Performance appraisal systems and their impact on employee compensation.
Daniel Schroder
MBA 533 Human Resources
Saint Leo University
Professor Michael J. McCabe J. D.

In any organization, employee compensation and benefits are a sizable percentage of the cost associated with running a business. Although most employees would consider themselves under paid, most companies would consider their employees as being fairly or even over compensated. The determination of employee compensation and benefits is often based on factors such a seniority, dependability, and quality and quantity of the work performed. The decision of which employees will receive higher compensation, and how much the increase will be is often determined by many factors. The overall profitability of the business, the individual productivity of the employee or department, a across the board cost of living increase, and often the factors are nothing more than the suggestions of a manager or the owner of the business. In many small businesses these simple systems for compensation determination may be fine, and individual needs of the employee may be just as big a determining factor as any other reason related to performance. In larger businesses it is important to design, implement, and maintain a performance appraisal system, as well as a system that compensates its employees based on the outcomes of the appraisal system. A well designed employee appraisal system should include an evaluation by the employee, the manager, and coworkers and the system should be an ongoing process, not just a yearly event. (Whitacre, 2011) one type of evaluation that can be utilized is employee self evaluation. This can be done in many ways and use different methods. The self evaluation can be done with a standard or custom questionnaire, or a graphic rating scale, a forced choice format, or even and essay