HRM Online Exam: Outsourcing and Performance Related Pay Discussion

This assignment provides a detailed analysis of two key aspects of human resource management: the implications of outsourcing for the role of HR in recruitment and the benefits and disadvantages of performance-related pay (PRP). The discussion on outsourcing covers its impact on HR functions such as training, talent retention, and conflict resolution, highlighting the potential for cost reduction and improved service delivery. It also explores how outsourcing allows companies to focus on core competencies and access specialized HR professionals. The analysis of PRP delves into its effects on employee motivation and productivity, weighing the advantages of incentivizing performance against potential drawbacks like mismanagement of profitability and reduced teamwork. The assignment concludes by emphasizing the importance of human motivation in maintaining productivity and achieving long-term organizational success. Desklib offers a wealth of similar solved assignments and study resources for students.

MANAGING THE HUMAN
RESOURCES
Online Exam | Question based test Papers

TABLE OF CONTENTS
TEST................................................................................................................................................3
QUESTION 2...................................................................................................................................3
Discuss the likely Implications of outsourcing for the role of human resources management in
the recruitment process...............................................................................................................3
Question 4........................................................................................................................................5
Discuss the benefits and disadvantages of Performance Related Pay. Consider in your
discussion the key assumptions about human motivation is at the heart of this practice...........5
REFERENCES................................................................................................................................8

TEST
QUESTION 2
Discuss the likely Implications of outsourcing for the role of human resources management in
the recruitment process.
Human resources plays a vital role in the company as they are responsible for providing
training and development to employees working in the firm. HR department is responsible for
retain talent, handle conflicts and build positive workplace (Michael, 2019). Transfer of roles and
responsibility for the management to an external party or any agencies is known as outsourcing.
Due to heavy competition in the changing business world, it is necessary to adopt outsourcing
arrangement.
Changing business structure sometimes push HR department of the company to focus on
providing benefits to employees. In today’s business environment, updated information system
with respect to HR increase HR performance, their working system such as providing motivation
to employees, lowering costs and others.
On the top of this, every company need someone to manage the services while
performing some strategic HR functions. Thus, human resources outsourcing is a method in
which a firm utilizes the service of the other party to take care of its function related to human
resources. For example- if a company want to recruit and select new employees so they can
utilize the services of the third party such as agency or other department to handle the
recruitment process. Some of the example of this function is staff training, payroll and job
evaluation.
Outsourcing for recruitment and selection procedure in the company is one of the
important aspect in which the management team of the firm can have a better means of managing
the human resources. According to (Boon, Den Hartog and Lepak, 2019) The major role of the
HR department is to motivate employees by providing them rewards and compensation and other
benefits too.
For managing human resource in the company, each industry needs to hire experts so that
they can provide training to employees. This process requires hiring a human resources manager
who look into the requirement of firm.

By understanding the implication of outsourcing HR department or human resources
functions helps to make a more important decision. With the help of this firm can make decision
about whether to recruit employee or not. They can make decision whether this choice is correct
for the firm’s productivity or needs of the organisation. In addition to this, outsourcing HR
functions has impacted the information technology and finance and various department of the
company. So, if the company adopted HR outsourcing function then they may get benefit such as
quality, good price and other, which is helpful to gain competitive advantages.
By outsourcing this function of human resources management company would be able to
provide more services and benefits such as benefit planning, payroll administration and creating
rewards system, offering wellness programs and employee training and development functions.
For example- when a company recruit an employee to manage human resources function, it is
necessary to have an exact cost for that staff member.
Moreover, an outsources human resources function might cost more than a staff member,
so, using outsourcing and its implication could lower overall expenses (Gottardello and
Valverde, 2018). A company may offer with suggestion of lowering payroll taxes, this helps
them to train and select more productive staff members and hence helps to manage higher
employee retention rates in the firm.
Assessing effectively company’s human resources function can be helpful to record and
manage work in house. To avoid any unnecessary harm, it is suggested to immediately made
copies of all work product.
By outsourcing human resource to an association, many industries can focus on the core
competencies which is beneficial for the performance of firm. The major advantage of using this
strategy, it will allow company to select the best talent or HR professionals for the benefit of
firm. By doing so, any company can save its cost, because it is cheaper as compared to the hiring
an in-house manager (Greer, 2021).
Nowadays, selecting and recruiting the employees so that they can work for a certain
company is an art and science. Therefore, outsourcing recruitment to HR professionals can
develop the talent acquisition quality which is helpful for the overall performance of the firm.
Benefits of outsourcing
The company can utilize this method to focus on internal resources so that employee can
make best efforts and contribution. It will also help to gain time efficiencies and gain cost so that

employees can get benefits and overall performance of the company can be maintained (Human
resources, 2022). As the HR is an important partner in improving organisational culture and
strategy, outsourcing will help them to improve benefits and services to staff members. They can
ensure the legal compliance, regulatory and best practice requirement so that risk can be
minimized.
Question 4.
Discuss the benefits and disadvantages of Performance Related Pay. Consider in your discussion
the key assumptions about human motivation is at the heart of this practice.
Answer: Performance related pay is basically the process that uses to link the salary of the
employees in order to increase the individual performance. The salary increase is added to the
basic pay of the employees (Papenfuß and Keppeler, 2020). The organization can use this
process when the output of the employees is getting low. There are some benefits and
disadvantages of this system which are described below.
Benefits of Performance reacted pay are as follows:
1. It helps the employees in order to increase their salary by increasing the performance of their
work.
2. The employees of the organization are more focused in order to increase their performance as
they are getting the higher pays.
3. By having the good Performance Related pay provides the rewards to the best performers of
the organization (Sundström, 2019).
4. This is the best of encouraging and motivating the staff of the company in order to increase the
performance and productivity of the company.
5. By providing the rewards to the employees makes the company to have and retain the best
employees in their organization.
6. This system usually provides the direct incentive to the employees in order to achieve the
planned and targeted work.
7. The reward given to the employees is always tangible as it makes the employees to feel
motivated in their work.

8. By having the healthy pay to the employees it increases their performance and also increases
the productivity of the company.
9. This makes the business to lower the cost of the resources and makes the business more
profitable.
10. It increases and improves the relationship between the employee and the organization.
Disadvantages of the Performance Related pay
1. This leads to mismanage the profitability of the organization and mismanages the work of the
mangers too.
2. In the sectors of the services, it is not easy to compare and measure the performances and
productivity of the employees (Pompei, Damiani and Ricci, 2019).
3. This performance pay may encourage the risk of the company as sometimes the organization
is not receiving the high profits from the market. So, it is difficult to provide the bonus to the
employees of the organization.
4. Profits which are related to pay the bonus may create the risk as sometimes the company
won’t be earning the profits in the organization.
5. The performance related pay may not work in the areas where the company is has working for
the short-term. The mangers of the company will not able to pay the bonus and incentives to the
employees.
6. The employees of the organization can get demotivated by not paying bonus and incentives for
doing good performance in the company.
7. It may reduce the equity capital of the company by providing the extra pay and incentives to
the employees of the organization.
8. This appraisal performance process may get affected because the focus of the employees is to
get the higher wages which sometimes decreases the quality of work in the business.
9. By applying this process the team spirit between the employees get reduces as everyone works
for their own high pays.
10. This may have the danger on the company that the employees may want the extra wages year
to year even at the inflation time also.
11. It makes the changes to be more difficult as employees don’t accept the changes easily.
12. It also affects the team work and only focuses on the quantity of work not on the quality of
the work done.

It is assumed that the performance related pay is very important for the employees in order to
maintain the productivity of the company. Human motivation is always have the positive effect
on the work and performance of the organization. Employees those who have the high level of
satisfaction always have the high incentive from the company (Al Rashdi, 2020). As
performance related pays is very important in order to make the employees good at their work. It
will also outline the goals and achievements of the person and takes the less time in order to
achieve the long-term success in the organization.

REFERENCES
Books and Journals
Al Rashdi, M., 2020. The impact of performance-related pay on employees’ performance: case
studies of Omani public and private sector organisations.
Boon, C., Den Hartog, D. N. and Lepak, D. P., 2019. A systematic review of human resource
management systems and their measurement. Journal of management. 45(6). pp.2498-
2537.
Gottardello, D. and Valverde, M., 2018. Human resource management outsourcing in Spanish
firms: Evolution over time and implication for devolution. Intangible Capital. 14(1).
pp.56-73.
Greer, C. R., 2021. Strategic human resource management. Pearson Custom Publishing.
Michael, A., 2019. A handbook of human resource management practice.
Papenfuß, U. and Keppeler, F., 2020. Does performance-related pay and public service
motivation research treat state-owned enterprises like a neglected Cinderella? A systematic
literature review and agenda for future research on performance effects. Public Management
Review. 22(7). pp.1119-1145.
Pompei, F., Damiani, M. and Ricci, A., 2019. Family firms, performance-related pay, and the
great crisis: evidence from the Italian case. Industrial and Corporate Change. 28(5). pp.1193-
1225.
Sundström, A., 2019. Exploring performance-related pay as an anticorruption tool. Studies in
Comparative International Development. 54(1). pp.1-18.
Online
Human resources. 2022. [Online]. Available through: < https://resources.workable.com/hr-
terms/human-resources-definition>