The 5 Categories of Employee Work Behaviors and Compensation and Development Actions

In this article, we will find out about how to relate work performance to promotion, compensation, development actions. Following that we will look at examples of how those decisions for actions are translated into HR compensation policies. We will also talk about gaps in the traditional performance appraisal tool.

The following is a 5 points rating scale that is commonly used to measure work performance in performance appraisals. The description on this scale only describe the work performance and in some cases the competencies (abilities) under each of the ratings but do not describe the work behaviors that will translate into or prescribe the promotion, compensation and development actions that may be taken. This is a gap in HR literature on performance appraisals.






Exceeds Standard

(Consistently surpasses job standards to improve personal performance and advance corporate mission)

Area of Strength

(Meets all job requirements and performs above standard for a specific competency)

Meets Standard

(Performs all job requirements satisfactorily)

Needs Improvement

(Standards for all competencies are met but performance is weak or inconsistent; improvement is needed in a

specific competency)

Below Standards

(Fails to perform the minimum requirements of the job and immediate improvement

is necessary)

Not Applicable

(Performance is not observed or the competency is not a responsibility of the position)


People Performance and Potential Model

Next, we will examine the following model. The origin of the following model is unknown. It appeared as group profiling matrix tool for teams and organizations in an article written by Alan Chapman titled “People Performance Potential Model” ( We can use this model to help us think about some of the promotion, compensation, development actions that we will like to take. I have inserted the descriptors (Superstars, stars, backbone and so on) into the 5 points ratings scale below.


Work Behaviors

The first step for making decisions on promotion, compensation and development actions is to identify typical work behaviors at work and make a decision of how much we value those behaviors and how we will like to reward and hence encourage more of those work behaviors. The above matrix gives some hints but these hints are inadequate for our purposes. Here is the 5 points ratings scale again, but this time, we have describes the some typical work behaviors and what ratings we want to give to those behaviors.






Exceeds Standard

(Super Stars)

Area of Strength


Meets Standard


Needs Improvement

(Problem Children and Icebergs)

Below Standards / Unacceptable


Staff that is not only reliable and good in their routine work and continuous seeks improvements but (a) able to solve complex problems (b) understand the business and is business savvy (c) keen to share knowledge and experience with other and a very supportive team member (d) (c) willing to work on after training project to improve functions Staff that not only reliable and good in their routine work but (a) put in ideas and efforts to resolve existing problems (b) put in ideas and efforts to increase productivity, quality or quantity either by simplification, automation or elimination (c) willing to work on post training project to improve functions (d) willing to serve as internal trainers on expert areas Staff who is good at his day to day routine tasks and is reliable not only performing their work but doing a good job. However, staff (a) is not willing to work on post training project to improve functions (d) does not have expertise to serve as internal trainers on expert areas. As a business strategy, will not send for external training when there is an economic recession. This group can be split into 5 sub-groups (a) Fresh graduates or job applicants who do not fulfill all the job pre-requisites (b) Staff with attendance and tardiness issues (c) Staff with minor disciplinary issues

(d) Unreliable staff (e) “Toxic” staff. It is likely that staff falling under c, d and f be placed under performance improvement plan, failing which they will be downgrade to the rating of 1 (below standards)

This group covers the staff that is most likely to have their employment services terminated: (a) staff with gross misconduct (b) staff with gross attendance and tardiness issues (c) staff that are unable to work as a team with others.


If your company has a code of conduct for all employees and a detailed and clear progressive disciplinary policy and procedure, it is easy to identify staff that may slide from a 2 or 3 rating into a 1 rating. The difficult area is employees with a performance rating of 2 where there are 2 broad groups – Problem Child (a) and Icebergs (b to e). It is the Icebergs that managers often find difficult to deal with and have problems trying to get rid of. This is another gap in HR literature on performance appraisals.

Now, let us look at some examples of how will proceed to translate these categories of work behaviors into compensations actions.

Performance Yardsticks

The following performance factors are used in the performance review typically covers the following areas:

  1. Quality of Work
  2. Quantity of Work
  3. Job Knowledge
  4. Attitude – Absenteeism, No pay leave, Tardiness, Disciplinary actions given
  5. Working Relationships – Ability to work as a team
  6. Supervisory Skills – Able to engage and lead the teams to strive for the goals
  7. Optional Factor (space on back of form)

Merit Grid

The following are examples of the straight merit and the merit grid (Source: Managing Employee Performance and Reward, written by Shields and published by Cambridge University Press). They represent 2 different methods of rewarding staff. However the common theme of both methods is that staff with higher performance ratings will receive higher salary adjustments to their base pay.



Below are examples of some policies on promotion and compensation actions related to the rating results that the Company would like to take as part of its performance management philosophy. You can use these examples to help you think about what sorts of actions you want to take in your Company as part of your compensation and development philosophy.

Salary Increases

Within-grade increases (WGIs) or step increases are periodic increases in an employee’s rate of basic pay from one step of the grade of his or her position to the next higher step of that grade.

When an employee is placed under suspension awaiting disciplinary proceedings against him, no salary increases is given to the staff. Salary adjustments will resume and back-dated if the staff is not charged.

Guidelines for Merit Increases

Staff salary increases are based on performance. A Performance and Staff Development Plan must be completed for all staff to support the merit increase awarded. The percentage increase should correlate to the performance rating. Where the performance is unacceptable, no increase will be awarded. Staff that is put on a performance improvement plan is not eligible for a delayed merit increase.

The merit increase shall be performance-based and should distinguish top performers. Organizations are encouraged to incorporate an internal review process and a merit distribution methodology that will support the reward and recognition of top performers within the parameters of the system wide budgeted control figure of 3.0 percent.

  • Merit increases are reserved for performance that is satisfactory or better.
  • Employees rated as Unsatisfactory or Needs Improvement shall not receive a merit increase.


The pay and allowances of an employee who is dismissed, removed or compulsorily retired will cease from the date of such removal or dismissal.

Guidelines for Promotions

To be promoted, a employee has to show potential to handle a bigger job and is also a consistently good performer (performance ratings of 5).

A employee who does not show the potential to take on greater responsibilities will not be promoted, even if he has many years of service.

Employees in acting appointments are those that are doing higher-level jobs while still in a lower job grade. This is to stretch and test them. They will be promoted to the grade commensurate with the job size only when they are able to handle the higher job competently.

Promotion and the Democratic Organization Structure

Similar to promotional selection for hierarchical organization structure, this is also the point to decide whether the staff should stay on as a specialist or to take on the role to become a facilitator. As there is no longer a hierarchical organization structure, it is not termed as a “promotion”. Instead of a salary increase, the person will be compensated with an allowance for the role.

Guidelines for Performance Bonus

This guideline applies to a Company that practices a salary scheme with a performance-bonus component. Those who do well will be paid performance bonuses, with the better ones getting a higher quantum. Those who just meet the job requirements or under-perform will not get any performance bonus (Performance ratings 4 and 5).

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