Discussing Performance Related Pay: Benefits, Drawbacks, Assumptions

This essay provides a detailed discussion of Performance Related Pay (PRP), exploring its benefits such as improved efficiency, increased worker morale and loyalty, enhanced employee engagement, reduced turnover, and better recruiting. It also addresses the disadvantages of PRP, including potential demotivation of non-rewarded employees, a negatively impacted competitive company culture, unrealistic payment expectations, a focus on rewards rather than goals, and subjective performance measurement. Furthermore, the essay differentiates between hard and soft Human Resource Management (HRM) approaches, highlighting that hard HRM focuses on workforce needs and cost control while treating employees as resources, whereas soft HRM emphasizes individual development and employee motivation, fostering a two-way communication and valuing employees as essential assets. The essay concludes that while soft HRM is generally more feasible for long-term employee relations and positive outcomes, there are situations where hard HRM may be necessary for strategic decision-making and business expansion.

Question 4: Discuss the benefits and disadvantages of Performance Related Pay. Consider
in your discussion the key assumptions about human motivation that is at the heart of this
practice.
Performance related pay (PRP) is a method which is mainly used by the company and it is a
method of remuneration that provides individuals in term of financial rewards that helps to
increase their basic pay and it is also related to assessment of performance that is also agreed by
the objectives. Further, it is a kind of an incentive that helps to increase the employee
performance. It can be also stated that with the help of performance related pay, company can
reinforce the existing culture and this might affect the results in positive manner as well. That is
why, it is a type of motivation strategy which is used by top businesses with an aim to improve
the performance and meet the defined aim of a company as well. Overall, it is a method for
encouraging good performance and also prevent employee to increase their wages because they
get this amount in the form of extra pay which is not counted under salary but a sense of
motivation increases.
Advantage:
 With the help of PRP, company gives a manager and workers an incentive that helps to
improve the efficiency and productivity. This in turn assists to lower the cost and also aid
business to lower to increase the profit. This in turn also assists to improve the
performance of employees because employees automatically get motivated as they earn
financial benefits regarding the same.
 PRP also improve the worker’s morale and loyalty, if they feel any hard during their
work which is rewarded. Thus, it assists to generate a sense of belongingness among
employees so that they attain the defined aim of a company. There are many situation,
where employees feel demotivated and that is why, there is a need to opt such strategy by
HR of a company that contribute to motivation and raise the performance of an employee
as well.
 Employee engagement is another benefit which is attained by using PRP within a
company because offering financial rewards to their employees always sustain a better
and long term relationship for the employees. It is human nature because once human get

any benefits regarding to financial term then it always assists to engage with a firm for a
longer term.
 Reducing turnover is another key benefit of implementing PRP within a business because
in this era, retaining employees for a longer term is quite difficult and that is why, there is
a need to increase pay and offer extra benefits to employees as well.
 Better recruiting is another advantage of using this method because it always helps the
business to improve the results in positive manner and this might improve the
performance of an employee’s towards a positive manner.
 In addition to this, Performance related pay also change the role and working patter of
supervisor because it always helps the employees to make decision and motivates them as
well. That is why, there is a need to use this method because it helps to improve the
business performance and sustain the brand image of company as well.
Disadvantage:
 Sometimes, using this method might cause negative impact over the business because this
might demotivate other employees who do not get any advantage regarding the same.
This also affect their performance within a company and that is why, it might affect the
performance of a company.
 If the culture of a company becomes too competitive then the morale of employees
affected in negative manner. That is why, it affected the business environment in negative
manner as well. This also affect the employee performance because working in negative
environment becomes too tough within a business and this might cause adverse impact as
well.
 Most of the employees might expected more payment for work and performance beyond
their goals and this might hamper the results as well. That is why, most of the top
business do not use this method because its drawback affects the results adversely.
 Employees might be focus upon the rewards instead of attaining the goals and this always
affected the results adversely. This negative behaviour towards working always affect the
business performance and their pattern of working as well.

 Manager or HR of the company sometimes become more subjective regarding measuring
the performance and this always leads to cause conflict among employees and this affect
the results in negative manner as well.
Question 5: Discuss the differences between the so called ‘soft’ and ‘hard’ Human Resource
Management approaches. Consider in your discussion whether a distinction between both
in practice is feasible.
Hard HRM approach: It is the approach which is used by the company and main focus is to
determine workforce needs so that company can recruit the people in effective manner. The main
purpose of using this method is such that it helps to meet the regular changes within employees
with a small empowerment. In this, HR mainly focus on the profit and that is why, they treat
their employees as a source of business. Though this method is not feasible because company’s
reputation affected as employees are nit respected effectively. This approach is work on the task
that needs to be done and cost control, also aid to meet the organisational goal.
The approach is also not feasible for the company because it is one-way communication
and also support towards autocratic leadership style. On the other side, this approach might help
to minimize the delay in a work with regard to convey the information at immediate basis. Thus,
it assist the company to improve the performance of employees so that the aim can be attained.
For example, in Hard HRM approach managers treat their employees like an ordinary resources
where workers needs to only follow the instruction by managers and adopt the same in their
workplace culture. That is why, it might affect the internal culture of a company, but on contrary
side assist to meet the defined aim of a business as well.
Soft HRM approach: This is mostly used by the company because emphasize individual and their
self-direction that assist the company to meet the defined aim by involving all the employees
towards a business aim. In this, employees are treated as an essential resources in a business
because HR offer reward and different ways to motivate them so that effective results can be
generated. Apart from this, under soft HRM approach, company discuss the same with
employees in order to understand their views pertaining to any issue so that they will also feel as
an important candidate for the company. That is why, it can be stated that there will be 2 way

communication in the business and it also lead to provide innovative ideas so that company’s
performance can be improved. In addition to this, it is just opposite of Hard HRM approach
because it is designed and followed to make the employees motivated to attain the company’s
goal and in return they get reward. Also, it helps to determine the importance of using or
adopting right approach according to the situation.
This is far feasible for the organisations because workers are valued as an important asset
and this in turn helps to develop a long term relationship with employees. Thus, company needs
to be follow this method over other, as it helps to create a better outcome and assist to improve
the performance of employees as well. In this methodology, company create a transparency
between employee and company so that long relationship will be attained. Using a democratic
management style within a business always support to meet the defined aim of a company and
this causes better outcome for a company. Another motive behind choosing this methodology
over other is such that company encourage employees to actualize their potential by adopting
soft HRM practice. However, it is not possible in Hard HRM practice. That is why, it can be
stated that most of the top and small business uses this approach in order to understand the
emotion of employees so that effective outcome can be generated.
By comparing and contrasting both practice, it can be stated that soft HRM approach is
far feasible because of having soft in nature and valued employee’s ability as well. This is not
possible in the case of hard HRM and might affect the increase employee turnover as well.
Beside this, it can be stated that there are many situation where HR of a company needs to be
adopt Hard HRM approach, as it is the only solution. For example, in order to invest and expand
the business at further level of success, company needs to adopt hard approach where the
decisions are taken by their end and this in turn help to improve the performance. This in turn
cause positive impact over the business and financial performance as well. However, for daily
work, soft HRM practice is far beneficial in order to maintain a positive outcome of a company