Employee Performance and Motivation Study

The assignment requires a detailed examination of employee performance and motivation, incorporating relevant theories and research findings from academic sources. It involves analyzing the role of public service motivation, performance-related pay, rewards, and goal orientation in employee motivation and organizational learning. The study also explores the impact of performance-related pay on firm productivity and future employee performance.

Running head: MANAGING HUMAN RESOURCES
Managing Human Resources
Name of Student
Name of University
Author Note

1MANAGING HUMAN RESOURCES
Introduction
Payment methods adopted for employees are one of the important challenges that
managers of business organisations face in the modern world. According to Herhausen, Luca
and Weibel (2017), payment of employees need to be based on the effort provided by them at
the workplace. At the same time, Shields et al. (2015) have made a counter-argument, stating
that payment needs to be made based on the performance of the employees at the workplace.
The essay highlights the concept of payment based on the performance of employees along
with its link to the motivation of employees. Motivating employees is required to ensure that
the teamwork and efficiency within an organisation exists. A comparison is made between
two industries based on the effect that performance-related pay has on the industries. At the
same time, the advantages and disadvantages of such a method are also taken into
consideration.
Discussion
According to Bellé (2015), performance related pay is a paying system that is solely
made for the performance and contribution made by the employees towards an organisation.
The performance is measured by the efficiency and the result that is received by the
organisation after the end of a financial year. For example, sales representatives or production
line workers receive wages via this type of payment. Such a method of payment has drawn in
various debates over the years. As stated by Malik, Butt and Choi (2015) employees need to
be paid for the effort provided as the end result of a particular sale of a product may not
always in the hand of the organisation. Tastes of customers, competitors and economic
factors play a major role in the success or failure of an organisation. On the other hand, Bellé
(2015) argued that without a good performance from the employees, organisations cannot

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succeed. Consequently, the payment of the employees may cease due to lack of success and
revenue.
In the modern day, it has been seen that most managers use the basic standard system
for calculating the salary or wage of an employee. The basic standard of pay provides
employees with a high salary if the performance rate is more. For example, if the rate of sale
of cars for one particular month is more for a particular employee, then the employee will
receive a better salary than its peers will. Poor sales performance, however, may lead to have
problems regarding job security and provide a modest or low rate of payment (Storey and
Sisson 2015). Such a method of payment acts as a motivational factor for employees.
Lucifora and Origo (2015) stated that the payment received in the form of incentives acts as
the rewards that a manager provides to motivate the employees. The targets set up by a team
or an organisation needs to be achieved so that employees become eligible to receive the
payment. Thus, the theories related to motivation can be linked with the concept of
performance related pay.
One of the theories of motivation that can be linked to the performance related pay is
the theory proposed by Herzberg. According to Schaller et al. (2017), motivation is required
to ensure that employees remain loyal to an organisation and the work atmosphere remains
fun as well as competitive. Employees need to fulfil the basic needs to lead a good and
luxurious life. Payment made in the organisations act as a hygiene factor for the employees.
This is because poor payment, lack of bonus or commissions acts as agents that create job
dissatisfaction among the employees. Improving the hygiene factors lead to the decrease in
the level of job dissatisfaction among employees (Lepper, and Greene 2015). Thus, it is
necessary to provide payments that are based on the performance of the employees. Extra
payment in the form of bonus or commission acts as a huge motivational factor, as employees

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try to make a living that matches their social class. The societal class of the people can be
maintained or improved with an increase in the payment.
In this regard, the motivational theory of Maslow can be considered as another
important concept related to performance related pay. In the words of Healy (2016),
Maslow's hierarchy of needs provides a systematic approach to attain motivation while
working in an organisation. Employees tend to fulfil the basic needs such as a place to live,
eat and job security before aiming at enjoying a healthy lifestyle. Hence, performance-based
pay can encourage the employees to aim at a healthy lifestyle initially. To do so it is required
that the employee utilises their skills and work hard for the success of the organisation.
Monetary benefits provided to the employees can help them to achieve more for the
betterment of an organisation. At the same time, Chadwick and Raver (2015) stated that
employees with poor performance could be motivated by the fact that the peers are earning
more money. Thus, this important factor needs to be considered by the managers as the
performance-related pay can act as a beneficiary for both high and low performers at an
organisation.
According to Lucifora and Origo (2015), to ensure that the performance-related pay is
executed in an effective manner, it is important for the managers to remain transparent so that
the employees are given the proper benefit from such a scheme. In automobile industries,
performance-related pay is based more on the selling of the cars. If an employee manages to
sell a car at the rate set up by the company then the payment received by the particular
employee is greater than the payment received by the others. At the same time, the number of
cars sold by an employee also accounts for success in the payment department. Hence, such a
method of payment is considered beneficial for the employees alone with benefits received
by the organisation. However, as stated by Schaller et al. (2017) employer benefit also needs
to be included in the performance related pay scheme.

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For example, it can be said that two organisations such as a police and law firm can be
taken into consideration. The fact that the police are paid their salary irrespective of the work
done provides them with an advantage over the law firms. People at the law firms need to win
the cases they are on so that they can get a decent pay. Thus, the performance related pay
exist among the people working in the law firms. According to Lucifora and Origo (2015),
improvement of the performance and productivity of individuals can be guaranteed with the
introduction of performance based pay in the organisations. The defined framework for
achieving the goals can help the employees maintains a particular target that can help them to
improve their performance and get more payments. The focus on the things that need to be
done can be maintained for staking the claim towards earning pay based on good
performance in the workplace. However, Cascio (2018), direct link to pay of an employee
need to be considered by keeping in mind the manner in which the payment is provided to the
employees. At the same time, a good performance-related pay system could reward the best
performers and ensure that the other employees consider these performers as a benchmark.
This can be considered as an effective way to deal with the poor performers. Gerhart
and Fang (2014) stated that often it is seen that the good performances of the peers instigate a
feeling of improving the performances among other employees. This is mainly because of the
monetary benefits that are provided to the better performers for the work done by them.
Moreover, the monetary rewards that are provided are often effective in retaining the staff
members. This is mainly because of the fact that motivation plays a huge role in the success
of an organisation. Motivation can be provided either by monetary or non-monetary factors
(Pinder 2014). Thus, performance related pay has its advantages mainly in the retaining
employees so that the organisations can benefit from the contribution made by the employees.
The work targets of the employees are defined that provide the additional motivation required
for maintaining a good performance. One of the biggest advantages that are gained with the

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implementation of performance-related pay is the fact that contribution of the employees is
recognised with the tangible reward.
Nyberg, Pieper and Trevor (2016) consider that the use of tangible reward as a source
of maintaining records within an organisation. The non-monetary pay provided to the
employees may often be intangible, as it cannot be converted into assets for the development
of the future of the employee. Such a benefit makes performance related pay more famous
among employees. This also accounts for the development of a healthy performance pay
culture among the organisations. This is because the employees can be motivated to work
hard to earn the extra incentive. Monetary benefits and the hygiene factor of the employees
are taken into consideration while ensuring that performance-related pay is introduced within
the organisations. In the opinion of Shafritz, Ott and Jang (2015), the advantages provided by
the performance-related pay can help an organisation as well as the employees in varieties of
ways.
However, certain limitations exist that some time raises doubts about the application
of the system within the organisations. One of the disadvantages of performance related pay
is the fact that goals can be difficult to achieve if it is set in a complex manner. This can be
particularly difficult for employees that have been newly appointed by an organisation. As
argued by Miner (2015) performance-related pay is mainly provided in companies that
provide a set of a target for the employees. Thus, employees need to be trained and briefed
properly about the job roles that they need to play and the target that they need to achieve.
Most organisations do not provide such facilities and as a result, it becomes difficult for the
employees to reach their target and receive the incentive provided. Bozeman and Su (2015)
stated that the performance-related pay process relies heavily on the judgement that is made
by the manager. The manager provides the target for the employees based on the skill and

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talent level of the employees. Thus, the reliance on the managers of an organisation is
extensive and it provides extra pressure on the employees.
D'Souza and Gurin (2016) stated that the biggest disadvantage of performance-related
pay is that it reduces the opportunity for employees to undertake equal earning. This act as a
de-motivation factor for most employees as the effort given by all employees is same.
However, the outcomes vary that result in the differences between the payments of the
employees. In this regard, an argument can be made that the outcomes and methods related to
achieving a target cannot be the same. This is considered as one of the biggest debates that
exist since the implication of management system is the organisations. Reeve (2014)
countered this by stating that such poor performance and failure to achieve target may at
times result in the improved performance of the employees’. The unequal pay poses
challenges to organisations as it becomes liable to equal pay challenges if companies fail to
implement operate it fairly. This also affects the performance appraisal process, as most of
the times; the performance is judged by the outcomes and not based on the effort showed by
an employee.
One of the biggest restrictions related to performance appraisal is the fact that the
managers cannot remain biased (Kessler and Purcell 2016). Biases can prevent proper
judgement that can subsequently affect the rating the performance of the employees.
According to Herhausen, Luca and Weibel (2017), performance appraisal needs to be
conducted keeping in mind the efforts as well as the results obtained by the employees.
However, in organisations that have implemented performance-related pay, the application of
performance appraisal is mainly done based on the payment received by the employees. This
causes a great deal of de-motivation for the other employees as the equal effort has been put
to achieve the target. An example can be provided in organisations that provide fixed salary
as compared to organisations that provide salary based on payment. Such examples include

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difference in salary between police officers and lawyers or sales personnel and management
people. This even affects the teamwork and co-operation that exists within an organisation.
Gerhart and Fang (2014) stated that performance-related pay affects teamwork within
organisations. This is because some members of the team get more payment than compared
to others. This may create a sense of division among the team members and consequently,
team performance may be hampered. This can be a huge disadvantage for an organisation as
it may prove to be difficult to attain success without proper contribution from the teams.
Performance related pay might even fluctuate with the change in economies of a
country (Gerhart and Fang 2014). This is because the economic growth and capabilities of all
countries are not equal. This provides the organisations with limited ability to gain profit and
consequently the payment provided to the employees also suffer. The amount of money
provided to the employees by an organisation located in an economically stable location may
be more than the payment provided to employees belonging to a lower economic region. This
causes frustration among employees as the performance and the efforts put in at different
branches are identical. Thus, this causes a huge disadvantage in the performance related pay.
In this regard, the effectiveness of the performance related pay could be analysed across
different industries. The analysis is done keeping in mind the efforts put in by the employees
and the payment they receive from working in an efficient manner.
The employer benefit is provided in police organisations. This is because the police
officers get the benefit of payment without having to complete their tasks; the mere presence
of the police officers at the station can provide them with the money required for maintaining
a proper life. However, performance based pay can be related with the law firms as without
results, lawyers are not paid. In fact, the job of the lawyers remains in balance if they do not
get to win the cases. Hence, the comparison between the two industries highlights the
advantage as well as the disadvantage of the performance-based pay. In one industry

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employees are provided with payment based on performance while in other a fixed salary is
provided for remaining present.
Conclusion
Thus, it can be concluded that performance-related pay is one of the most effective
manners in which satisfaction of employees can be maintained. Without proper payment, the
performances of the employees cannot improve. However, on most occasions, it has seen that
such a method of payment has received criticisms based on the inequality of payment. This
opens up debate about the method of paying employees so that they can be satisfied and
effective performance can be derived out of them. The advantages as well as disadvantages
posed by this method of payment are significant and contribute heavily towards the
development of modern managerial developments. The effectiveness of such a system of
payment highlights the impact it has on the mentality of the employees working in these
departments. By analysing the effectiveness, it can be said that the application of
performance related pay needs to be based on the proper analysis of a situation. The mode of
achieving goals can be made simple so that employees can gain the benefits provided by the
performance related pay.

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