To properly use incentives, management must capture the performance of employees. This is done through a performance-appraisal process, in which supervisors systematically review and evaluate the performance of subordinates on a formally documented basis at regular time intervals. Although most organizations have formal mechanisms to measure organizational performance, such as budgets, scorecards, or financial statements, systems to track individual employee performance are not as ubiquitous and, therefore, may need to be implemented before an organization can introduce personal performance-based rewards. After the performance information is ascertained, supervisors hold one-on-one appraisal interviews in which ...
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