Performance management guidelines and employee compensation review at JVA Corp

Compensation and Performance management: Two Sides of the Same HR Coin

While it is unquestionably part of a human resources manager or director's job to ensure that the company achieves some level of cost savings -- and definitely cost benefit -- in its human resources expenditures, this does not mean that keeping compensation packages at the minimum possible level is the ideal target to shoot for. The well-being and satisfaction of employees is important not only to ensure ongoing loyalty and productivity, but also for intrinsic and ethical reasons. When making cost-saving decisions in regards to human resources compensation, then, certain steps and measures must be taken.

First, effective appraisals must be conducted to determine where cost savings is appropriate, and where it is unwarranted. This process must begin with a purposeful appraisal design that is in keeping both with legal and ethical requirements and that is explicitly geared towards the issue at hand, namely (in this instance) the cost effectiveness of the company's human resources (McNamara 2011). Performance management systems must also be reviewed to ensure that employee requirements and directives have been clear and in keeping with management's expectations; it is possible that inefficiencies in these systems could also lead to cost savings without direct adjustment of compensation packages (DeCenzo & Robbins 2009). Often, there is not adequate communication taking place in a regular top-down manner, and thus adjustments and improvements sought by management are not communicated to employees; enhancing communications is often necessary in order to make performance management systems more effective (DeCenzo & Robbins 2009).

Only after employees and the performance management systems in place in the company have been evaluated can a meaningful review of compensation packages themselves be conducted. It must be remembered during this review that compensation -- even the many different types of compensation that exist, including salary, merit bonuses, promotion schedules, vacation days, and job perks -- consists of only some of the rewards that exist in an employment system, and the other rewards that exist should also be taken into account as intangible forms of compensation (DeCenzo & Robbins 2009). The goals of the compensation administration must also be kept in the foreground while reviewing compensation packages; there are a multitude of perspectives that can be brought to bear during a critical review of employee compensation, and effective results depend on a well-focused review (McNamara 2011). In this case, examining compensation packages for cost inefficiencies and/or unwarranted spikes in individual compensation when compared to averages would be most useful. Armed with this information and focus, it will be possible to actually adjust compensation packages n a way that promotes individual merit, assures collective fairness and satisfaction, and at the same time presents a cost savings to the company.