Reward Management - Cavendish Hall Hotel

Running head: REWARD MANAGEMENT
REWARD MANAGEMENT
Name of the Student:
Name of the University:
Author Note:

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Executive Summary
The main purpose of this management report is to provide a critical evaluation about the
contribution of reward principles, policies, practices and decision making to performance
management in organizations. A particular case study has been given where Daphne Jones is
being appointed as personnel manager of the Cavendish Hall hotel. She will be going to
prepare this management report where she will investigate on Individual Performance related
Pay (IPRP) and the reason for its failure in the hotel. The report will also analyze the
advantages and disadvantages of IPRP system and the barriers of implementing the IPRP
system. The report will conclude with summarizing all the relevant points. The report will
recommend about an alternative forms of reward.

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Table of Contents
Introduction................................................................................................................................3
Performance Management System.............................................................................................3
Individual Performance Related Pay (IPRP)..........................................................................3
IPRP in Organizational Performance.....................................................................................4
Theory and Research..................................................................................................................5
Expectancy Theory.....................................................................................................................5
Performance Management......................................................................................................5
Suitability of IPRP to Hotel Business....................................................................................6
Advantages of IPRP System......................................................................................................6
Disadvantages of IPRP System..................................................................................................7
Barriers to the Effect of IPRP System........................................................................................7
Barriers to the Implementation of the IPRP System..................................................................8
Recommendations......................................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
Rewards are given to the employees of any organization based upon the
performances. These rewards should be aligned with the organizational goals. When an
organization achieves its goal with contribution of an employee, the reward is given for
achieving the goal of an organization (Shields et al., 2015). In the report a particular case
study is given, in which the Cavendish Hall Hotel introduced an individual performance
related pay scheme. The newly appointed personnel manager Daphne Jones will investigate
and review the effectiveness of the scheme.
The main purpose of the report is to evaluate critically the general understanding of the
reward management principles, practices, policies and decision making in an organization in
the context of the Cavendish Hall Hotel case study. The manager Daphne Jones will prepare
this management report. The report will investigate on Individual Performance Related Pay
(IPRP) scheme and the reason for its failure in the organization. The report will also analyze
the advantages and disadvantages and the barriers of implementing the IPRP system. It will
be concluded with summarizing all the relevant points. The report will recommend about an
alternative forms of reward policy that can be implemented in the hotel.
Performance Management System
Individual Performance Related Pay (IPRP)
The individual performance related pay is a standard-based system by which an
employee is evaluated in an organization by his or her performance in that organization. It is
related with increased payment to the employees or teams in organizations who are
performed better in the organizational system. An employee is evaluated based on his work
and that is applicable for setting the salaries of the employees. This is the part of reward

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strategic system management in business operation. Those employees who have helped in
contributing the organizational success are considered in the individual performance related
payment system. Therefore, it can be said that individual performance related pay is a process
of managing and controlling the payment of an employee by relating his or her salary
progression to the individual performance assessment, which are measured by pre-agreed
goals or objectives of the organization (Shields et al., 2015). There are different schemes in
performance related pay; however, its effectiveness in the organizational workflow remains a
question.
IPRP in Organizational Performance
The individual performance related payment system could be helpful in improving the
overall performance in an organization. As PRP is related with financial payment, it could be
helpful in cultural change and workflow in the organization. It could bring changes in the
work culture and encourage the individual and thus organizational performances. It was
started from United Kingdom and now it is accepted by many organizations all over the globe
as a part of organizational reward strategies (Gerhart and Fang, 2014). It can be applied as
motivational strategies to encourage the workers in an organization. In this strategy, money is
used as a potentially powerful system of incentives that would influence the effort that an
employee put in the organizational workflow. It can be helpful in creating appropriate
behavior as money works itself as a goal as believed by some theorists. It is valuable to the
employees, which works as an external status symbol and internal recognition for them.
However, some critics believe that the system of individual performance related pay create
discrimination among employees and act as anti motivational tool as few employees are high
performers in comparison to total number of employees. This system even undermines the
equity in an organization.

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Theory and Research
The theories and research works are based on the relationship between behavior and
pay and the measure of satisfaction in the organization and employees. The most common
theory related to individual performance related \pay is Expectancy Theory. The recent
literature has termed this type of framework as the Performance Management (PM), which is
also discussed.
Expectancy Theory
Expectancy Theory is primarily explained by Vroom in 1964. The theory is based on
the presumption that workers would be motivated in work when they would expect that they
would achieve the organization’s requirements and this effort would be rewarded in form of
money or incentives (Parijat and Bagga, 2014). However, the presumption is based on
hypothesis that the workers are the rational being and they know what they have to perform
to achieve the rewards. In expectancy theory, the motivational force depends upon three
variables, which are expectancy, which is the expectation that an employee’s effort would
result in his or her performances, instrumentality, which based on the reward instrument in
accordance with one’s performance and valance, which is the perceived value to the recipient
regarding the rewards.
Performance Management
The performance management is related to improve and promote effective of thee
employees. It is collaborative and continuous process from part of the employees and
managers to plan control and view an employee’s objectives of the work and his or her
overall contribution to fulfill those objectives. However, most of the current literatures put a
caution to implement IPRP system in isolation. it needs to apply with supporting
infrastructure. It should be treated as an integral part of the wider management strategy that

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encompasses objectives of the organization and individual contribution within the workflow
of the organization. As stated in recent literature, the IPRP should be considered in broader
structure of Performance Management system (Buckingham and Goodall, 2015).
Suitability of IPRP to Hotel Business
The suitability of IPRP to hotel business would be described based on the case study.
In Cavendish Hall Hotel, the IPRP system is active. It has been started three years ago. The
new manager Daphne Jones reviewed opinions of the staffs. It is noticed that the staffs are
happy with the reward system and 38% of the total staffs agreed with fair reward system
compare to other people in similar job structure. However, the sense of personal
accomplishment from the work is below 35%. It could be said from this data that the
employees do not work for personal accomplishment, thus, the sense of satisfaction from the
work only is less. However, as the people in the hotel are happy with the new scheme, it is
suitable from their perspective, though the hotel is suffering from poor level of customer
service. Thus, it could be said that the overall implementation of the IPRP scheme I not
successful as it could not improve the business service of the hotel.
Advantages of IPRP System
The advantages of the IPRP are based on theory of motivation. It could be beneficial
as it has capacity to influence the individual’s performances. However, this advantages are
discussed by the motivational theorists. For example, the goal-setting and expectancy
theorists give importance to cognition thought procedure, which is the decision people would
take based on how far they want to participate in the workforce (Lichtenberg, Lachmann and
Fosshage, 2016). The goal theorists stated that the anticipated outcomes or goals could be
used as influential and motivation tool. However, these theories imply that there is no need to

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perform a financial reward system; rather, the management needs to set a goal, which would
work as motivational tool for the employees.
However, the IPRP system could be helpful for implementing the individual
performances in a way that some objectives should set for obtaining an increment. Money has
its own power to motivate people as workers work for gaining money. Thus, in this system of
monitory reward, goals need to be set (Bach, 2012).
Disadvantages of IPRP System
There are many disadvantages of the IPRP system within an organization. The
implementation of the IPRP system itself could be a disadvantage as the process is depended
on the quality of the judgment considered by the managers of the organization. It minimizes
the pay equity and this could itself be posing as challenges to implement the IPRP system
(Kim and Hong, 2013). It could affect the organization as the focus shifts from
developmental need to the financial reward as happened in the Cavendish Hall Hotel case.
The employees could be de-motivated if the goals are so hard that they cannot achieve. The
company should be prepared beforehand in investing lot of money and time to implement the
IPRP; otherwise, it could become a disadvantage. From employees’ point of view, the
achievement of IPRP needs to be laborious, as it requires wider knowledge internal and
external knowledge about the company’s environment (Frey, Homberg and Osterloh, 2013).
The other disadvantages include clear and understandable reward system for all the
employees and the effective objective criteria.
Barriers to the Effect of IPRP System
The main barriers to the implementation of the IPRP system could be related with two
main criteria. One is lack of employees support and other one is erosion of fairness and trust.

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Most of the employees in an organization are average or middle range performer. It could be
stated that the 10% employees are top performers and 5% are the poor performers. Thus, the
total 85% of the employees are the average performers (Cohen et al., 2013). For the average
performer, the IPRP system has no value. Thus, they are less supportive to implement the
IPRP system, as it could be disadvantages for them and could generate poor level
competitiveness and de-motivation among the employees.
As the IPRP system is based on the managers’ judgmental skills, they need to build
trust and fairness in the evaluation process among the employees. Otherwise, the system itself
could become a chaos within the structure of the organization and among the employees. The
management of the organization should set a parameter to provide the IPRP system and it
should be discussed with the employees (Cho and Lee, 2012). The parameter should be
followed strictly from both the employees and managers and both of the party should have
relied on the parameter. The employees should know on what basis they are getting
performance related pay.
Barriers to the Implementation of the IPRP System
The barriers include attribution errors and lack of training to the managers. The
attribution errors are part of the management system that the managers evaluate employees in
comparison to other employees’ performances (Swift et al., 2013). However, the evaluation
should base on the standards set by the organization. It diminishes the enthusiasm of the
employees to perform better. The managers should be trained effectively to implement the
PRP schemes with the workflow of the organization. They need to be trained on how to deal
with PRP communication with successful and unsuccessful ones (De Waal, 2013). The
managers should communicate the reasons for not paying the PRP.

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Recommendations
It could be recommended that an alternative reward scheme could be employed in the
hotel that would be used to complement or replace the IPRP system. The hotel management
could employ career planning or succession planning and awards as an alternative reward
tools other than the money. These alternative systems would minimize the risks of the
monitory payment. It could be effective in a way that it replaces the PRP system with ‘Total
Reward’ commented by Shields et al. (2015). It encompasses everything related to
employment and it takes into employees’ development, flexible benefits, work life balance,
flexible working hours, career opportunities and recognition. In this reward strategy, an
employee could flourish in well manner. However, the management and the employees
should be involved in making the design of this reward strategy ensuring its success as it is
the most complex process of strategy (Terera and Ngirande, 2014).
Conclusion
It can be concluded by stating that the evaluation on the general understanding of the
reward management principles, practices, policies and decision making in an organization in
the context of the Cavendish Hall Hotel case study is done properly. The challenges and
barriers have been discussed also. There is alternative reward system that could be
implemented within the workflow of the hotel and it is recommended to the managers to
consider this reward strategy. However, if the Performance Related Pay schemes are
implemented properly it has capacity to work effectively within the organization. The
managers and leaders should be alert about its barriers and challenges and should remove
these before implementation.

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References
Bach, S., 2012. Performance management. Managing Human Resources: Human Resource
Management in Transition, pp.219-242.
Buckingham, M. and Goodall, A., 2015. Reinventing performance management. Harvard
Business Review, 93(4), pp.40-50.
Cho, Y.J. and Lee, J.W., 2012. Performance management and trust in supervisors. Review of
Public Personnel Administration, 32(3), pp.236-259.
Cohen, R.I., Jaffrey, F., Bruno, J. and Baumann, M.H., 2013. Quality improvement and pay
for performance: barriers to and strategies for success. CHEST Journal, 143(6), pp.1542-
1547.
De Waal, A., 2013. Strategic Performance Management: A managerial and behavioral
approach. Palgrave Macmillan.
Frey, B.S., Homberg, F. and Osterloh, M., 2013. Organizational control systems and pay-for-
performance in the public service. Organization Studies, 34(7), pp.949-972.
Gerhart, B. and Fang, M., 2014. Pay for (individual) performance: Issues, claims, evidence
and the role of sorting effects. Human Resource Management Review, 24(1), pp.41-52.
Kim, P.S. and Hong, K.P., 2013. Major constraints and possible solutions for performance
management in Korea. Public Management Review, 15(8), pp.1137-1153.
Lichtenberg, J.D., Lachmann, F.M. and Fosshage, J.L., 2016. Self and motivational systems:
Towards a theory of psychoanalytic technique (Vol. 13). Routledge.

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Parijat, P. and Bagga, S., 2014. Victor Vroom’s expectancy theory of motivation–An
evaluation. International Research Journal of Business and Management (IRJBM), 7(9),
pp.1-8.
Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P.,
Johns, R., O'Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee
Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.
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Johns, R., O'Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee
Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.
Swift, S.A., Moore, D.A., Sharek, Z.S. and Gino, F., 2013. Inflated applicants: Attribution
errors in performance evaluation by professionals. PloS one, 8(7), p.e69258.
Terera, S.R. and Ngirande, H., 2014. The impact of rewards on job satisfaction and employee
retention. Mediterranean Journal of Social Sciences, 5(1), p.481.