Performance and Compensation Management Notes
Subject Overview
The sixth HRM group elective, covering the performance management system and its processes, alternative performance assessment models, compensation and benefits management, and executive compensation and wage administration in India. A 4-credit elective theory paper.
Subject at a glance
4
Units
30
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Performance management system
- counseling
- planning
- appraisal
- potential appraisal
- problems and errors
- monitoring and implementation
- role of HR professionals
- ethics in performance management
- 1. Plan: Set goals and KRAs
- 2. Monitor: Regular check-ins
- 3. Develop: Coaching and training
- 4. Review: Appraisal
- 5. Reward: Pay and recognition
Study guide
This unit covers performance management systems, counselling, planning, appraisal, potential appraisal, errors, monitoring, HR's role and ethics. List common rater errors.
- Performance management and strategic planning
- Balanced Scorecard
- EFQM model
- Economic Value Added
- building a high-performance culture
- performance management and rewards
Balanced scorecard
Financial, customer, process, learning
EFQM model
Enablers and results
EVA
NOPAT − cost of capital
OKRs
Objectives and key results
Study guide
You study performance management with strategy, the Balanced Scorecard, EFQM, EVA, high-performance culture and rewards. Build a scorecard for a team.
- Job evaluation approach to compensation
- bonuses
- pay for performance
- competency-based pay
- equity-based rewards
- team rewards
- reward strategy and psychological contract
- law relating to compensation
- benefits administration and employee welfare
Merit pay
Raise based on appraisal
Bonuses
One-time rewards
Competency-based pay
Pay for skills
Team rewards
Group targets
Equity
ESOPs, stock options
Study guide
You study job evaluation, bonuses, pay for performance, competency-based pay, equity rewards, team rewards, reward strategy, the psychological contract and compensation law. Compare pay-for-performance schemes.
- Components and pay structure in India
- linking salary with potential and performance
- wage incentive schemes
- employee benefits and services
- fringe benefits
- recent trends in wages and salaries in Indian industries
- Variable pay
Bonus, incentives
- Benefits
PF, gratuity, insurance
- Allowances
HRA, special allowance
- Basic pay
Often 40–50% of CTC
Study guide
You study executive pay and pay structures in India, linking pay to potential and performance, incentives, benefits and recent wage trends. Understand how fringe benefits are structured.
Why Performance and Compensation Management Matters
Performance and pay design is a core HR specialisation affecting motivation and retention in every organisation.
How to Prepare for Performance and Compensation Management
- Study real appraisal and compensation systems.
- Learn compensation law basics.
- Practise designing a simple reward system.
Performance and Compensation Management: Frequently Asked Questions
What is competency-based pay?
It links pay to the skills and competencies an employee has and shows, not only to their job title.