How to motivate your employees by using financial and non-financial performance appraisal measures?

Recently researchers have paid attention to the performance appraisal system and its consequences. Organizations motivate their employees by using financial and non-financial performance appraisal measures. In the past, just financial measures were being used for this purpose. These measures have a lot of weaknesses. For improving their weaknesses, a vast majority of organizations are using non-financial measures.

One of the responsibilities of managers is motivating employees. Using both financial and non-financial measures has a positive effect on employees’ motivation. Therefore, the proper combination of these two should be used.

performance appraisal measures

Financial performance measures

Performance appraisal is important for employees because it is directly related to compensation and job promotion. Therefore, it is important to use appropriate measures. Financial measures are the oldest, most popular, and most widely used measures.

These measures facilitate the comparison of staff performance across different departments of an organization. Although these types of measures contain valuable information, they are not able to evaluate staff performance in different aspects. Consequently, non-financial measures such as customer satisfaction, innovation, adapting, and colleagues supporting should also be considered.

Non-Financial performance measures

Supporters of the using non-financial measures believe that using these measures has many benefits for individuals and organization. In addition, it will lead to improving organizational culture, job performance, and increasing employees’ loyalty.

Intrinsic and Extrinsic Motivation

Intrinsic motivation

When we undertake an activity for our sake without any sort of external reward, we have intrinsic motivation. It results from our feelings, thoughts, values, and goals.

Extrinsic motivation

When employees behave in a particular way for external reasons, such as money, they have extrinsic motivation. They can be something like salary, promotions, grades, praise, and punishment.

What can organizations do for employees’ intrinsic and extrinsic motivation?

Using different performance appraisal measures defines the organization’s expectations of employees and provides a tool for performance feedback. Organizations reward employees based on performance appraisal measures. It can increase employees’ sense of competence and self-determination. And when employees feel they are being assessed by a set of specific financial and non-financial performance appraisal measures, they will have higher intrinsic motivation.

Financial or non-financial measures?

Researchers believe that if you want to motivate employees to pursue organizational goals, you cannot ignore non-financial performance measures. Senior executives of organizations have more information about financial measures than non-financial ones. Unlike senior managers, lower-level employees are less involved with financial measures. At this level, the nature of the tasks and responsibilities of the staff as well as their performance are largely non-financial so that using just a set of financial measures may be inappropriate.

financial measures

How to determine different performance appraisal measures?

Managers can focus on participatory decision making and involve employees in designing these measures. When employees know based on what measures are being evaluated and rewarded, their extrinsic motivation will increase as they have participated in designing of these performance measures. Employees who participate in the organization’s policies will be better engaged in achieving organizational goals.

financial and non-financial measures

Conclusion

Since human resources are important, HR experts in organizations strive to create an environment that helps maintain employees and improves their performance. Therefore, motivating employees, by considering appropriate performance appraisal measures, is essential.

Paying attention to financial measures by organizations can stimulate intrinsic and extrinsic motivation and improve employees’ job performance in the organization since these measures are more familiar to employees. But, employees get motivated not only by financial performance measures but also by non-financial measures; therefore, it is suggested that organizations use both of them.

teemTIME features for performance appraisal

Determining deadline

teemtime enables managers to determine a deadline for each task, which can help them to identify the employees who could not accomplish their tasks through the date which they were supposed to.

Knowing this can help you in two way:

First of all, maybe the related manager has determined an unrealistic deadline. teemTIME lets employees schedule and record timesheet. It also lets managers evaluate employees’ schedules and timesheets so that by comparison these documents they can define the more realistic deadline for future projects.

Second, maybe this happened because of the employee’s weaknesses. In this case, if he gets on missing deadlines, you should go through holding some training seasons to help him catch up with others.

Recording real-time

This feature enables managers to identify the unprofitable projects and finding solutions such as, changing the project team, or modifying the contract by persuading customer with data taken from teemTIME.

Attendance time

This feature helps managers to compare the hours that employees are in the organization with their useful hours so that they can recognize the employees who waste their time and if it drags on, they can punish these employees.

Check staff working hours

We can easily see different employees’ working hours on teemTIME, and as we have records of other employees on a similar project, on the one hand, we will find out the people who have slacked off or pretended to work. On the other hand, we will recognize those who deserve it and encourage them with clear data that will more or less contribute to organizational justice.

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