Question

Write 3-5 paragraphs explaining your belief about compensation being linked with performance appraisals. You may discuss the strengths/weaknesses, pros/cons of the concept but ultimately come to a conclusion of where you stand.

Answer 1

In my belief compensation is one of the most important external stimuli which can act as an incentive for doing a job well. Other forms of stimuli are recognition and intellectual fulfillment. Thus, an alignment of the compensation with the job related performance is usually a good method to incentivise the workforce to put in greater efforts to achieve organisation goals and be suitably rewarded.

One of the disadvantage of this method is that there could be an overreliance on external stimuli and self motivation of the workforce may get eroded over time.

On an overall basis however, monetary rewards and compensation has been seen to be good motivators to extract good performance from the workforce and thus there should be an alignment there.