Effectiveness of Individual Performance Related Pay Schemes

This assignment discusses the effectiveness of Individual Performance Related Pay (IPRP) schemes in managing hotel performance. It explores the advantages and disadvantages of IPRP, including its ability to motivate employees and increase efficiency. The study concludes that different reward approaches, such as total reward approach, flexible benefits approach, and reward approach based on performance, can complement IPRP schemes in achieving better employee motivation and performance.

TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
TASK....................................................................................................................................................3
1. Disadvantage and advantage of individual performance related pay...........................................3
2. How suitable is IPRP to business environment of hotel?.............................................................5
3. Barriers to effective design and implementation of IPRP scheme...............................................6
4. Different reward approaches which used to replace individual performance related pay scheme
and why these work more effectively...............................................................................................6
CONCLUSION...............................................................................................................................7
REFERENCES.....................................................................................................................................7

Executive Summary
In the recent time, business units are placing high level of emphasis on undertaking
performance related pay system. This report is based on Cavendish Hall Hotel which offers
accommodation facility to the customers. IPRP implies for the aspect of reward management which
focuses on offering pay to the individuals on the basis of their performance. Such hotel unit
provides personnel with several rewards in the form of merit pay, standard hour plans etc with the
aim to motivate them. It can be summarize from the report that Cavendish Hall Hotel can
implement the IPRP system in its operations so as to derive benefits of increased benefits with ease.
It can be depicted from the evaluation that by taking feedback from personnel hotel unit can avoid
barriers identified.

INTRODUCTION
IPRP define the aspect of reward management in which essential assessment is create for the
purpose of individual performance related pay. Hotel business decision making delves with reward
systems. This unit need to define the advantage and disadvantage of IPRP, and the impact of their
schemes in hotel sector (Collings, et al., 2018). It describes the impact on implementation or
efficiency in trust. Barriers to the effective design as well as implementation of individual
performance related pay scheme which need to be taken consideration and their alternative reward
approaches which may be used for replacing IPRP.
TASK
1. Disadvantage and advantage of individual performance related pay
Individual performance refers to any task or work which is to be solely performed by an individual
and the reward paid to him would be in accordance to the level of work being done by him. So, it
basically refers to the salary or wages being paid to any individual on the basis of his/her
performance in the organisation.
Now, in Cavendish Hall Hotel, justice is being done with the performance of every individual
working for this hotel. Salary being offered to them by the HR Manager is on the basis of their
effectiveness in work. Up to some extent, it’s true that, an individual's performance can improvise
the organisational performance.
Performance related to pay, sometimes leads to the alternative of craved outcomes when it is
applicable to any type of work which involves psychological feature instead of physical ability.
Research done by the Federal Reserve Bank which is confiscated at MIT with input from Professors
of Chicago and Mellon University. However, for once, basic skills are required for accomplishment
of any particular work otherwise it will lead to poorer performance of organisation.
Such type of experiments have been repeated a no. of times by various economists and other expert
people with specialization in some other streams giving same results (Mueller-Hanson & Pulakos,
2018). Experiments were also conducted in Madurai where financial amounts were involved and it
portrayed more epochal amounts to the individuals and outcome was recurrent.
Following are some measures that can be taken to improve it.

 Piecework Rates: - As a bonus to work effectively and efficiently Cavendish Hall Hotel is
paying its employees on this basis. In this case the payment is frequently made in addition to
the basic pay of an employee. The amount being paid is fixed at a level that works as a
reward for employees if their work performance is above the average.
 Standard Hour Plans: - The best thing in Cavendish Hall Hotel is it takes work from its
employees only up to the standard working time period. If time limit to do any particular
work is Three Hours and an individual has done that work in 1 1/2 hours then, he would be
rewarded for the pay of three hours.
 Merit Pay :- It basically refers to task of determining any employee's salary/bonus only on
basis of how efficiently and efficaciously any employee is working. Cavendish Hall Hotel
treats each of his employees as an asset and on basis of that it evaluates whether to increase
the salary of any of its employee if the employee is truly fair on all parts or whether to retain
any new employee in the hotel.
 Performance Bonus: - Just like Merit Pay, it also focus on the rewards of individual's
performance. But, it is not included in the basic pay. It is completely different and employee
is rewarded with this at the end of financial year. Cavendish Hall Hotel also rewards its
employees with the yearly bonus which could be more or less and all depends upon the
performance of employee.
 Sales Commission: - It is one in which, Cavendish Hall Hotel gives commission to its sales
personnel on doing maximum sales (Collings, et al., 2018). Reason being the commission on
sales is given to only that employee who would be doing maximum sales.

2. How suitable is IPRP to business environment of hotel?
IPRP (Individual Performance Related Pay) is the pay which is given to the employees
based on their performance. It can be derived from the fact that high standard performance is
desired by the employees in order to attain prestige and higher monetary benefits. It acts as an
driving force to individuals by which productive and highly efficient work is performed by them in
the best way possible (Park & Sturman, 2016). The IPRP is generally assessed with that of how
management of Cavendish Hall Hotel makes assessment of individuals in effective manner. On the
other hand, it also involves measuring the performance based on qualitative and quantitative
measures in effective manner.
Cavendish Hall Hotel can implement the IPRP system in its operations so as to derive
benefits of increased benefits with ease. The payments are made in the form of increment in pay and
usually annual payments are made. This is best suitable one for business environment of Cavendish
Hall Hotel as it will strengthen relationship among providing rewards and performance in effective
manner. The company's strategy will be driven at individual employee level leading to attainment of
goals. The top notch talents which are key drivers for better performance of Cavendish Hall Hotel
should be provided with rewards for enhancing their level of satisfaction. This will provide insight
to them for continuing with superior performance in the future course of action.
Business environment suitability can be emphasised on the hospitality industry which is
highly competitive one and requires firm to implement well-defined strategies. It will enhance
Cavendish Hall Hotel in attainment of desired financial performance ahead of its competitors. The
IPRP has major suitability to the business environment of firm as employees should be rewarded
with monetary benefits which will improve their performance up to a high extent (Han, et al., 2016).
Furthermore, they will be motivated for continued and sustainable performance. Thus, it will lead to
achieve firm's group goals within stipulated time and increased benefits can also be garnered by it.
Moreover, if they are not rewarded as per their superior performance, it will have negative impact
on staff structure of firm as employee turnover may increase leading to decreased productive
workforce.
IPRP should be adopted by company as it will be able to retain top performers which will
increase over their potential leading to provide ultimate benefits to it. Moreover, it is utmost suitable
for business environment of Cavendish Hall Hotel as it will categorise non-performers and
accompany them with training and counselling and removing the errors on their performance and
how they can increase their overall efficiency and performance (Patiar & Wang, 2016). This will
provide them with inner confidence and will perform their duties quite effectually. Performance
reviews can also be applied in firm by which low and high performers can be categorised and

necessary actions can be taken for increasing standard of performance. In all, it can be assessed that
Cavendish Hall Hotel has much suitability to implement IPRP so that overall performance could be
enhanced of employees.
3. Barriers to effective design and implementation of IPRP scheme
Individual performance related pay delivers insufficient reward, during the times of short
pay or inflation, award is measured to be very small for provide incentive. Therefore, implication of
company cannot pay main force to staffs for motivating. IPRP damage creativity and motivation of
intrinsic. Individual performance related pay implemented by Cavendish hall hotel. There are some
barriers to effective design and implementation of (IPRP) such as lack of executive support,
manager training, and perceived budget restrictions. Leaders have to be paid for performance
structure. Lack of manager training, it should be train in every sector for managing business. He is
the person who discussed about the strategy and communicates to employees. For managing the
whole process they should be trained for making any tough conversation about pay. Rewarding does
not pay money to any other company for their performance. If any organisation does not pay
satisfied money to employee it increase employees turn over. Strengthening relationship between
reward and performance implemented IPRP schemes. Lack of staff support is the barrier to effective
design (Shields and et.al., 2015). There are some alternative rewards which complementing IPRP
such as flexible benefits approach, performance based rewards and total reward approach. Flexible
reward system is having ability to fit in any strategy of business in esteem of organisation.
Company management need to give reward to employee on the base of their top performance. All
these services motivate workers and also implement them for the development of staff members in
their work life.
4. Different reward approaches which used to replace individual performance related pay scheme
and why these work more effectively
Total reward approach: it is non financial method to motivate employees, holistic approach for
satisfying and measured complete proposition value offers to employers. Thus, it helps to develop
staffs, make flexibility in benefits and working hours, career scopes as well as elusive benefits.
Reward approach based on performance: hotel management avoid individual rewarding depending
on staff exceptions, they give reward on base of their high performance in business world at
workplace. It increase efficiency of workers to achieve reward through their performance, it also
motivate to give their effective work performance which increase their reward opportunities more
than any other people at work areas (Gershman & Kuznetsova, 2014). This types of approach
system attract people to build their performance strongly for staying in company. This process also

encourage those persons who are medium size performer.
Flexible benefits approach: flexible means to fit in any system according to demand of conditions.
Employees get worked within flexibility in their work performances at any environment of
organisation or business sector. Company can understand that this is not sufficient in copying
reward scheme of another industry (Parmenter, 2015). Every organisation consider individual in
respect for how work occur. All these reward system replace the scheme of IPRP at hotel because
they are effective than the other approaches. By using this systems employee get motivated and also
get the opportunities for the other staff members who does not have capability of performing
effectively in hotel sectors. Every employee need reward for their work in any business sector in the
world, this will increase their efficiency of work.
CONCLUSION
This study has discussed about managing performance and also the advantage and
disadvantage of individual performance related pay for managing hotel sector by using their tools.
Also, in what type IPRP improve company performance by using theory and research. It define the
stability of IPRP to hotel business environment. It also has been concluded the barriers to effective
design and implementation of individual performance related pay schemes. This project is also
explain the different types of reward approaches which give complement to IPRP scheme at hotel
and there reasons for work effectively in this sector.

REFERENCES
Books and Journals
Collings, D. G., Wood, G. T. & Szamosi, L. T., 2018. Human resource management: A critical
approach. In Human Resource Management , pp. 1-23.
Collings, D. G., Wood, G. T. & Szamosi, L. T., 2018. Human resource management: A critical
approach. In Human Resource Management . s.l.:Routledge.
Gershman, M. & Kuznetsova, T., 2014. Performance-related pay in the Russian R&D
sector. Форсайт. Форсайт, 8(3).
Han, H., Kim, W. & Jeong, C., 2016. Workplace fun for better team performance: Focus on
frontline hotel employees. International Journal of Contemporary Hospitality Management, 28(7),
pp. 1391-1416.
Mueller-Hanson, R. A. & Pulakos, E. D., 2018. Transforming Performance Management to Drive
Performance: An Evidence-based Roadmap. s.l.:Routledge.
Park, S. & Sturman, M. C., 2016. Evaluating form and functionality of pay‐for‐performance plans:
the relative incentive and sorting effects of merit pay, bonuses, and long‐term incentives. Human
Resource Management, 55(4), pp. 697-719.
Parmenter, D., 2015. Key performance indicators: developing, implementing, and using winning
KPIs. s.l.:John Wiley & Sons.
Patiar, A. & Wang, Y., 2016. The effects of transformational leadership and organizational
commitment on hotel departmental performance. Journal of Contemporary Hospitality
Management, 28(3), pp. 586-608.