Assignment on Strategic Human Resource Management

Added on -2020-02-12

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STRATEGICHUMANRESOURCEMANAGEMENT
Table of ContentsASSIGNMENT 1.............................................................................................................................1Critically evaluate the extent to which individual performance related pay can stimulatehigher level of performance from employees.............................................................................1Circumstances in which PRP works best and in which it does not work well............................4Different issues in PRP...............................................................................................................6CONCLUSION ...............................................................................................................................8REFERENCES..............................................................................................................................10
ASSIGNMENT 1Critically evaluate the extent to which individual performance related pay can stimulate higherlevel of performance from employeesTo link performance with pay scales is something which any employer desires to attain.Job positions with performance related pay (PRP) draw employees who possess the highcapability and inspire them to give their best efforts and contribution (Suff and Reilly, 2007). Inthe past few years, there is an increasing trend specifically in private firms towards linkingrewards with the performance of employees for the accomplishment of objectives. It has beenincreased because rewards system motivates employees which lead to improving theperformance of employees. It affects things because enhancement in employee’s performanceleads to improving the productivity in business (Jain, 2014). Therefore, pay scales are linkedwith performance. In several developed nations, there has been a rising interest in PRP, which ispromoted by the government (Bryson and et. al., 2013). For critically evaluating the extent towhich individual performance-related pay can stimulate the high level of performance ofemployees, it has been assessed that performance related pay increases morale and improvesperformance which in turn leads to increased operational outcomes. This is good because byincreasing morale and performance of employees firm can easily enhance sale andprofitability(Park, Min and Chen, 2016). However, it should be taken into account that thisscheme can be taken in use as a method for employing goal setting policy in an organisation. Itcan be said that bringing performance linked pay-scales is valid for the execution of goal settingin public organizations (Washko, 2016). This can be said as an essential benefit of applyingperformance linked pay (Hayek Thomas, and Montalvo, 2016). Moreover, application of PRPgives an opportunity to redefine the set norms of organizational performance. This effectsorganization because changes need to be made in firm’s norms which are not easy as it consumestime and employees need some duration for adopting changes.However, Bryson and et. al., (2013) argued that employees may also get discouraged ifthe targets, which are set, are tough to attain. If they are unable to attain tough target then is candemotivate them to work hard for getting pay for performance.This is argued because if target is tough then employee unable to work hard foraccomplishing the goals Performance related pay is placed by some companies who want toreward employees on an individual or team basis. (Sriyan de Silva, 2016.). The process of1
performance related pay is dependent on the quality of judgment made by management.Nevertheless, another Hopp and Zenk (2012) argue that it is an effective method for handlingbad performance and productivity. Apart from that, it is helpful to retain employees in theorganisation (Hopp and Zenk, 2012). Still, the counter statement becomes a weak point from theperspective of employees. One may argue that performance related pay could reduce theengagement of trade unions as the emphasis shifts from collectivism to individualism. It affectsunion and it is important for them to redefine their own roles as collective representative. Thiseffect trade union because in collectivism people are integrated behind the common bond. Hereif the employee gets pay according to their performance then they may not like to work for thecommon goal. This effect individualism because trade union works hard for all employees Onthe other side, the introduction of performance-linked pay is favored as a necessity to the modernbusiness scenario. It is defended with the fact that management takes use of this scheme to set itsgoals and objectives (Frey, Homberg and Osterloh, 2013). It makes improvement in productivityand performance of staff. One may argue that introducing performance related compensation inany enterprise is implemented for encouraging fairness and equivalence along with the rewardsthis was argued by Ammi and Fortier, (2017). However, criticism of performance-linked pay-scales suggests that it makes the reduction in pay equity and can make the firm responsible forexpensive equivalent pay challenges if it does not operate in a fair manner (Daley, 2012). Also,the performance appraisal procedure can be influenced due to the emphasis on financial rewardsinstead of developmental requirements of staff. This is bad for the company because it needs topay financial reward which leads to impact the profit of the firm.On the flip side of this evaluation, it is considered that the lower level employees in anorganisation may like this kind of scheme and take it as an opportunity for their growth in rolesand development of their careers (Frey, Homberg and Osterloh, 2013). It also gives incentives ina direct manner to the staff for attaining stated goals and objectives, their contribution and effortsare given with a recognition with a concrete reward. This is bad for the organisation because acompany cannot pay the financial benefit to each and every employee which directly impact theprofit of a company. Yet, it can be argued that performance related pay is an obstacle in fosteringteam spirit and collaboration in an organisation. It is bad because due to performance related payemployees not work in a team they only focus on their own performance instead of supportingothers in a team. It is narrowly focused as rewards are made with a short-term quantitative2

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