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Hourly performance appraisal

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I. Contents of getting hourly performance appraisal

Small business owners in the retail industry have to decide how they will pay their employees.
This decision is not always an easy one to make. Various options exist as far as how the business
owner can proceed with establishing a pay plan. Differences between the compensation strategy
of hourly and salaried employees can help the employer decide which is the most appropriate.
Putting together a retail industry pay plan requires that the employer first have strong grasp of
the differences between salaried and employees paid hourly. Employees paid on an hourly basis
receive a wage for each hour of work they perform. Because of work laws, employees who work
more than the maximum number of allowable hours per week must be paid more per hour after
reaching the limit. Salaried employees can work as many hours as the employer requires, but do
so for a set amount of money per week, month or year. In the retail industry, entry-level and
other non-management workers are often paid on an hourly basis, whereas those in management
will sometimes be paid a salary.
Hourly Advantages
Employers developing a compensation strategy with hourly pay in mind may be banking on the
fact that they can get the quality and quantity of work that they need done within a prescribed
time frame. Employers who adopt hourly pay plans may avoid scheduling employees beyond 40
hours per week due to legal work limits. Doing so may affect the quality of employee the
employer can attract, especially if no potential for overtime pay ever exists. The employer will
have to select from an employee pool that consists of workers willing to be paid a set hourly rate.
In the retail industry, paying workers on an hourly basis is fairly commonplace, except perhaps

when it comes to salespeople who work on a commission basis. Many retail workers tend to be
younger and less experienced workers who are used to being paid on an hourly basis. Employers
can use a hiring strategy whereby they hire part-time workers more than full-time workers. This
creates scheduling flexibility and allows retail managers to limit the number of hours worked.
Salary Advantages
The advantage for employers who choose a salary model as the basis for their pay plan is that
they too will always know what they will be paying their employees in a given period of time.
Another advantage to this type of pay plan is that the employer can generally require the
employee to work more hours than they would under an hourly plan without necessarily having
to pay them extra. This provides an employer the opportunity to get the most bang for his buck
out of each employee. In the retail industry, managers are typically paid a salary because they
work longer hours and are often on-call to serve the needs of the business. This is especially true
in larger nationwide retail establishments that put a high demand on the time and availability of
their managers.
Disadvantages exist to both types of pay plans as well. Getting the most bang for your buck out
of your employees on a salary plan may result in less production from employees who have to
work longer hours than their counterparts. Employers may have to use salary plus incentives as a
way to motivate employees who work on a salary basis. They may also need to offer a salary that
is higher than what they would pay an hourly employee for the same job. Additionally, the
employer may also have to limit the amount of hours they work employees so that the employees
don't revolt and quit. Hourly employees may also need to be compensated at a higher level for
retention purposes. The promise of occasional overtime may help as well. Compared to the
amount they could make on a salary, retail employees paid on an hourly basis may seek work
elsewhere if not compensated above minimum levels for their field of work, especially in areas
where there is tight competition for hourly retail employees.

III. Performance appraisal methods

1. Essay Method

In this method the rater writes down the employee

description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales

statements of effective and ineffective behaviors
determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages helps overcome rating
errors. Disadvantages Suffers from distortions
inherent in most rating techniques.

3. Rating Scale
Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages Raters biases

4. Checklist method

Under this method, checklist of statements of traits of

employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages economy, ease of administration, limited
training required, standardization. Disadvantages Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
Limitations of Ranking Method
The whole man is compared with another
whole man in this method. In practice, it is very difficult
to compare individuals possessing various individual
This method speaks only of the position where an

employee stands in his group. It does not test anything

about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method

The approach is focused on certain critical behaviors of
employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

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