relevant and
appreciated. Younger workers would prefer higher wages and more overtime
work to augment their take home pay to pay their needs and other comforts.
Married women will need more disability benefits and childcare protection
than single women will. Older work force will need more retirement programs
and pension plans. Planning such a benefit program could be ticklish issues
as human resource compositions are varied in any company organization.
Careful study must be conducted along this line through a research program
to assess employees’ preferences; in the same way the consumers demand
for products and services are analyzed. Care must be taken not to raise
employees’ expectations regarding future changes benefits.

5. Organization of Employees Cooperatives

Organizations of employee associations cooperatives will greatly help

unburden management of employees’ loans and cash advances. This will
also help employees save part of their income and generate dividends as
added incentives. Credit unions are developed as self-help organizations to
help solve some of their personal financial problems through loans at very
minimal interest plus incentive refunds.
Credit cooperatives can also have consumer merchandise and groceries for
the employees’ household needs at prices below regular market cost and
may be paid through payroll deductions. The organization of these
associations should be encouraged and supported by management. Some
companies provide seed fund to start the program and make monthly
deductions based on the employees’ approval on how much capital
investment they will put into the association. Capital investment plus interest
can be withdrawn when the employee retires or is separated from the
company.

6. Communicating Benefits to Employees

Any strategic implementation of any program cannot take root on employees

morale without their understanding fully the concepts and program of
management in the granting of such benevolent gestures for their welfare.
Benefits are investments in the greater job satisfaction and increased
commitment for better performance on the job.

Research findings have shown that employees’ job satisfaction and

performance show very little correction between company benefits
programs. Many employees think that it is mandatory for a company to grant
those 15 days sick leave and 15 days vacation leave without their realizing
that those are not mandatory for a company to implement. Many employees
do not feel the cost impact of such absence with pay to the company’s
financial conditions but his time off from work is aimed giving the employees
the time to relax and refresh and for them to be more efficient when they go
back to work.

The benefit program must be properly communicated to the employees c the

orientation program and induction of new employees. The cost implications
during must be mentioned in all activities through bulletins and company
news information. The employees must feel that they are part of the
employers welfare program as a member of one big family.

Job applicants must be aware of the benefit programs of the company for
them to be attracted not only on the pay but also on how the company cares
for their employees. A caring employer is what most productive applicants
want to work with.

Corporate Policy Guidelines on Benefits

The company must develop corporate policy guidelines in the

implementation of any benefit program. Such policy and procedure must be
developed in cooperation with all operating and staff departments and
submitted to the Board of Directors for proper approval. It must set the policy
and procedure in implementing the program and communicating these to all
employees concerned so that they are fully understood.

Corporate policy must follow the following guidelines:

1. It must specify are covered by the policy.

2. It must relate to the family and individual assistance to levels of need.

3. It must make the cost of work-related benefits as part of cost production.

4. It must provide security in such forms as compensation during work-

related illness and retirement benefits.

5. It must promote healthy and safe work environment.

6. It must provide morale-building programs and develop employees’ esprit

de corps.

7. It must be of mutual benefit to both the employees and the employer.

Benefits Program Evaluation

Effective program management of employee benefits is an important means

by which organizations successfully compete. Benefit costs are substantial
and continue to grow rapidly in some areas, especially on employees’ health
care benefits. Effective evaluation of all benefit costs is necessary to be able
to compete in products and services especially in the global market.
Evaluation must also focus its attention not only on product cost but also on
the growing competition in acquiring a totally committed work force that will
profile the company toward its growth and economic stability. Beyond
investing more money and other resources on benefits implementation, the
attraction and retention of quality employees can be helped by proper
evaluation and communication of benefit packages to all company
stockholders. The employers carry a very significant social responsibility to
its employees in carrying out benefits decisions. On the other hand, the
employees must fully understand that they themselves carry the
responsibility of safeguarding their own economic and social well-being by
protecting their employers through productive efforts to sustain financial
stability.

A continuing research program should be done by the Human Resources

Department to evaluate not only the cost impact of benefit programs but
also its effects on employees’ performance and morale. Cost benefit
researches and evaluation are tools that will guide management in decisions
on any further benefit implementation.

Chapter 12

Human resources are company assets that must be maintained to keep the
company at competitive advantage in this changing world of work, While
machines and other technological assets need maintenance and reformation.
Employees are assets that could not be changed immediately by changing its
part. The development of employee morale and job satisfaction should be
considered as a maintenance factor that would keep the employee working
efficiently and productively in the organization. The objective of any
company is the development of more concerned employees that will serve
the company with loyalty and dedication. Along these lines, HRD plays the
great tasks of keeping people in the organization by being aware of their
needs, problems, and their personal aspirations in their work activities

The company must understand its work force as to their need and wants and
how they react to different situations. Managers get results from their
employees and these could be possible only by working hand-in-hand with
subordinates who are motivated to contribute their best efforts toward the
achievement of the company objectives and goals. The work environment
must develop the employee morale toward productivity, as the index of
competitive advantage lies in the hands of the work force whose working
situations meet their demands and expectations.

Employee Morale

Morale is the mental attitude that makes the employee performs his work
willingly and enthusiastically. It is the state of mind that is intangible to
measure and it is manifested in his attitude toward work and his
relationships with the work environment. Since morale is intangible, it is
present in varying degrees on how the employee reacts to the company
policies and programs his supervisors, his pay rewards, and those of his
opportunities for his advancement in the company.

Morale could be measured in terms of team spirit, loyalty and employees’

goodwill These qualities are indicated in the value of the employee in his
personal satisfaction, pride in his advancement, and willingness to work for
the good and welfare of the company. The development of morale rests on
effective supervision and management of human resources, as they are in
direct contact with the employees concemed.

Factors that Influence the Development of Morale

1. Employee Factor – The employee’s attitudes and values are the results
of his kind of education, social environment and economic status. The
employee must be able to understand the company policies, rules and
regulations because these are indicative of the quality in the hiring
procedure and selection of the employee. At the initial stage of the
employee’s employment or during the orientation and training, policies
and regulations of the company and how these are applied in the
organization must be made clear to the employee. The employee must
be exposed to the rudiments and work standards, working
environment, and the relationships of the employees in the work place.

The employee must be properly appraised of his job performance

periodically, such assessment will develop skills and attitudes necessary is
effective delivery of work output. Generally, an employee wants to know hie
strong and weak points and how he can improve and contribute more to this
organization. He has personal aims and aspirations, and he also looks after
his future in terms of promotion, increase in salary and recognition.

2. Management Practices – As properly emphasized in the previous

discussions The quality of supervision and management practices are
the makings of the front managers and supervisors. Development of
high morale consists of programs and policies carried effectively in the
daily relationships of the supervisor and manager with the people they
supervise. It is the ability of the line managers to develop cooperation,
teamwork, and understanding that will make the employee do willingly
his daily work activities as he is inspired by his immediate superiors.

The quality of supervisions and management depends on the supervisory

and managerial skills abilities in handling employee problems at the work
place. Supervisory and managerial training would greatly help develop such
skills and values. The morale-building program will steadily demonstrate
good management practices in relation to its employees. The management
teams are in the frontline to develop the organizational climate that makes
up the feelings, beliefs, attitude and behavior of the people at work.

3 Environmental Communication- Good employee and management

relationship depends on the environmental communication. Open
communication between the management and employee is the basic in all
relationships. The different levels in the organizational structure must open
up the communication channels from the top management to the lowest
channels, which are the people down the line. The delegation of authority
and responsibility must be firmly established in the system of communication
so that conflicts are easily resolved and actions are facilitated and effectively
carried out.

The following are the requirements of effective communication:

a. Stress openness, fairness, and direct to the point communication. Avoid

words and phrases that are not properly understood.

b. Encourage feedback and immediate response from the receiver.

c. Listen attentively. Understand the meaning of the message for the greater
understanding of all, I,e, memoranda, bulletins, verbal channels, and other
media.

D. Repeat communications when necessary. Remove barriers in

communication. Be sure that you are properly understood.

3. Social and Environmental Factors – The social conditions outside the

work environment play to some extent on the development of
employee morale. His mental and emotional conditions are influenced
by the social forces to which the employee is exposed daily. The family
and his community greatly influence his attitude and values and these
have some bearing on the employee’ attitude toward the company.
The union or employee organization where forums and opinions are
hatched and discussed exerts strong influence on the morale of the
employee toward his company.

To counteract and develop more concerned employees, the management

must develop social programs within the organizational environment. Good
employee moral could be developed through the following:

A. Recreational Activities-The company recreational activities must

focus on the development of teamwork and cooperation among
employees and a positive attitude toward the attainment of
moral values.

b. Social Activities – Company socials such as annual outings, Christmas

parties, and other important company gatherings are venues for social
development.

c. Athletic Programs All-year-round athletic competitions and departmental

athletic activities would channel the extra energy and develop cooperative
attitudes that in turn develop employee morale.
D. Training Programs This could be formal settings where employees discuss
both technical and value formation topics that could greatly influence the
development of employee morale toward the company’s objectives and
goals.

The Role of Motivation In the Development of Employee Morale

Managers and supervisors get things done through the work of the people
under their direct change. Motivating employees to perform well is of major
concern to all managers and supervisors and this plays a great role in the
development of employee morale.

The word 'motivation and motivating’ are derived from the word motives
which are drives, impulses, or desires that move toward the desired goal or
objective. A motive is an inner state of the employee mental process that
directs him to seek to satisfy a felt need that develops his morale toward the
attainment of a personal goal or purpose. Along these lines, managerial
motivation is the process by which managers and supervisors stimulate
employee behavior and direct it toward achieving desired personal and
organizational objectives.

Organizational performance results from the interaction of the four factors of

production which are physical, financial, material and human resources. The
three other factors are inanimate and could be translated only when the
human element is introduced. The human element is a variable factor and
performance efficiency could result only it they are properly motivated to
achieve the desired quality and quantity of output. This human will increase
the intangible factors of will, violation and freedom of choice. The increase or
decrease of managerial motivation determines the rate of performance and
production output.

Employee performance in the work place is the result of the skills and
abilities and the degree of motivation that comes from effective managerial
leadership. It is axiomatic for managers to expect that self-motivation has to
do much in employee’s job performance and to assume that anyone can be
motivated if he tries hard. The motive for performance must come from
within the employees inner drive and it occurs only when he is motivated to
do something, for his interest and wants. The skills and abilities determine
what the employee can do, but it is the motivation that determines what he
will do. As ability and skills are related to performance, output varies
proportionately with the increase in positive motivation.

The following are indicative of good performance and personal satisfaction:

1. Personal accomplishments

2. Praise for good work

3. Getting along with co-workers

4. Getting credit for good ideas implemented by management

5. Having a capable supervisor

6. Having challenging work responsibilities

7. Being kept informed

8. Participating in decision-making

9. Company location and availability in transport

10. Knowing the parameters of what is expected of them

Most of our managers and supervisors assume that employees must be

stimulated to do what they want them to do. This is not all true, as most
people have a natural built-in motivation. The managerial motivational factor
is necessary to appeal to self-motivation and when there are signs of
declining motivation, and then positive reinforcement would do the trick.

Theories of Motivation that Affect Morale and Performance

The different theories of motivation that were expounded by different

management experts play a great role in the development of employees’
productivity at work. As pointed out in the previous discussions, people are
resources and personnel executives must help them grow as individuals and
as factors of production. Organizations have to develop a more enlightened
attitude toward the role of individual workers.

1. Maslow’s Hierarchy of Needs – Abraham Maslow developed the theory

based on the hierarchy of human needs. According to him the human
needs progresa through five basic levels which are as follows:

a. Psychological Needs – need for food, drink, clothing, shelter, rest, sleep
and sex.

b. Safety and Security Needs – need for protection against any danger,
attack, and environmental elements, including security in employment.

c. Social Needs – involve associations and interaction with others in group for
love, friendship, affection and acceptance.

D. Esteem and Status Needs are related to self-respect, respect for others,
prestige, recognition, and ego satisfaction.

e. Self-actualization Needs – motivates us for self-development, self-

expression, creativity and self-fulfillment by becoming what we are capable
of doing

Relative to this theory of Maslow is that the employee has to be satisfied with
the first level before the next level needs are activated. As soon as the level
of employee's basic survival needs are satisfied and his earnings are more
than enough, then the next level of needs which are safety and security have
to be satisfied and then on to his social needs. To satisfy his self-actualization
needs, individuals should have levels of aspiration equal to or higher than
their abilities and developmental levels.

2. Herzberg’s Motivation Hygienic Theory – Herzberg’s motivation

hygienic theory assumes that the relationship between job factors such
as personal attitudes and performance cannot be studied in isolation
but must be studied together. The hygienic factor such as company
policy, supervision, salary, job security, and job-related benefits would
lead to job performance if present in the organization. The motivating
factors such as achievement, responsibility, recognition, ego and social
 needs are necessary to achieve participative attitude that produces
outstanding employee performance.

3. McClelland’s Achievement Motive Theory- This theory emphasizes that

every motive is learned. He identified that power, affiliation, and
achievement develop motives that drive an employee’s morale and
performance. His conclusion is that the need for achievement can be
learned and management develops self-motivation by appealing to the
employee’s drives.

Relative to those conclusions and their relation to Maslow’s theory of

motivation, higher order needs could be learned and developed and this
could be more appealing for those in the supervisory and managerial levels.
Managers and supervisors also need motivation to attain maximum
productivity in the work place as they are in direct control of company
operation.

4. Expectancy Theory- According to this theory, the employee’s

motivation is the force driving them to achieve some level of job
performance. The amount or level of performance is the result of his
perception of the benefits in terms of higher wages or other company
incentives. If the employees believe that they will be paid higher
wages if they perform at high level than if they do not, and higher
income is of value to them, then they will produce more, In achieving
higher performa the the employee gains satisfaction, which in turn
influences future efforts. If the employee also receives the expected
higher income it will provide satisfaction, which in turn will tend to
make future income appear more valuable.

Along this line, HRD must also emphasize that higher company productivity
and income is the result of employee’s efficiency. The company could only
give higher wages and more benefits of the employee is productive and is
concerned with his work. Profits are results of effective company operations
and higher wages are relative to employee performance. As an employee
perceives that performance leads to intrinsic and extrinsic rewards and
satisfaction that rewards have value and that efforts will probably be
rewarded. He will exert effort to perform his job well.

Improving Employee Self-Perception

People in an organization are the very backbone of its existence.

Organizations are made up of people with values, perceptions and
aspirations and work together for that common good or purpose
organizationally and personally. Since organizations are made up of different
people motivation tends to be different for each of the employees. Different
organizations follow different approaches to improve employee perceptions.
Employees are more attracted to a company with good salary and benefits
while others are attracted to a company with good working environment and
good management.

As pointed out, people are important and HRD can do a lot to help them grow
as individuals to develop them as assets that will play vital roles in the
development of a productive organization. The individual employee does
according to the standard norms of behavior. The most common are the
following self-perceptual models.

1. Factor Of Production Approach – This is classical approach that

considers an employee as another factor of production, This system of
thought provides background for Douglas McGregor’s Theory X which
states that the average human being is

a. Generally lazy

b. Dislikes work and would avoid it if possible

c. Avoids responsibility

d. Needs to be coerced to perform effectively

While this school of thought still prevails to a certain extent in our local
conditions managers and supervisors must use varied techniques in human
relations and gradually change the behavior toward a more concerned
employee. While autocratic supervision will work effectively under this set-up
many managers have shown a more compassionate and paternalistic
attitude to change the behavioral pattern. Employers are becoming more
people-oriented in developing motivational approaches to increase
production and employee morale.

2. Human Relations Approach – The Hawthome experiment and other

researchers emphasize the concept that “people are human and would
like to be treated as such”. The model for this management method is

Employee participation – Job satisfaction – Increased productivity

This model is most similar to the concept of McGregor’s Theory Y that

people:

a. Like to work and consider it normal as if in play

b. Have the initiative and only need to be motivated

c. Have ability and capability to do work

d. Accept responsibility and enjoy working with a team

Under these concepts, the factor of motivation plays a great role to

maximize the potentials of an employee for productive work behavior. We
need to come up with systems that will make people move toward increasing
morale and performance.

3. Human Resource Approach This approach views the productivity of the

employee as an economic resource of an organization Performance is
viewed and measured by the economic criteria of productivity,
efficiency, effectiveness, cost and profitability, and the employees
themselves their relationships with members of the organization
viewed as having dignity, worth and value.
As a resource of production the employees are treated individually according
to their behavioral pattern. Employees who have the tendency of Theory X
are given the treatment of autocratic philosophy and those with the
tendency of Theory Y are supervised with the use of democratic and
paternalistic philosophy. Under this concept the manager or supervisor must
have a good background of human behavior and human relations to attain
the maximum development of employee morale and efficiency in the work
area. He must know how to analyze the behavioral tendency of the individual
in order to pattern his supervisory practices along the individuals behavior.

How a Supervisor Can Motivate

When employees find their work interesting they are more likely to give it
their full attention and enthusiasm. Work is Interesting when it has variety
and allows employees some control over what they do. The following are
some work-related motivators for employees:

1. Job Rotation – involves moving an employee from one job to another to

give him more variety. This requires an employee to have broad skills
so that he can be assigned to other jobs that fit his skills and
qualifications.
2. Cross Training – This could be related to job rotation. The employee
must be provided with other training programs to acquire new skills.
Learning new skills will serve as motivating factors for an employee to
perform other jobs.
3. Job Enlargement-It is an effort to make a job more interesting by
adding more duties. This approach assumes that variety in a job makes
it more satisfying with the result that an employee is more motivated.
4. Job Enrichment – It means incorporation of motivating factors into a
job. An enriched job gives an employee more responsibilities to make
decisions and more recognition for good performance. Enriched jobs
are more challenging and presumably more rewarding.

In modifying jobs to make them more interesting. Supervisors and managers

must remember that not all employees are motivated. While other
employees may eagerly accept new job duties and responsibilities other
could be less enthusiastic. The supervisor must careful in emphasizing the
advantages of the new arrangement and in carefully listening to employees
reactions

Work can also be made more interesting and meaningful if the employee
could be given the opportunity to make contact with the users of the
product. Sometimes the supervisor should arrange for his line workers to visit
the consumer who may have some trouble with the machines the company
has sold and in the same way help the customer fully understand the
mechanics of the machine operator

Having High Expectation

Effective supervision can lead performance beyond an employee’s

expectations of himself. When you expect him to do a lot then more output is
achieved and when little is expected then little is achieved. A supervisor who
wishes an employee to set high standards for himself must think and speak
with the assumption that the employee is capable of meeting high standards.
The supervisor must involve the employee in setting attainable goals through
planning work activities that set higher performance.

Provide Employee Rewards that are Valued

Rewards are motivating factors for an employee to perform but not all
rewards have the same effect on all employees. The supervisor's challenge is
to determine what rewards will work for a particular time. This means
appreciating the needs people are trying to meet and the variety of ways a
supervisor can provide rewards. Supervisors should therefore be aware of the
different theories of motivation of employees according to their needs and
capitalize on it to achieve greater job performance.

The rewards that supervisors use should be linked to employee performance.

Linking rewards to the achievement with a realistic objective is a way to help
employees believe they can attain desired rewards and therefore view them
as achievable. Management provides rewards when employees cooperatively
do goal setting and identify objectives.
Treating Employees as Individuals

Most theories of motivation as discussed earlier, emphasize different things

that motivate an individual to different degrees. A supervisor who wishes to
succeed at motivating has to remember that employees will respond in
varying ways. As much as possible, the supervisor must respond to individual
differences. If one type of motivation is not applicable then the supervisor
should try other motivating factors that would make the individual respond
favorably. One way to learn about employees needs is to encourage them to
participate in planning and decision-making and from there the supervisor
could benefit from their ideas. The employees will feel better when they feel
that they are part of a team.

Money as Motivator

The organization assumes that the main thing employees want out of
employment is the monetary consideration. Most people get employment to
support their needs and those of their families. The theories of motivation
imply that money motivates people when it meets their needs. If money
motivates employees they must believe that they are able to achieve
financial rewards that the company offers.

Financial incentives – The way the pay plan is structured can influence the
degree to which the employees are motivated to perform well. Some pay
plans offer bonuses, commissions or other kinds of pay, meeting or
exceeding target objectives. For instance, a growing number of companies
tie up their pay increase to performance evaluation and for maintaining
customer patronage for their quality product and services. Other companies
pay additional premiums for additional skills in training that result in better
production and machine efficiency.

Piecework and Production Bonus- Some companies pay for additional

piecework produced that is over and above the production quota. Additional
productions are paid extra and motivate the employees to be more efficient
in their work. Some companies pay additional production bonus outside of
the regular salaries and wages. Increasingly popular for executive and
supervisory compensation packages are bonus plans in which the financial
rewards are tied up to such quantifiable measures as growth in sales, profits,
cash flows, production output and other values to the company.

The following are additional incentive pay system:

1. Piece Rate- Some companies pay additional premiums for additional

pieces of work accomplished more than the required quota for
production. These incentives are offered instead of overtime work
which is not quantifiable in terms of output. Contractors usually give
this type of plan for producing pieces of goods.

2. Production Bonus System- When sales are at their peak and workers
are required to produce more goods to take advantage of the growth in
sales production bonuses are given by the management in excess of
the regular production quota. These may be computed in terms of
profit indexes based on work done by the employee or a group of
employees in the production area.

3. Commissions – These are incentives usually given to sales people who

sold goods or services more than the required quota. Some companies
pay regular salaries and add sales commissions as additional
incentives. These motivate employees to produce more and cover
more sales territories.

4. Payment for Suggestion System – To encourage employees to think of

product improvement or methods improvement and make better
products or reduce working time schedule employees are rewarded for
good suggestions. An employee becomes aware of his role and the
suggestion system improves morale especially when employees are
recognized accordingly.

5. Group Incentive Plan – a financial incentive plan that rewards a team of

workers for meeting or exceeding the target objective. An organization
 measures the performance of a work unit against its objective and then
pays the bonus when they produce more than what is required. This
works well under the concept of management by objectives.

6. Profit Sharing Plan – This is a group incentive plan under which

company sets aside a share of its profit and divides it among the
employees. The assumption is that the better the work is done the
more the company will earn and therefore the bigger is the bonus.
Before this practice was made only for executives but most companies
now recognize the employee in the sharing of profit as they are the
backbone of the organization.

7. Gain Sharing- This is a group incentive plan in which the organization

encourages employees to participate in making suggestions, decisions
and then rewards the group with a share of improved earnings Gain
sharing seeks to motivate not only by giving financial incentives but
also by making the employees feel they have an important role as part
of the team.