Performance appraisal and analysis of the performance based pay systems

recently, performance management is one of the most important human resources functions for organization to enhance their performance. Along with the human resources becoming more important, performance appraisal becoming important in the enterprises. The Performance Management System consists of determining, encouraging, measuring, valuating, developing and rewarding the performance of a personnel working in a workplace. The Performance Appraisal is a system, which was developed to remove the traditional comprehension regarding the performance valuation in the enterprises, according to which, the performance appraisal was comprehended only as the selection of the techniques used for the appraisal of the performance reflected only by only one personnel.The Performance Based Pay System is a system, where the financial and nonfinancial instruments are used together and in combination, and its main aim is to motivate of the personnel and to build up a link and relation between the performance and pay, in order to reward the personnel because of his/her successes reflected in the past period and accordingly, to encourage him/her to reflect better performances in the future periods.Nowadays, the severity of the competitions is increasing upwards day by day and therefore, the enterprises have started to pay more attention to the human resources, in order to be able to continue their activities in the national and international markets and to develop their structures further. Along with the human resources becoming more important, the Performance Based Pay system, which builds up a link and relation between the performances reflected and wage earned, has started to become more important, instead of the traditional pay systems. Herewith, it is aimed to motivate the personal through pay him/her according to the performance reflected by him/her and to obtain more efficiency from him/her.This study is planned under three main sections. In the first part of the study, the concepts of performance, performance valuation and performance management system are tried to explain.In the second part of the study, concepts regarding to the wage and building up the pay structure and pay systems expecially related to the performance pay system are explained.Within the third and last part of the study, an example of application from banking sector are explained.