Performance Related Pay in Practice
Added on 2021-04-17
13 Pages3611 Words64 Views
Leadership Management
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Running head: MANAGEMENT OF HUMAN RESOURCESMANAGEMENT OF HUMAN RESOURCES Name of the Student Name of the University Author Note
MANAGEMENT OF HUMAN RESOURCES1Introduction Performance related pay or PRP can be defined as the way by which the organizationcan manage the payment made to the employees. The payment is linked to the salaryprogression of the employees by assessing their individual performance. Performance relatedpay can also be defined as the financial rewards that are provided to the employees who haveachieved their goals and targets. Performance related pay is used when the performance ofthe employees cannot be linked to the sales of the company or the output that is achieved(Ishizaka and Pereira 2016). The performance of the individuals is measured with respect tothe performance standards of the organization. The reward policy of the differentorganizations can vary from each other, however, it mainly involves rewards related to cashor the increase in the rates of wages. The concept of performance related pay has grown inthe recent years. However, this concept does not play an important role in improving the teamwork of the employees (Buckingham and Goodall 2015). Discussion related to Performance related payThe pay scale of the employees is related to the system which determines the amountof wages that are paid to the employees. Pay scale is based on more than factors related to theorganization which include, the status or the rank of the employees, the level of theemployees and time for which the employees have been working in the organization. Payscale is also known as the salary structure based on which the employees are paid (Sharma,Sharma and Agarwal 2016). Performance related pay is strongly related to the motivation that is provided to theemployees so that they can give their best performance in the organization. Motivation hasbecome an important factor that is related to the performance of the employees in theorganization. The major factors that are related to motivating the employees in the
MANAGEMENT OF HUMAN RESOURCES2organization include, creativity and the understanding related to the areas where theemployees have shown good performance. The areas that are required to be improved arealso related to motivating the employees in the company. The human capital of theorganization is the most valuable asset that is related to the ways of increasing the revenuesand the profitability. Motivation is mainly related to the ways by which the organization canassist the employees in achieving excellence (Rashidi 2015). The different ways by which an organization can motivate the employees are asdiscussed further. Observing the performance of the employees over a period of time andcompare the duties performed by them with the job descriptions. The employees are alsoprovided with regular feedback so that they can improve their performance. The performancerelated issues of the employees need to addressed as early as possible. Providing recognitionsto the employees is also a part of the motivational process. Promotions provided to theemployees based on their performance is a major part of the motivation process (Gerrish2016). The motivation of employees is based on the Herzberg’s Two-factor theory or themotivator-hygiene theory. The factors related to the job that provide satisfaction to theemployees. The major factors that are related to this motivation theory are mainly, thesatisfaction and the dissatisfaction of the employees. The two major categories of Herzberg’smotivational theory are, Hygiene factors and motivational factors. Hygiene factors are mainlythe factors related to the job which are based on the existence of the motivation. This furtherleads to provide satisfaction to the employees in the long-term (Lo, Lin and Hsu 2016). The absence of these factors leads to the dissatisfaction of employees in theorganization. Hygiene factors are extrinsic to the organization and they can also be called themaintenance factors. The major hygiene factors include, pay, policies of the company, fringe
MANAGEMENT OF HUMAN RESOURCES3benefits, status, physical working, interpersonal relationships, job security. The pay or thestructure of salary needs to be reasonable and appropriate. The policies formulated by thecompany have to be fair for all the employees. The employees should be offered benefits likehealth care related plans and family member related facilities. The conditions of work need tobe favourable for the employees and they need to feel safe. The relationship within theemployees and the management is also related to the hygiene factors of motivational theory(Sanjeev and Surya 2016). The job security provided to the employees also provides motivation to theemployees. Another part of Herzberg’s two-factor theory are the motivational factors.Hygiene factors are not regarded as the motivators to the employees and the motivationalfactors help in providing satisfaction to the employees. The motivational factors are a majorpart of the work process of the organization and they affect the performance of theemployees. The major motivational factors include, recognition which is related to the waysby which the employees are recognised by the managers. The sense of achievement amongthe employees is also a part of the motivational factors. The promotional and growth relatedopportunities provided to the employees form a major part of motivational factors (Kotni andKarumuri 2018). The responsibility of the employees related to their job is an importantmotivational factor. The challenges faced by the employees at their job is related to themotivational factors. Adam’s Equity theory is based on the balance between the inputs provided by theemployees and the outputs received based on these inputs. The theory is mainly based on thebelief that the employees can get demotivated in their organizations with respect to the joband the employers. This can happen if the inputs provided by the employees are more ascompared to the outputs that are received by them. This can cause demotivation in theemployees and their efforts towards the job can decrease (Lazaroiu 2015).
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