Strategic HRM: Individual Performance Related Pay and its Impact on Employee Performance

This report discusses the role of individual performance related pay (IPRP) in stimulating higher levels of performance from employees in the context of strategic human resource management. It examines the benefits and drawbacks of IPRP and its impact on employee motivation and productivity. The case study of Leon restaurant is used to illustrate the application of IPRP in a real-world setting.

STRATEGIC HRM
assessment 1

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN- BODY.................................................................................................................................1
Critically evaluate extent to which individual performance related pay can stimulate higher
levels of performance from employees.......................................................................................1
Considering circumstances related to IPRP tends to motivates employees why and what
circumstances tends not to work so well.....................................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES...............................................................................................................................6

INTRODUCTION
Strategic human resource management refers to an activity that includes the future
oriented process for developing and implementing the HR programs that can used by the
business organisation for solving the issues within business so that it can be directly contribute in
the long term objectives. It leading in directly impact the performance of employees and their
overall productivity. In this manager can focus on hiring, firing, administration, benefits and
training. The strategic management is an activity that is used by the 0organisation for developing
the relation between human resources and employees so that goals can be attained on time. It
also helps in proper working so that company will gain the competitive advantage and also
enhance the quality of working culture in effective manner. This report is based on Leon
restaurant that is a fast food chain within UK, established in 2004. The firm is inspired by the
natural benefits that also includes the flavour of Mediterranean cooking. This report involves the
individual performance related pay that helps in stimulating the higher levels of performance of
the workforce. Further it also includes the circumstances that relates to IPRP which is helpful to
motivates the employees in several time and sometimes it will not motivates the workers work in
effective way(Zaid And et. al., 2018).
MAIN- BODY
Critically evaluate extent to which individual performance related pay can stimulate higher levels
of performance from employees
Performance related pay represents as a pay for performance that reflects as a methods
which is used to explain the several aspects of managing the employees pay so that they will not
confused with the performance related pay that is related with salary and assessment of
performance based on individual(Performance-related pay, 2020). It includes the distinct issues
that can be addressed according to the execution of several schemes that is adopted by business
firm for exploring the adequate linkage between performance and employee pay. It related to the
overall functions of line manager, distribution of rewards, different behaviour of employees and
many more. In enterprise there is a tough competition within market because of globalisation of
business that can reflects reflects the potential customers and effective companies. Due to this
business venture are regularly tries to improve the performance level of their work force that can
connects with supporting the individual performance related pay. In this employees can get the
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pay as per their capabilities that can be understand by their working experience. It also helps in
encouraging the working to work effectively.
The individual performance related pay is used by the business venture to offer
compensate to their workers so that they can effectively accept the practices of management. In
case of Leon restaurant, management can effectively focus on performance appraisal and reward
management for developing the effectiveness of the employees so that they can fulfil the task on
desired period of time. In this firm will highly focus on scope of working of the man power so
that they can business will get the proficient results. In performance related pay company cannot
emphasis on major changes for attaining the goals. For instance- In respected company, if
manager can appoint the two workers on similar jobs who also perform same functions and
activities(Macke and Genari, 2019). In this one can work with more efforts for getting the higher
pay as compared to other employee. The performance can reflected the straight forwardness in
the employees that represent their sophisticated work. This practice is also adopted by Leon
restaurant where they can motivates their employees for effective performance by comparing the
employees with one another and also with their past performance. The individual performance
related pay helps in developing the trust and effectiveness in the employees so that they can
effectively get the knowledge regarding pay and rewards according to their performance
designed. This is very significant that all the employees have enough knowledge regarding the
pay and rewards so that their believe and faith can be maintained that will helps in satisfies their
working criteria. Due to which management can practice effectively.
Performance management refers to the logical framework that is adopted by the company
for enhancing the accountability of the employees. This will reflect the better sense and
appreciation which impact positively on the competition and because of this working
environment is developed. In this company can set the managerial actions that is associated with
the development of targets and objectives so that it can be attained on time(Amarakoon and et.
al., 2018). This impact positively on the working in employees so that they cannot do
discrimination because of this unfair practices is to be removed. In case of Leon restaurant
management can show the care for their employees that can helps in rebuilding and redesigning
their Woking criteria of the company. This will consider the moderate level of development
which is suitable for effectiveness and friendly working aspects for employees so that they work
effectively and gain targets.
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In business management and other higher authority can highly emphasis on the fulfilling
the requirements and demands of the employees so that they can perform their allotted work
productively to gain the standardised target on specific period of time. In this manager can focus
on taking the timely follow-ups so that they can easily understand the working criteria and issues
of the employees in adequate way. In this performance related pay helps in conveying the output
of working so that they can do appropriately in better way. It also impact adversely if the
employee can know the loopholes then they can demotivated and due to this they cannot work
effectively(Armstrong, 2016).
Within company, communication play an essential role because if employees and manger
can interact effectively and understand the task efficaciously than appropriate outcomes is come.
Communication is basically used for taking the employees follow-ups and transferring the task
and objectives in adequate manner. This helps in developing the individually behaviour and
attitude regarding the working so that they get the pay as per their performance. This will helps
in reducing the complications in working and rewards. IN this employees can get the
appriciateion for their good work in the form of salary, bonus, incentives etc. so that they will
retain within the organisation and also satisfied with their working culture. In this individual
performance pay is basically based on the integration of efforts that involves feedback
mechanisms, pay, reward and incentives, performance management system, pay, objectives
execution process etc. so that workers are always the on the priority list. The performance related
pay is a process that is used to solve the several issues. In terms of Leon restaurants, manager can
focus on enhancing the pay that can emphasis and encourages the employees towards effective
working, this also helps in implementing the change for longer sustainability and reducing the
overall operating cost for maximising the profits. In this firm will focus on equality pay scheme
in which they can pay their employees according to their capabilities, responsibilities so that they
can focused and committed with their work in effective and efficient manner(Konrad, Yang and
Maurer, 2016).
In related to manufacturing sector, the employees performance is to be developed and
improved by getting the monetary benefits. This helps in enhancing the sales of the organisation
by which benefits of employees are also positively increased. The performance related pay helps
in redesigning the employees working abilities on regular basis so that objectives can be attained
in effective and efficient manner. This PRP system is used to encourages the employees so that
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their efficiency is to be enhanced for attaining the goals. This will motivates the employee
internally such as providing responsibilities, recognition, advancement etc. and externally
offering salary, incentives, compensatory that will satisfy the employees individually(Cooke,
Xiao and Xiao, 2020).
Considering circumstances related to IPRP tends to motivates employees why and what
circumstances tends not to work so well
IPRP is denoted as a individual performance related pay that is basically used by the
Leon restaurant for encouraging the employees in terms of monetary basis so that they can give
their best in positive way. It is basically helps in doing the cultural change because better
encouragement can be provided by the company to their employees. In this employee behaviour
is motivated by getting the incentives and better recognition in terms of financial benefits. In this
employees is awarded by their performance and effective outcomes. This will developed the
connection and commitment as employees can received the rewards effectively. In case of Leon
restaurant that is a food company in which they offers the appropriator income to their workers
as per their job experience. In this restaurant employees like waiters, chefs etc. are getting their
pay as per their job role so that they can work in favour of company and lead the organisation in
UK(Jiang and Li, 2019).
In case of occupation, it reflects the values as per economic downsizing so that
competency can be gained and demands and needs of the market can be fulfilled as per the trend
of the marketplace. Occupational performance relates to the potential performance that
represents the ability of choose, manage and satisfy the several set of issues that are considered.
This sector is also offer the better salary to their workers but wants a better expectation in return.
If employees get better salary they get motivated for working and put their inputs to get higher
outputs. The standardized income of UK is based on £29,600 that is average household as in
food sector such as Leon restaurant is around £20,600 that is based on the average salary. If the
person can get the rewards and pay benefits than they work productively and proficiently. The
basis of individual performance related pay is based on their behaviour and attribute so that they
can motivates towards the working. Financial rewards are the factor that can help in motivating a
person individually. For instance- in this financial manager of Leon restaurant can get the salary
adequately than they highly focus on their working culture and adopts the changes effectively
and addressed it in an appropriate way. In this employees can put their all efforts so that project
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is to be complete in set time frame due to this employees participation is also to be improvised.
In this high values and relations is to be developed that will helps in retaining the employees
within the organisation for a longer time period(Amini and et. al., 2016).
In some circumstances the IPRP tends to not working and also de motives the employees
in several manner that includes reducing pay equity, discrimination level is enlarged,
demotivation by not attaining the targets, the task is much complex. Contaminate the review of
performance, employees pressurised, quality and style of management in working area, feel
underestimate within a team, not getting proper coordination, doesn't work in the recession
climate, attaining the quantity objectives is to be reduced etc. In case of salary, PRP concept is
used by the company in which firm will delivers the short rewards to their workers that directly
impact on merit based payment that will limits the inflation and reserved the payment. IN case of
Leon restaurant, manager can stated that employee pay is helpful as a supportive factor but not
influenced the worker as a primary factor(Brewster and et. al., 2016). This individual
performance pay benefit is beneficial and supportive only with top performers but not all their
staff because there are huge number of staff that core verdict is related to expenses. This also
bifurcate the employee and employer as per the pay due to this engagement is not done properly.
In food sector that is Leon restaurant, manager can provide the pay benefits only those workers
whose performance is best and most effective that helps in completing the task on time basis.
This will negatively affect the other employee task and also placing the issue in rebuilding the
trust in decision making aspect(Mondy and Martocchio, 2016).
CONCLUSION
From the above report it is to be concluded that the strategic human resource
management is very vital for the business. This term is very helpful in encouraging and
motivating employees so that moderate impact can be shown in the employees that can enlarge
the competency in appropriate way. It is very helpful in achieving the effective outcome in time
frame so that high success and growth can be faced by the company. It is very effective for
diversify the effect of employees and its performance so that goals can be attained in proficient
manner.
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REFERENCES
Books and Journals
Amarakoon, U. and et. al., 2018. Learning capabilities, human resource management innovation
and competitive advantage. The International Journal of Human Resource
Management. 29(10). pp.1736-1766.
Amini, M.T. and at. al., 2016. Prioritisation and performance evaluation of employees at
strategic human resource management process using fuzzy AHP and fuzzy TOPSIS
methods. International Journal of Productivity and Quality Management. 17(1). pp.61-
81.
Armstrong, M., 2016. Armstrong's handbook of strategic human resource management. Kogan
Page Publishers.
Brewster, C., and et. al., 2016. International human resource management. Kogan Page
Publishers.
Cooke, F.L., Xiao, Q. and Xiao, M., 2020. Extending the frontier of research on (strategic)
human resource management in China: A review of David Lepak and colleagues’
influence and future research direction. The International Journal of Human Resource
Management, pp.1-42.
Jiang, K. and Li, P., 2019. Models of strategic human resource management. Sage handbook of
human resource management, pp.23-40.
Konrad, A.M., Yang, Y. and Maurer, C.C., 2016. Antecedents and outcomes of diversity and
equality management systems: An integrated institutional agency and strategic human
resource management approach. Human Resource Management. 55(1). pp.83-107.
Macke, J. and Genari, D., 2019. Systematic literature review on sustainable human resource
management. Journal of cleaner production. 208. pp.806-815.
Mondy, R.W. and Martocchio, J.J., 2016. Human resource management. Pearson.
Zaid, A.A. And et. al., 2018. The impact of green human resource management and green supply
chain management practices on sustainable performance: An empirical study. Journal of
Cleaner Production. 204. pp.965-979.
Online
Performance-related pay, 2020 [Onlin]. Available through
<https://www.cipd.co.uk/knowledge/fundamentals/people/pay/performance-factsheet>
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