Remuneration and Performance Management

This report discusses remuneration and performance management issues faced by O’Meara Electronics and proposes the use of an Integrated Development System (IDS) to improve organizational and individual performance. It includes a comparison of two performance management systems and recommendations for implementing the proposed system.

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Remuneration and Performance Management
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Abstract
O’Meara Electronics – an electronics company has operated in the Australian market for more
than 20 years. Within this period, the company has realized an international market share that is
smaller compared to its local market share. Ten years after its operation, the company had
already set up subsidiaries in more than four countries (mostly in South-East Asia and one in
Germany). Mostly, the company operates in semi-automated factories. Also, its staff includes
electronics engineers and technicians who are charged with designing televisions, audio, digital
cameras, telephones, and other accessories. However, there are other employees in departments
including:
i) Research and development
ii) Production
iii) Storage and dispatch
iv) Marketing
v) Accounting
vi) General administration
vii) Human Resource (HR)
In the departments mentioned above, the company boasts of over 1,250 staff members. In the
department of production alone, the company has incorporated ten teams (each with twelve
staff). Other departments, however, have about six to fifteen workers each.
Contrary to the above-provided information, this remuneration and performance management
report intends to solicit issues that O’Meara Electronics face (regarding remuneration and
performance management). According to the president of O’Meara, the company incurs some

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management issues that are likely to affect its operation and success. As put by the president, the
issues have already led to the decline of O’Meara’s market position as well as its profitability.
Such a case, therefore, contributes to the unanimous decree to rationalize several operational
areas including changes in performance management and remuneration strategies. There are
some ideas put across by the stakeholders to ensure that the outlaid objectives are achieved.
Among such ideas is the development of international strategies of management (with regards to
legislative requirements and country practices). Another idea put across is the changing of the
company’s position-based remuneration system to a more advanced person-based system.

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TABLE OF CONTENT
Contents
Abstract.......................................................................................................................................................2
1. INTRODUCTION.............................................................................................................................5
1.1. Purpose.......................................................................................................................................5
1.2. Scope...........................................................................................................................................6
1.3. Limitations.................................................................................................................................7
2. ANALYSIS.........................................................................................................................................7
2.1. Performance Management (PM System).................................................................................7
2.2. IDS' International Strategies of Management.........................................................................8
2.3. Organizational vs. Individual Performance: Encouraging Employee Motivation................9
3. COMPARISON OF PERFORMANCE MANAGEMENT SYSTEMS.......................................11
4. CONCLUSION AND RECOMMENDATION..............................................................................12
5. REFERENCE..................................................................................................................................13

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1. INTRODUCTION
1.1. Purpose
As mentioned before, this report intends to solicit remuneration and performance management
issues that O’Meara Electronics faces. Such issues, as put by the president of the company, are
likely to affect its operation and success. Worse put, such issues have already caused a decline in
O’Meara’s market position as well as its profitability. Therefore, in line with the problems faced
by O’Meara, we shall discuss:
a) Remuneration systems
b) Systems of performance management
c) Goals of performance
d) Evaluation of performance
In relation to the named discussion issues, some ideas were put across by stakeholders to ensure
that the outlaid objectives are achieved. Such ideas included:
i) The development of international strategies of management with regards to legislative
requirements and country practices.
ii) Alteration of the company’s position-based remuneration system to a more advanced
person-based system (Stephen and Timothy, 2015).
iii) The appointment of a Consultant to organize Staff Forums for discussing such
Remuneration Systems alongside Performance Management.
iv) Encouraging employee motivation and equality

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v) Implementing a participative approach for the new remuneration management system
(ensuring that all the stakeholders are involved in the affairs of the company)
(Silverman, 2004).
vi) Developing a system for Performance Management
vii) Ensuring that the work teams are self-managed.
viii) Developing performance related goals.
ix) Performing Performance Evaluation
1.2. Scope
In the abstract section, we gave a brief outline of the company to be discussed in this report. In
the section, we also highlighted the history of the problems faced alongside what the paper
intends to do. The second section is the introduction. In this section, some issues have been
illuminated. Such issues include, but not limited to:
i) Identifying the purpose of the paper
ii) Discussing the limitations faced in the paper
The next section is analysis where we shall expertly outline the process of diagnosis for our case
study. We shall also provide evident approaches to systems of performance management and
give the route map to choosing a good system for the company. Other issues that will be
discussed in this section include but not limited to:
i) The development of international strategies of management with regards to legislative
requirements and country practices.
ii) Choosing a good person-based system.
iii) Establishing ways of encouraging employee motivation and equality

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iv) Providing a participative approach for the new remuneration management system
(which would ensure that all the stakeholders are involved in the affairs of the
company).
v) Choosing a good system for Performance Management
vi) Outlining how the company’s work teams would be self-managed.
vii) Outlining performance related goals.
viii) Determining how Performance Evaluation would be achieved
The section after that would, however, outline a comparison between two systems of
performance management. We shall also argue out one of the two systems by demonstrating why
it’s better than the other system (Northouse, 2007). Last but not least is the conclusion and
recommendation section. Here, the report will provide a comprehensive and insightful summary
of the entire report regarding performance management. We shall also provide recommendations
for performance approaches, measures, and tools determined as the best for O’Meara
Electronics.
1.3. Limitations
Every performance management system needs to emphasize some important issues to realize
success (Bass, 2015). Most of such issues are tackled by our identified system. However, we still
fail to tackle issues about:
- The creation of appreciation and a clear understanding of values associated with IDS as a
performance management system.
- Employee development through their performance in the organization (Robin and Peter,
2015)

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2. ANALYSIS
2.1. Performance Management (PM System)
In this section, we shall begin by defining “Performance management.” By definition, it is an
integrated and strategic approach towards the delivery of success that is sustained (within an
organization) (Lewis and Thornhill, 2009). In this way, the performance of stakeholders is
improved. Such performance improvement is, however, achieved through the development of
team capabilities as well as personal contributions (Brikend, 2011).
Source: (Johnstone et al., 2012)
In this scenario, we recommend the use of An Integrated Development System (IDS) (Koys,
2011). This system is all inclusive (it incorporates strategic and co-coordinative plans for the
alignment of company resources). As a framework, it forms the platform by which O’Meara’s
annual budgets are based. It also forms the principal strategic instrument to guide all processes of
management, planning and development, investment, and implementation of decisions while
taking into account the stakeholder input (Keller, Berryman and Lukes, 2009). IDS reflect on
O’Meara’s:

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a) Long-term development vision
b) Assessment of the current development level
c) Development objectives and priorities
d) Strategies for development
e) Plans for disaster management
f) Performance targets and Key Performance Indicators
2.2. IDS' International Strategies of Management
International strategies outlined alongside the implementation of IDS are to ensure that O’Meara
continually improves its international operations with regards to the local and international
legislative requirements. The identified system will ensure that the company:
i) Develops appropriate performance indicators alongside impacts and outcomes
associated with its priorities and objectives.
ii) Develops targets that are measurable
iii) Reviews and measure its performance twice every year
iv) Establishes a regular reporting process
v) Develops a warning system for the identification of poor performance areas (John,
2014).
The ID System is designed in a way that it improves organizational effectiveness and strategic
focus by seeking to continually improve organizational and individual performance (Jennifer and
Gareth, 2015).
2.3. Organizational vs. Individual Performance: Encouraging Employee
Motivation

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The performance of an organization is linked to that of its staff in a way or another (Russell,
2013). Therefore, it is important that the performance of an organization is tied to that of an
individual. Such enables management (at the same time) for the two performances (but
separately). According to our new system, a manager is required to sign employee performance
contracts. Such contracts contain targets and objectives for such performances. Such objectives
are required to be measurable, practical, and key performance indicators based (Gregory, Lyman
and Richard, 2013). Effectively, the organizational scorecard is executed by the employees of the
municipality. From a practical point of view, such a case means that organization’s strategic
scorecard is the sole responsibility of departmental managers. The departmental heads must
create performance plans. These must be aligned with the individual performance plan of the
head of the department. In this way, employees are encouraged to work towards a common
organizational goal. On the contrary, the employer is held responsible for creating an
environment in which workers can deliver set targets and objectives in their job descriptions and
performance contracts (Grant, 2014).

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Source: (Brown, Trevino and Harrison, 2015)
Regarding incentives and bonuses as remuneration, workers need to be paid bonuses in different
work situations for various reasons. Such bonuses should be performance-related. However, the
company also needs to have another type of compensation given to all workers whenever a
particular project is successful or for a successful year. Apart from such bonuses, workers may
also be given Holiday bonuses. Simply put, incentives are supposed to be motivational. They are
supposed to be appreciative. This system is thus, involving the implementation of an incentive

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program to motivate workers. Such will be done through the giving of non-cash gifts including
wellness programs and trips (Brown, Trevino and Harrison, 2015).
3. COMPARISON OF PERFORMANCE MANAGEMENT SYSTEMS
Here, we are going to compare and contrast two important systems – The Service Delivery
Budget Implementation System against The Integrated Development System. The comparison is
as shown below:
Service Delivery Budget Implementation
System (SDBIS)
Integrated Development System (IDS)
- This is mainly a budgeting system and
mostly supplements the IDS
- It contains objectives and goals set by
the organization.
- It also provides the basis for
performance measurement.
- SDBIP that is properly formulated
ensures that it internally and externally
circulates appropriate information to
monitor budget performance execution
- Develops appropriate performance
indicators alongside impacts and
outcomes associated with its priorities
and objectives.
- Develops targets that are measurable
- Reviews and measure its performance
twice every year
- Establishes a regular reporting process
- Develops a warning system for the
identification of poor performance
areas.
After such a comparison, the company settles for IDS because:
- It is a framework that forms the platform by which O’Meara’s annual budgets are based.
- It also forms the principal strategic instrument to guide all processes of management,
planning and development, investment, and implementation of decisions
- It takes into account stakeholder input (Claudia and Jonathan 2014).

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4. CONCLUSION AND RECOMMENDATION
This remuneration and performance management report has solicited issues that O’Meara
Electronics face in relation to its workforce development and management. To ensure that such
issues are cubed, this system proposed An ID System. The system comes hand in hand with the
development of international strategies of management and changing of the company’s position-
based remuneration system to one that is person-based (Daniel and Sam, 2011). The system
ensures that:
- Appropriate performance indicators alongside impacts and outcomes associated with its
priorities and objectives are developed.
- Targets that are measurable are also developed
- The performance of the company is measured and reviewed twice every year
- A regular reporting process is established
- A warning system for the identification of poor performance areas is also developed.
However, this report suggests that O’Meara implements the ID System alongside the Service
Delivery Budget Implementation System (as a new remuneration system) to tackle employee
compensation issues. The system will also help in:
- Increasing the efficiency of IDS
- Providing the basis for performance measurement.
- Ensuring that appropriate information is internally and externally circulated in the
organization to monitor budget performance execution (Ezeani, 2008).

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5. REFERENCE
Bass B. (2015) From Transactional to Transformational Leadership: Learning to Share the
Vision, Organizational Dynamics, London.
Brikend A. (2011) Management Research and Practice. Research Centre in Public
Administration and Public Services, Romania.
Brown, M.E., Trevino, L. K. & Harrison, D.A. (2015) Ethical leadership: A Social Learning
Perspective for Construct Development and Testing, Organizational Behaviour and Human
Decision Processes, New York.
Claudia P. & Jonathan P. (2014) Focus Group Practice, Sage Publications, UK.
Daniel, P. S. & Sam, A. G. (2011) Research Methodology. Gyan Publishing House, Delhi.
Ezeani S. I. (2008) Research methods: A realistic approach, Sage Publications, UK.
Grant, L. (2014) Organizational Predictors of Family Satisfaction in Nursing Facilities, US.
Gregory A. B., Lyman W. P. & Richard M. S. (2013) Motivation and Work Behavior, McGraw-
Hill, Sydney.
H. Russell B. (2013) Social Research Methods - Qualitative and Quantitative Approaches,
Pearson, USA.
Jennifer M. G. & Gareth R. J. (2015) Understanding and Managing Organizational Behavior,
Pearson, USA.
John B. (2014) Great Motivation Secrets of Great Leaders, McGraw-Hill, Sydney.
Johnstone, R., McCrystal, S., Nossar, I., Quinlan, M., Rawling, M. & Rily, J. (2012) Beyond
employment: The legal regulation of work relationships, Federation Press, Sydney.
Keller, S. M., Berryman, P. & Lukes, E. (2009) Effects of extended work shifts and shift work on
patient safety, productivity, and employee health, American Association of Occupational Health
Nurses, Chicago.
Koys, D. J. (2011) The effects of employee satisfaction, organizational citizenship behaviour,
and the turnover on organizational effectiveness: A unit-level, longitudinal study, Wiley, New
Jersey.
Lewis P. & Thornhill A. (2009) Research Methods For Business Students, Prentice Hall, Sydney.
Northouse, G. (2007), Leadership Theory and Practice, Sage Publications, London.
Robin F. & Peter R. (2015) Principles of Organizational Behaviour, Oxford, Northants.

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Silverman, D. 2014, Qualitative Research Theory Method and Practice, SAGE, California.
Stephen P. R. & Timothy A. J. 2015, Organizational Behavior, Prentice Hall, Sydney.