Human Resource Management Report: Lloyds Bank Performance Analysis

This report delves into the realm of Human Resource Management (HRM), specifically examining performance management strategies within Lloyds Bank. The report begins by introducing the significance of HRM in today's competitive business environment, emphasizing the need for organizations to attract and retain skilled employees. It then explores the concept of performance management, defining its role in aligning organizational goals with employee capabilities. The report analyzes the importance of performance management for Lloyds Bank, highlighting how it contributes to business success, employee motivation, and the provision of rewards. It outlines the steps involved in the performance management process, including goal setting, planning, ongoing monitoring, and feedback. The report also addresses potential biases in the performance management process, such as size of the bank, and the consequences of poorly structured procedures. Finally, it examines various factors that can influence performance measurement, such as service performance and the use of tools like the Balanced Scorecard (BSC). This detailed analysis provides valuable insights into optimizing HRM practices within a large commercial bank setting.

Human
Resource
Management

Table of Contents
INTRODUCTION......................................................................................................................4
TASK 1......................................................................................................................................4
QUESTION 1........................................................................................................................4
QUESTION 2........................................................................................................................9
TASK 2....................................................................................................................................18
Conclusion................................................................................................................................21
References................................................................................................................................22

Illustration Index
Illustration 1: Four indicators of commercial banks................................................................13

INTRODUCTION
Looking into the current business scenario of competitive global marketplace,
corporate bodies are continuously making their significant efforts to adapt changes according
to revolution in the business industry. Every organisation is keen to focus to attract large pool
of talented and high-skilled human resources, who can contribute to the success of an
enterprise. Thus, in accordance to the market needs and requirements and sustain in the
competitive market, it is necessary to adopt the HRM practices and theories in a significant
manner. The present report introduces and examine the different perspective of human
resource management within an organisation, along with the assessment of various processes
of employee development, resourcing, relations and rewards. For a while now, it has been
seen that performance management is becoming an augmentative bureaucratic process under
the provision of HR, which is why Lloyds Bank is taking sharp upturn to change their current
performance management along with reward system (John, 2012). To make this system in
line with the corporate strategy and culture, it is necessary to improve the employee
engagement system and focus on the numerous factors which can converge the performance
management of HRM within the workplace. In the present unit, emphasis is done on the
aspect of performance management and its contribution to the success of the Lloyds Bank
with the context of Lloyds Bank, which is a British commercial bank, along with a retailer
and considered as one of the 'Big 4' clearing banks. The report hereby, lay its concern over
several business issues, which have great impact on the formulation of HRM activities of the
Lloyds Bank. With the assistance of various HRM theories and methods, performance
management approach will be analysed in this module.
TASK 1
QUESTION 1
Performance management and its contribution to the organisational success
As per the provided case scenario, the HR director of large bank has analysed from
the annual performance appraisal interviews that there are many complaints arising regrading
performance appraisal systems within the workplace (Allen, Lee and Reiche, 2015). The
main reason found to be unfair judgements and assessment of employee's performance made
by line manager of the bank. Thus, it has become necessary to undergo with various factors
and issues that are pushing the aspect of performance management on the top priority of
every Lloyds Bank. Performance management can be defined as an effective process for
establishing an understanding of workforce' needs and demands and about what is to be

attained according to organisational purposes goals and objectives. In other words, it is a
distinctive procedure of alignment of organisational strategies and objectives with the skills,
competencies, requirements, development plans and agreed measures of employees within
the workplace. In the context of present scenario, it is the responsibility of the Lloyds bank to
bring improvements and developments in the performance management strategy (Importance
of Performance Management Process & Best Practices To Optimize Monitoring Performance
Work Reviews/Feedback and Goal Management. 2016). The Lloyds Bank should effectively
manage the performance of employees in the workplace, as it:
 contribute to the success of business by ensuring the alignment of efforts of
employees with specific organisational objectives;
 improve the motivation level of employees and enhance their performance by
providing them positive reviews and further opportunities for development and
training;
 avail a basis for linking rewards to employee's performance;
 provide more information about employees and their needs;
 Establish focus for the development and learning activities for employees to acquire
skills and knowledge;
 provide accessibility to clarify accountability related to performance and other
measures.
In accordance to the provided case scenario, the success of Lloyds bank is not just
dependent upon having right strategy and appropriate resources, it is also rely upon the
management skills of managers of the Lloyds Bank to support, direct and harness the groups
and individuals (Bloom and Michel, 2012). HR managers possess great role and
responsibilities to manage and arrange its human resources in an effective manner and get the
best results from the employees. Performance management process comprises of many steps,
which can be adopted by the Lloyds bank in its workplace in an effective manner. There are
many practices of reward systems can support the performance management system and also
impact on employee retention, job satisfaction and employee engagement level within the
Lloyds Bank. Some of these practices are mentioned below:
 By delivering feedbacks and reviews to individuals and groups
 Communicating and defining clear objectives and standards related to performance.

 Identifying the career paths for employees and providing them more responsibilities.
 By linking performance of employees with compensations and rewards.
 Providing learning and development opportunities to employees, so that they can
grow and prosper (Bloom and et. al., 2012).
 Identifying strengths and weaknesses, so that they can be availed with better
opportunities (Importance of Performance Management Process & Best Practices To
Optimize Monitoring Performance Work Reviews/Feedback and Goal Management.
2016).
Performance management process:
1. Set goals effectively: In performance management process the first step is set goal
effectively. In this step the two element are focused when developing goals. The goals
are written clearly and objectively and the goals are directly contributing to the
achievement of organization strategy( Certo, 2015). When organization setting goals
they not only address what is expected but also address how it will be achieved. The
job expectations and responsibilities should use as main guide when setting goals. The
objective of setting goals in organization to identify purpose of Lloyds company.
2. Begin with Performance Planning: This step is cooperative process between
employers and employees. In this step start with job description and analyse job
expectation then clarified expectation of job for each major area. In the performance
planning it is important to identify short term and long term objective of every job and
also understand that how they will be achieved. After identify goals analyse the
difficulties which would stand in the way of these goals being achieved. If any
difficulties then overcome through training, coaching and mentoring (Myers,2013. ).
The performance planning is design according company goals because it helps to
achieve objectives effectively and efficiently manner.
3. Ensure an Ongoing Process: Goal setting, performance planning, monitoring,
feedback, training is ongoing process which supports performance appraisal,
performance rewards and development. The ongoing process of performance
management helps to understand future goals and achieve individual objective or
Lloyds goals.

4. Improve Productivity Through Better Goal Management: Regular goal monitoring is
help to provide feedback, to make better performance plans and remove barriers
through proper goal management. Without a mechanism to regular monitor progress
against objectives , the ongoing process falls (Wickens and et. al., 2015). To better
goal management, the discussion of goal progress with all performance feedback
supports to understand goals and responsibilities and focus on future improvements.
The discussion should be delivered objective oriented and supportive. The process of
communication is open process to understand effectively employee problem and
understand that how employees motivate and how they improve their performance.
5. Gather Information From a Number of Sources: Gathering performance
information through various sources ensure that the factors are impacting on
performance or not (John, 2016). The information should be collect through sales
reports, deadline reports, feedback from others and personal observation. The
organizations used mostly 360 degree feedback methods to collect feedback from
everyone which is helpful to design future strategies and improve future performance
of employee and Lloyds bank.
6. Document: The organization records performance of every employee which is include
all negative and positive aspects of employee. Documentation of employees supports
when take decision of performance of individual. The purpose of documentation is
that they can record successes or performance which needs improvements.
Documentation is help to compare previous or current performance to understand
employee improvements. At the time of appraisal the documentation helps to
understand better individual performance. The records of employees will help to
assess employee performance and understand where employee needs improvement.
7. Adequately Prepare and Train Your Managers: Managing the another individual
performance is not an easy task and requires many skills. In the organization it is
ensure that the manager adequately trained or needed training to manage effectively
all the task related performance management.(people stream. 2013) This is especially
the case for new hired managers because they need to understand human behavior,
how to develop, how to motivate and how to deal with conflicts. The manager who
adequately prepared to provide and receive feedback and conduct a evaluation
performance meeting will be a major contribution in successfully functioning process
in Lloyds bank.

8. The review: The employee performance appraisal or review should be discussed in
organization. The review discussed upon job expectations, contribution and
evaluation methods (CHUANG and Liao, 2010). The review should be a written
conformation which is discussed already with employees. The review is should be
forward looking and target on future objectives. The review process in organization
are adopted frequently to better understand employee behaviour.
9. Link Performance Management With Rewards and Recognition: Organizations link
performance with rewards and recognition. Organization appraise employee
performance through no. of ways i. e formal recognition event, personal delivered
feedback and informal public recognition(Bloom, and et. al., 2012).This process
increasing performance and creates a sense of fairness. The rewards and recognition is
help to retain employee long-term in organization.
10. Evaluate and Encourage Full Participation and Success: The annual meeting does
not give effective benefits but the ongoing feedback and review is give effective
benefits to organization. Some organizations conducting performance review twice a
year or some are conducting frequently. The frequently performance review will be
give more benefits to Llyds bank. Its helps to creates atmosphere participative and
effective process of organization. The encouragement or evaluate by employers helps
to open communication with superior to clarify issues. This process helps to enhance
employee performance as well as organization(Chapron and et. al., 2014. ).
Consequences of poor structured procedure of performance management
There can be great consequences of poorly structured performance management
process. If employee's goals and objectives are not aligned with corporate strategies, then it
total waste of resources and time (Certo, 2015). Low employee engagement systems will tend
to lower down the performance of employees and also affect their morale within the
organisation. Moreover, inconsistent evaluation criteria may lead to mistrust, higher attrition
and lower productivity. However, it also necessary to differentiate the performance of top
employees with moderate performance level, with the help of many techniques and criteria.
They can be provided with various opportunities, performance ratings, compensations and
rewards according to their performance. Stakeholders can also get affected by lack of
documentation, accountability and visibility who are seeking to get more from the Lloyds
Bank. Furthermore, if its is difficult to access the performance information, then it will

become tough for the Lloyds Bank to determine the availability of training and development
programs in the workplace. There are other issues may also arise due to lack of proper
documentation.
QUESTION 2
Biases that can creep into the management process of performance
Earlier research and studies have found various points of performance measurements.
Some author have stated upon how well bank industry is performing and providing their
services to businesses and clients. Some others have evaluated the alignment of financial
performance and corporate environmental, in relation to analyse the contribution of
employee's performance in the success of the Lloyds Bank. However, it is also depicted by
Chapron. and et. al., 2014, that service performance should be considered as indicator of
performance management. Authors also suggest that the size of banks are main indicator or
performance measurement, such that large banks are performing better small banks, thus size
of banks are considered as an important factor in the measurement of performance of
employees. However, research have made and it is analysed that, many industries have
started using BSC (Balance scorecard) to evaluate the performance of employees, which is
considered as new trend for performance management procedures in banking industries.
After the financial crisis in 2008, banks are taking many effective steps to measure the
performance of employees in the workplace (Tulgan, 2010). Moreover, it is also necessary to
evaluate their capabilities and potentialities according to market change and economic
conditions. It has been seen that the new regulatory structures are highly affecting the
underlying economics of these businesses in terms of processing and payment card issuing.
The capital requirements is also increasing in banking industries (CHUANG and Liao, 2010).
Moreover, in the realm of modernisation and advancements in technology, the demand of
mobile phones are also increasing and becoming the important element. Revenue growth is
also affecting due to the weak economic conditions, regulatory instructions and low interest
rates. Lloyds Bank is efficiently trying to manage the costs, enhance product mix and deepen
the relationships with employees and customers (Colquitt and et. al., 2012). Moreover, in
order to overcome various organisational issues related to pay-scale and appraisal system, the
Lloyds Bank can adopt several methods to implement performance management system
within the workplace. Each organisations have different strengths and weaknesses to
implement this system, there is no single method is invented to measure the performance of
employees according to business needs and requirements. Dale, Cooper and Wilkinson, 2014

have classified appraisal method into absolute methods, relative methods and objective
methods, however, Florén, Rundquist and Fischer, 2016 have classified this system into
modern and traditional approach. Some of these methods are stated below, which can be
adopted the Lloyds Bank in its workplace accordingly:
 Ranking method: This method is considered as simplest form of appraisal method,
whereby employees are compared with each other according to their performance in
the workplace. Ranking method is traditional method, in which emphasis is given on
employee's traits, intelligence, leadership, creativity, leadership skills and many other
set of skills (Florén, Rundquist and Fischer, 2016). In ranking method employees are
scaled according to highest and lowest ranking, that id from best to worst. The
employee who is at lowest level, will be categorised under L and who is performing
best and at top level, will be indicated under category of H. So, this is an simplest
method, which can be used by Lloyd Bank in an effective way. However, there are
also some limitations of this methods, which need to be undertaken:
◦ It does not specify clearly that who is performing best and who is worst.
◦ If large number of employees will be there, it would become difficult to measure
and evaluate them with the help of this technique.
◦ Moreover, this techniques don't measure their behaviour, each employee has
different traits and attributes which need to be undertaken by employer in a
significant manner. 360 Degree Appraisal method: This is the modern approach, in which employees
are judged and evaluated on the grounds of their performance, job achievements and
evaluation of work rather than the personal traits in the workplace. This feedback
method is generally used for ascertaining the development and training requirements,
rather than for increment in pay scale (Griggs and et. al., 2013). According to this
technique, employees are judged and evaluated according to their skills, behaviours
and abilities, by knowing the view point of peers, colleagues, subordinates, team
leaders, supervisors, customers and clients (D. J). The Lloyds Bank has adopted this
technique, by interacting with employees and knowing their interests and behaviours.
In 360 degree feedback method, employees are being judged is likely to be more
realistic and correct. Unlike traditional method, this method can effectively used by
Lloyds Bank to evaluate the performance of employees within the workplace.

However, employees may also get negative feedback, which can highly influence
their review.
 Management By Objectives: MBO (Management by objectives) consists of the
traditional method to appraise the performance and for judgement. It says whether it is
superior or subordinates have common goals. This concept was given by Peter F.
Drucker. He also proposed that every individual has different types of responsibility
for getting the result expected from him. It measures the contribution of each member
to get the expected results. In MBO some steps are considered for completing the
objectives of organization are as follows
◦ Goal setting
◦ Standardized the performance
◦ Setting comparison
◦ Periodic review
1. Goal Setting: In MBO, the first step is to set the targets and goals which are to be
achieved by each person.
2. Standardize the performance: After the settlement of goals, the second step is to design
the standard for the employees like what is to be completed, what things are remaining, etc.
3. Setting comparison: After the standardized performance, third step is analysing the
standards with its targets and goals. This comprises of finding out whether it is according to
them or not. In other words, this step helps the Lloyds Bank in determining the difference
between actual and desired performance (Gruman and Saks, 2011).
4. Periodic review: In MBO, this final step assists organizations of banking industry to
check whether the goals and targets are achieved or not.
MBO helps Lloyds Bank to design the objectives and targets and link with them to
their standardized performance and pattern. It will help to be differentiate the actual and
desired level within the given time frame (Guest and et. al., 2012). MBO helps the banking
industry as it is not only for performance measurement while also for subordinates to plan,
organize and communicate activities in an appropriate manner. It also helps the managers to
control and debate.

 Behavioural Anchored Rating Scales (BARS): BARS is an effective method, which
combine all degrees of behaviour of employee according to specific performance. It
comprises of critical incidents, quantified ratings and narratives by anchoring the
scale with specific behavioural examples or good or bad performance (John, 2012)..
In the development of BARS, the following five steps will be involved:◦ Generation of critical Incidents: Critical incidents are essential for the evaluating
the performance of job. Employees who are aware of their job, will be asked to
describe the the critical reflection of effectiveness of ineffectiveness of their
performance (Jiang and et. al., 2012).◦ Development of performance dimensions: Then critical incidents are clustered into
the set of different dimensions of performance.◦ Reallocation of incidents: Allocation of critical incidents will be done according
to different groups, such that each cluster shows similar incidents (Kehoe and
Wright, 2013).◦ Scaling incidents: Then employee's behaviour will be described in each incident
according to the effectiveness and ineffectiveness of particular dimension. Then
those incidents will be allotted scores
◦ Development of BARS instrument: The subset of critical incidents usually consists
of 6 to 7 clusters, used as behavioural anchor for evaluating the performance.
The critical incidents comprises of several performance dimensions, such as
conscientiousness, knowledge and judgement, skills in human relations, skills in monetary
transactions, and observational abilities (Li and et. al 2013). BARS method is an effective
approach that can be used by banking industry in an effective manner. It is best method, in
which employee's are evaluated on the basis of clear standards, accurate gauge and
feedbacks.
 Balance Score card for Banks: In BSC, performance criteria are associated with
different groups according to multiple dimensions. It includes financial and non-
financial criteria in a balanced manner in the report. While measuring the
performance, balance weight has been given to all dimensions of performance criteria
in BSC (McDonnell, Scullion and Lavelle, 2013). The balanced score card usually
have four perspective, that are process; financial; customer and learning perspectives,
according to which performance of employees are evaluated ( John, 2012).

Thus, Lloyds Bank can effectively make use of BSC in its workplace.
Issues associated with implementation and design of performance management systematic
There can be serious issues arise while formulating and assessing the performance
appraisal system within the bank. Some of them are discussed below:
 Not assessing the actual performance: Most of the HR managers of Lloyds Bank
focus on the personal characteristics, traits of a person, rather than focusing on the
actual performance of employees (Mendenhall and Osland, 2012). As performance is
output of volume, quality and responsiveness.
 Non-database assessment: Most of the decisions are taken on the basis of informal
assessment, due to which efficient employee suffer. So, it is required to conduct
formal assessment of performance within the workplace (Noe, and et. al., 2014.).
 Infrequent feedbacks: It is the primary goal of Lloyd's banks to identify and resolve
the issues arising in the execution of performance management appraisal systematic
within the Lloyds Bank. At regular time interval, it is required to assess the feedbacks
which are given by employees, customers, clients and stakeholders. Lack of integration: If the appraisal process is not fully linked with the development,
compensation, staffing and performance management of the Lloyd, then it will lead to
affect the morale of employees.
Evaluation of approaches of HR to ensuring effectiuveness of management of employees
It has been stated from the study that BSC has highly influenced the personal and
interactive learning and commitment of employees and line managers. Myers, 2013 has also
critically evaluated that to improve the banking performance and attain desired objective ,
BSC can be used as an effective and useful assessment tool (A Strategic Approach to
Performance Management in Banks: The Balanced Scorecard. 2014). Balanced Score card
has been raised the value of appraisal system, in accordance to the internal business process,
customer factors, growth, employee learning and financial factors (Myers, 2013). Moreover
the following figure states the main four indicator of commercialized banks evaluation index
criteria ( John, 2012)..

The above diagram stated all aspects of BSC, which can be implemented in large
Lloyds Bank, comprehensive aimed to acquire large market share and earn profits and
sustainability by providing best customer services. An evaluation criteria may provide
assessment to improve the performance of employees to high extent. This model is usually
used by all bank and provide complete understanding to managers of bank to implement
strategic performance measurement systems and also increasing the importance and
awareness of BSC measures (Noe and et. al., 2014). Lloyds Bank can make us of many
strategies and tactics to implement this technique in its workplace and take effective actions
to support organisation's strategy and vision. When BSC is implemented within the
Illustration 1: Four indicators of commercial banks
Source: A Strategic Approach to Performance Management in Banks: The Balanced Scorecard. 2014

workplace, real performance of employees and institute can be determined during the certain
period of time. Moreover, the resultant outcome is then compared to the targeted
performance. (Noe, and et. al., 2014.) Moreover, numeral amount and monetary sum is
achieved at the end of the performance management appraisal indicator, BSC. At each
performance, the maximum limit, minimum base and target value are stated ( John, 2012).
.
Approaches to mitigate detrimental consequences associated with apprisal programmes
The evolution of Balance scorecard has been considered as a significant turning point
for the performance management appraisal systems. There are various detrimental
consequences associated with appraisal programs (Pfeffer, 2010). These include infrequent
feedbacks and non data based assessment. Also, there is lack of effectiveness metrics in
appraisal programs. Further, various process related problems are also associated with
appraisal programs ( John, 2012).. These include disconnection from rewards, lack of
integration etc.
For mitigating the consequences, a number of approaches are available. The first
approach of mitigating detrimental consequences can be by implementing a system of
frequent feedbacks within the bank. Lloyds Bank can adopt a system where it can ask for
frequent feedback (C. Barry. 2015). This will help in bringing consistency in the performance
appraisal system. Further, there can be implementation of effectiveness metrics. Various
metrics which determine the effectiveness of an employee can be specifically and clearly
defined by the organization. Following it, appraisal of performance of that individual can be
checked.
Developing connection with rewards is the third approach that can be adopted for
mitigating detrimental consequences of performance appraisal systems within the Lloyds
Bank. It is important to link the process of performance appraisal with rewards. The scores of
performance appraisal should form the basis for getting a merit raise or bonus or even a
promotion (Ployhart and Moliterno, 2011). This will improve the link between rewards and
performance appraisal and will help in making the managers as well as the employees take
the process seriously. Also, the process can be integrated with the compensation,
development and staffing procedures. This integration will help in dealing with issues such as
duplication and missed opportunity (Noe, and et. al., 2014.). Along with this, approach of
comprehensive team assessment should be followed. There is a need for overall assessment
of team even if the individual of the team have been assessed. Moreover, the Lloyds Bank

can also adopt the approach of data-based assessment for carrying out performance appraisal.
There should be a proper balance between subjective as well as objective measures that are
used for carrying out performance appraisal (Colquitt and et. al., 2012). As there are issues of
bias associated with performance appraisal, the Lloyds Bank can train appraisers for avoiding
these biases. Furthermore, outcomes of each job should be identified. This will further help in
reducing the bias issues that occur during performance appraisal (Snape and Redman, 2010).
Also, the organization can make use of performance management model for implementing
performance appraisal system.
Recommendations of implications of best practices
It can be stated that the use of balance scorecard approach can be very effective in
carrying out performance appraisals of all employees. It can be also argued that carrying out
appraisal of employee performance is not an easy task and companies are required to deal
with lots of issues and challenges (Truss, 2011). Furthermore, companies are required to lay
emphasis on improving performance of employees instead of managing them. There are
various reason why Lloyds Bank has started using balance score card approach in order to
deal with the concept of entire performance appraisal ( Colquitt and et. al., 2012). The
reasons or benefits of above mentioned approach are provided below as:
 Nowadays nature of work has changed- It can be stated that at present the nature of
work in banking industry has changed a lot as compared to the traditional times. Now
it is not fixed or mandatory to carry out employees performance appraisals annually.
There are some businesses in the industry which carries out appraisal as per their
need and demand (Turner, Swart and Maylor, 2013). Nowadays, the reporting
authority from one single person has also changed to multiple persons and thus,
balance score card is more effective.
 The workforce is evolving- In the modern era, workforce of Lloyds Bank can be
considered as evolving one. Instead of focusing only upon measurement and rankings
now employers focus on other areas also such as developing long term relationship
with employees and providing them with opportunities for growth and development
(Noe, and et. al., 2014.).
 The use of technology help in measuring performance more effectively- At
present the rate of technological advancement and up gradations in the entire banking
industry has become very high. This has supported businesses in measuring

performance of employees on ongoing basis instead of waiting for the project to get
completed for carrying out performance appraisals.
 Maximizing employee overall productivity- It can be also stated that the use of
balance scorecard approach can help Lloyds Bank to enhance overall performance
and productivity of their employees. In order to achieve higher success and growth in
long run it has become very essential for companies to focus on increasing employer
performance and productivity (Vivares, Sarache Castro and Naranjo-Valencia, 2016).
This will create sense of satisfaction among workers and will encourage them to
contribute outstanding to overall success of the company.
Thus, it is recommended to Lloyds Bank to implement best possible performance
management appraisal system within the workplace, so that work performance of institute
and employees can be improved and attain organisational purposes goals and objectives.
There are various methods and theories are available, which can be used by it to motivate its
employees and enhance their working performance. It has been stated that BSC method is the
best suitable method, which can be used by it to enhance the confidence level of employees
and attain success (Wickens and et. al., 2015).
TASK 2
Performance related pay and skilled-based pay
Performance related pay scale is a financial reward system which is given to
employees through assessed their performance relative to declared criteria in Lloyds.
Performance related pay scale is used in a business for analysing the work of employees. It is
also used where employee performance cannot be measured in terms of output
produced(Colquitt and et. al., 2012). In organization, performance related pay is given to
employees whose work has reached a required standard or above average. There are many
types of performance related pay i.e merit pay, Incentive Payments, Group Incentives and
Productivity Gain-Sharing, Profit Sharing, Long Term Incentives and performance bonus.
The performance pay is good way to reward human resource because it assists the
employee’s growth as well as organizational growth (Zheng, Yang and McLean, 2010).
For employer's point of view the advantages of performance related pay is helpful in
implementing strategy in the organization because of its understandable structure of objective
and appreciated behaviour occurring in the company(Griggs and et. al., 2013. ). The
performance related rewards attracts and retain highly skilled employees and further it

reduces poor performance in the workplace. This pay system gives employers flexibility in
work and capability to reward high performers. The outcome of this pay system is motivate
employee's and improve Lloyds bank growth. This flexibility changes in the external but
mostly in internal environment in organization. The pay system also supports the existing
values, creativity and performance culture can also be developed in the workplace(Li, and et.
al 2013. ).
If employers are directly linked with reward of employee performance then they are
more focused on what they need to do improve their skill and performance. This system is an
effective way for dealing with poor performers (Noe, and et. al., 2014.). The performance
pay system is very important element in the employment relationship. The pay system is
essential aspect of employee, employer and government. To the employee because it raise
their standard of living and value of their work. To the employer because it represent
important part of his cost and increasing employee's overall performance, competitiveness.
Affect of pay system is recruit and retain a labour force of quality. To the government
because the micro-economic stability such as inflation, purchasing power, employment and
economic development also affect the pay system (Zheng, Yang and McLean, 2010). The
most important objective of PRP is that clarify to all employees goals and targets of
organizations. In the company by paying rewards supporting a performance oriented culture
and Appreciate individual performance and team work. If employers achieve objectives then
they would be able to use performance related pay to work for their profits (Noe, and et. al.,
2014.). They not pay extra but also help motivate employees to work harder. The PRP
system will also help them to become more aware of company’s goals. The benefits of
performance related pay system is that the organization pays right amount to the right
employee. Defines clear goals and remove out lazy employees (Zheng, Yang and McLean,
2010). Other benefits of PRP system is that it help in improving living standard of employee,
increasing productivity, improving labor management relation, flexibility in labor cost, long
term growth of company, better management and planning and maintaining corporate
property.
The performance related pay strategies are required to be modified depending
on the organization size. The number of employees in organization and the performance pay
rewards must be paid to employees for overall growth of the Lloyds bank.
The skill-based system is a company paid wages on the basis of job skill they have
acquired. This pay system is also known as a person based system because this system gives

monitory value on person characteristics rather than job. The bonus rewards or base pay
rewards are type of skill based pay system (Turner, Swart and Maylor, 2013). This
compensation system gives rewards to employee with extra pay in exchange of mastery of
skills, knowledge and competencies. The skills are obtained and observable expertise in
performing job. Knowledge is obtained because to perform every job information is used.
competencies obtain because traits needed when perform job or roles. In skill based pay
system employee receive extra pay when they prove the skills, knowledge or competencies.
The skill-based pay system is a good way to reward employee because it helps in job
enlargement and job enrichment by specifying narrow job classification. Increased flexibility
by appreciate the performance of multiple work. The SBP helps in job rotation when filling
temporary unfilled job, to absenteeism and for any instance case in Lloyds. It enhances
quality and increases productivity by using employees (Turner, Swart and Maylor, 2013).
This pay system gives higher pay, training and job enlargement which reduces
employee turnover. The skill-based system helps in reducing the need of supervision. It also
helps in controlling the planning and implementation and gives employees job satisfaction.
The skill-based pay system is incentives for employee self development. The pay system
provides employment security through skill enhancement. The system helps in career
planning and succession planing and the less competition among employees. This pay system
raises performance level of individual as well as organization and improves quality and
productivity (Wright and McMahan, 2011). The pay system Increases flexibility of skills
among employees and encourages the development of skills which increases the value of
organization. In organization, the employers must encourage employees to enhance their
skills as much as possible. The human resource should focus on acquiring new skills and
mastering existing skill through this pay system which is beneficial for the organization. The
communication process is enhanced because the individual have better knowledge , skills
and information of variety of jobs in work place (Zheng, Yang and McLean, 2010). The skill
based pay system is important for every organization and each company applied in their
workplace to reduce turnover and increased recruitment. The skill-based pay system helps to
develop new skills, knowledge, information and grow in a work which fulfill higher order
needs.
The skill based pay system is plays a crucial role in organization so they make
strategies for enhance this system. This system helps attract and retain highly skilled
employee and organization long term growth and success (Wright and McMahan, 2011). In

Lloyds bank for future growth or success the employers must paid skill based pay to
employees. Thus, it is very essential to know the importance of performance management
appraisal system within the workplace, due to which employee's morale increases and they
get motivated in an effective way. Moreover, the organization also tend to grow ans prosper
in the competitive global market place.
CONCLUSION
In this report, the aspect of performance management and systems associated with it
are discussed, which are adding the multiple dimensions in the increased performance and
productivity of an organisation. With the help of critical review and several other
suggestions, the issues and problems which are faced by banking industry has been analysed
in a significant manner. Many author have been claimed that, there is no significance of
evaluation of performance management within the organisation, but some other have argued
that, it increases the morale of employees and provide them a sense of satisfaction (Barry,
2015). However, there is no conclusive evidence has been revealed, but it can be depicted
from the above the study that performance management can be a vital contribution to the
organisational success. In the present report, the Lloyds Bank can effectively implement this
approach in its workplace by recognising the complexities of cross-cultural and operational
performance management, so that effective measures can be adopted, like BSC in a
significant manner. Furthermore, it can also be inferred from the above study that
motivational level of employees can be raise by providing them monetary and non-monetary
rewards, which will further also increases their performance and efficiency.

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