Strategic HRM: IPRP's Impact on Employee Motivation and Performance

This report delves into the realm of Strategic Human Resource Management (SHRM), specifically focusing on Individual Performance Related Pay (IPRP) and its effects on employee performance and motivation. The report uses Burberry, a luxury fashion house, as a case study to illustrate how IPRP can stimulate higher levels of performance by offering financial rewards based on individual achievements. It examines how IPRP can incentivize existing employees and attract productive candidates, emphasizing the role of goal setting and the potential for increased employee participation and job satisfaction. However, the report also acknowledges the limitations and potential drawbacks of IPRP, such as the creation of an unhealthy competitive environment, difficulties in accurately measuring performance due to market fluctuations, and the potential for demotivation if employees feel undervalued. Furthermore, the report discusses the circumstances under which IPRP motivates employees effectively, such as when targets are clear and rewards are directly linked to performance. Conversely, it explores situations where IPRP may fail to motivate, such as when performance measurement is inaccurate or when employees feel pressured or unsupported. The report concludes that while IPRP can be a valuable tool for enhancing productivity, it's crucial to consider its potential negative impacts and implement it strategically to foster a positive and supportive work environment.

Strategic Human
Resource Management
(Assessment 1)

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
How IPRP stimulate higher level of performance from employees...........................................3
How IPRP motivate employees and how it does not..................................................................5
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Human resource is considered as the asset of the company who work day and night for
the success and growth of the organisation. Human resource management is a practice which
involves managing the people in order to achieve better performance. The HR of a company is
entrusted with the main task to manage the workforce and involves the primary function of job
analysis and job design, recruitment and selection, training and development and many other.
Strategic HRM is the HR which is consistent and coordinated with an overall business objectives
so that it can improve the business performance (Konrad, Yang and Maurer, 2016). The
organisation chosen for this essay report is Burberry, a luxury fashion house which is
headquartered in London. It deals in the fashion industry and distribute and design ready wear
clothes, fashion accessories, fragrances, eye wear, leather goods and cosmetic. This essay report
shall deal with the individual performance related pay (IPRP) and how it can stimulate higher
performance and motivate employees. Also how IPRP does not work so well.
MAIN BODY
Strategic human resource management refers to the human resource that is consistent
and coordinated with the business objectives as a whole so that business performance can be
improved. It mainly works in such a way that its actions differentiate the business from the
competitors. Through the strategic HRM, the HR builds the link between the strategic direction
of the organisation and its people who are considered as the asset of the company.
How IPRP stimulate higher level of performance from employees.
The individual performance related pay is one of the reward system which offers the
employees some financial reward which is based on the assessment of their performance within
the workplace. This reward system is applied to the individuals only and the performance related
pay is applied to the team and group. It is measured by the pre agreed objectives. If looking from
the perspective of employer, they can use this IPRP as a tool to make work faster and harder
from the employees (Kasemsap, 2019). It helps in improving the productivity and efficiency of
the employees as financial compensation is often considered as the effective way to boost the
morale of the workforce. The individual performance related pay is best worked in the hard
working environment where the efficiency is required to be enhanced as it works to give positive
effect on the employee's loyalty as it works on individual and not on the whole team.

The employees are driven by this approach and the companies are utilising its benefits for
the success of the organisation. Burberry can make use of the individual performance related pay
and enhance the productivity of the employees. By this tool, it can firstly incentivise the existing
employees and then encourage the productive employees to apply for the job in the company.
The IPRP is based on the individual effort and not the group performance.
The scheme of IPRP firstly increases the employee participation which on one hand is
perceived that it increases their involvement in decision making and on other hand they have a
level of control over their job process which is considered as the way to make them feel more
motivated and satisfied from their jobs (Kundu, Mor and Gahlawat, 2020). It is said that the
workforce participation have a positive impact on the employee performance as it increases the
opportunity for the employee involvement which in turn helps in good ideas being flourished in
the workplace which increases the productivity and profitability of the company. The
relationship between the performance and participation is contingent on many interrelated factors
which requires the critical consideration.
The employer can set the goals of the employees so that they can improve their
performance as specific goal setting helps it hem to give their best to achieve the target and the
one who is without goal is demotivated. The individual who has challenging goals works to
achieve it by improving its performance and inhibits efforts and creativity to do their best. The
employer of Burberry can make use of IPRP by initially setting the goals for the employees so
that it can measure their performance by the pre determined goals and reward them for their good
performance.
The system of individual performance related pay stimulate higher level of performance
from the employees as they focus on achieving their target by hook or crook which helps them to
improve their existing performance and reach a level of higher performance. It helps in boosting
the company loyalty as IPRP inspire the workforce to be more invested in their work and give
result to the organisation by working hard (Knezović, Bušatlić and Riđić, 2020). The system of
individual performance related pay is based on many factors like standard of income, occupation
or the culture of the country. This system is applied on the employees and vary from employees
of different income. The financial incentive is fixed by the company according to their income
level and the occupation. Culture also plays an important role as the system of IPRP also vary
from culture to culture. For instance, the culture of Burberry is to motivate the employees and it

keeps such system which continuous motivates the workforce by offering them different
incentives based on their performance.
But looking from other perspective, this reward system of IPRP may help in boosting the
productivity of the employees but it will do so only for a shorter time period. Moreover the
individual performance related pay may create an unpleasant working environment as the
workers may feel that they are only worth for their production value. This system may increase
the performance level of the employee but it cannot build the positive culture rather it can lead to
create an unhealthy environment where the competition among the employees may turn negative
and affect the relationship among the workforce (Storey, 2016).
Another drawback of the IPRP is that it may become sometimes difficult for the
employers to measure the performance of the employees as there are numerous fluctuations in
the marketplace. For instance, Burberry operates the retail store where it offers luxury
fashionable clothes and accessories to the customers. The company offers IPRP to its employees
which may be affected by the prices of suppliers or economic downturn which may impact the
disposal income. This may result in decreased profitability as the employees may take less at an
end of the day for which they worked hard to give higher level of performance despite the
situation which is out of their control. So this system may help in stimulating higher performance
from the employees but on other side it can create unhealthy and negative environment in the
workplace and affect the positive relations of the workforce and tend to demotivate some of the
employees.
How IPRP motivate employees and how it does not.
It is very natural that the companies wants to connect a performance of the employee
with payments which are paid to them. An employee who produces better benefit for the
company tends to get promotion and the perception of the workforce creates the circumstances
where they get motivated by IPRP system (Jiang, 2016). This system varies according to the
occupation and standard of income of the employees. For instance, this system is suitable for the
employees who does desk work or is in sales team where targets are given and when achieving
the target, they are given extra commission or bonus.
The individual performance related pay may help the employers to motivate the
workforce and bring out their best. This is highly effective strategy to motivate employees but it
can be only effective if implemented effectively. For instance, Burberry must bring such

incentives which are based on their performance. The company can offer annual bonus to its
employees Based on their performance which will motivate them to give their best.
The employers motivate the workforce by offering them individual performance related
pay so that they can work hard and enhance their productivity. This will ultimately result in
increased profitability of the company and employees also feel motivated to stay in the
organisation for long run. This will decrease the employee turnover of the company.
For offering the individual performance related pay, the employer have to set goals so
that it can easily measure the performance of the employees. This goal setting will motivate them
to work harder and faster so that they can achieve their objectives and contribute to the overall
objectives of the company. The employees feel motivated to give their best as they are been
rewarded for their hard work and providing direct incentive will also help in defining the work
targets (Dragusha, Josimovski and Dragusha, 2019).
The IPRP will support the companies to create a healthy culture where everyone works to
achieve their pre determined objectives which will in turn motivate them to to contribute to
overall objectives of the organisation.
One such situation is when the employer sets the objectives and goals of the employees
which are clear, they are given responsibilities and mission so that they can easily accomplish
their objectives. This will enable them to work with productivity and efficiency and also help
them to develop their skill and knowledge. Another circumstance is that a job position which
gives greater benefit to the company due to the increase in the work volume and effort will
require the IPRP to motivate and encourage the workforce to fulfil their job responsibilities
efficiently and timely. Motivation is important for the employees as IPRP encourages them to
work more efficiently which results in growth and success of the organisation and also helps in
taking the competitive edge over the competitors.
But there are some circumstances when the individual performance related pay does not
motivate the workforce rather it creates such problems and issues which affect the organisation
as a whole. One situation is that the employer can measure the performance of the employees
accurately which in turn demotivate them as they are not being valued for what they have
worked hard and tends to loose interest in the job responsibility (Bhattacharyya, 2018). Another
circumstance is that some employees are not so communicative but when they execute their
assigned task they become equate to the one who are communicative but the employer may

become biased which in turn demotivate them. This demotivation affect the overall performance
of the company and impact the productivity and goodwill. Another circumstance when the
employees feel demotivated is that when they feel pressure in carrying out their task due to
various reasons like lack of support from colleagues or subordinates or when the objective is not
made clear which will discourage them in execution of activity and results in decreased
productivity. So Individual performance related pay sometimes encourages the wrong behaviour
in the workplace and results in negative environment.

CONCLUSION
It is concluded from the above essay that human resource management plays an
important role in bringing out the best from the employees. The HR manages to motivate the
employees so that their productivity is enhanced and efficiency is increased. The individual
performance related pay is a kind of reward system which is given to the employees on the basis
of their performance. It also helps to stimulate the higher performance from employees as it
motivate them towards the financial incentive which encourages them to work harder. This
system of reward motivates the employees to improve their performance and achieve their
objectives which ultimately contribute to overall goals. But on other side, it also creates a
negative and unhealthy environment as it increases the competition and creates a feeling of
jealousness among the employees. The culture also becomes sometimes unhealthy which in turn
lower the morale of the workforce as they feel less valued and less recognised which results in
decreased productivity and profitability due to less job satisfaction of the employees.

REFERENCES
Books and Journals
Bhattacharyya, S.S., 2018. Development of a conceptual framework on real options theory for
strategic human resource management. Industrial and Commercial Training.
Dragusha, B., Josimovski, S. and Dragusha, N., 2019. Social Network impact on strategic human
resource management and traditional recruitment process: Case study Republic of
Kosova. ILIRIA International Review. 9(1). pp.179-189.
Jiang, K., 2016. Strategic human resource management and organizational commitment.
In Handbook of employee commitment. Edward Elgar Publishing.
Kasemsap, K., 2019. Promoting strategic human resource management, organizational learning,
and knowledge management in modern organizations. In Advanced Methodologies and
Technologies in Business Operations and Management (pp. 879-891). IGI Global.
Knezović, E., Bušatlić, S. and Riđić, O., 2020. Strategic human resource management in small
and medium enterprises. International Journal of Human Resources Development and
Management. 20(2). pp.114-139.
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.
Kundu, S.C., Mor, A. and Gahlawat, N., 2020. Strategic human resource management and
employees' intention to leave: testing the moderated mediation. International Journal of
Productivity and Performance Management.
Storey, J., 2016. What is Strategic Human Resource Management?.