Challenges and Solutions in Performance Management and Reward Systems

This report delves into the critical aspects of performance management and reward systems within the context of the Australian clothing industry. It begins by highlighting the importance of employee performance and the diverse approaches businesses use to manage it, including regular assessments and feedback mechanisms. The report then analyzes the clothing industry in Australia, emphasizing its economic significance, revenue, and employment figures, as well as the growing influence of e-commerce. A central focus is placed on the challenges related to employee performance, often linked to inadequate performance management and reward systems. The report then defines performance management and reward systems, exploring their roles in enhancing employee potential, aligning with strategic goals, and motivating employees through recognition and rewards. The core of the report examines key issues such as lack of strategic focus, ineffective leadership, inadequate stakeholder review, and insufficient feedback. The report concludes by analyzing how these challenges impact the effectiveness of performance management and reward systems, particularly in the Australian clothing industry, and suggests improvements for better employee performance and overall business success.

Running head: PERFORMANCE MANAGEMENT AND REWARDS
PERFORMANCE MANAGEMENT AND REWARDS
Name of the Student:
Name of the University:
Author’s Note:

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Introduction
As opined by Greene (2018), the modern business firms are extensively focusing on
the attribute of employee performance so as to gain a higher profitability as well as the
desired level of growth. Marshall et al. (2019) have stated that the importance of employee
performance becomes apparent from the fact that the different business firms are using
diverse kinds of performance management processes for the effective management of the
performance or production of the employees. The resultant of effect of this is that the
business firms not only undertake regular or periodical assessment of the performance of
their employees but at the same time provide them with different feedbacks as well for the
improvement of their performance (Baird, Su and Munir 2018). In this regard, it needs to be
said that the construct of reward and recognition that the different business firms take the
help of for the purpose of motivating the employees but also for the purpose of enhancing the
performance of the employees. However, at the same time it is seen that there are various
kinds of issues or challenges that the firms face for the effective usage of the processes of
performance management and rewards. Some of the essential ones in this regard are
ineffective strategic focus, leadership support, ineffective feedback, stakeholder review,
excessive focus on quantitative data rather than taking into account the contribution made by
the employees towards the growth of the firms and others (Foss et al. 2015). The purpose of
this paper is to analyse the issues or the challenges that the business firms face related to the
usage of an effective performance management and reward system while suggesting the
manner in which they can overcome the same.
Clothing industry of Australia
The clothing industry over the years had become an important industry of the nation
of Australia not only because of the economic contribution that it makes towards the national

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economy of Australia but also on the score of the large variety of products that it offers to the
customers (Ibisworld.com.au 2019). For example, the clothing industry not only offers
different kinds of apparels, garments and others kinds of cloths to the Australians but at the
same time in the recent times the effective collaboration between the fashion industry and the
clothing industry had positively affected the business or the financial prospects of the
concerned industry (Ibisworld.com.au 2019). In this regard, it needs to be mentioned that the
annual revenue generated by the clothing industry of Australia for the year 2018 was $16.8
billion while it offered employment services to more than 110,000 people (Ibisworld.com.au
2019). More importantly, an important trend which is being seen within the framework of the
clothing industry of Australia is the fact that the e-commerce model of business is gaining
more popularity than the brick and mortar system of business. In this context, it needs to be
said that whereas the brick and mortar system of business registered a growth rate of 2.1% for
the year 2018, the same registered by the e-commerce model of business was more than
16.4% (Ibisworld.com.au 2019). However, at the same time it is seen that despite the
impressive growth rate of the concerned industry one of the major issues that the industry is
facing presently can be related to the ineffective performance of the employees. One of the
most important reasons for the same is the inadequate performance management system or
the reward system used by the firms which in turn had significantly contributed towards the
below-par performance of the employees.
Performance management and rewards
Henttonen, Kianto and Ritala (2016) have articulated the viewpoint that performance
management is the process through which the business firms try to create the kind of work
environment or work culture wherein the employees or the workers would be able to perform
as per their maximum potential and thereby realise the goals or the objectives of the
concerned firm. As opined by Kontoghiorghes (2016), the construct of performance

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management refers to the entire work system wherein an employee is hired and his or her job
roles are being defined till the time of their leaving the firm. More importantly, it had been
seen that the different business firms through the effective usage of the process of
performance management not only try to enhance the performance of the individual
employees of the firm or its different departments but at the same time the entire firm itself
while trying to ensure that the firm as well as its employees are being able to achieve the
strategic goals or objectives formulated by the concerned firm (Manroop 2015). In this
context, special mention needs to be made of the process of performance appraisals that the
different business firms are taking the help of not only for the purpose of analysis of the
performance of the employees but at the same time for the improvement of the same by way
of offering feedbacks (Greene 2018). As a matter of fact, it is seen that the employees are
given appraisals or salary hikes on the basis of the results of the performance appraisal
(Cadez, Dimovski and Zaman Groff 2017). This is important from the perspective of the
clothing industry of Australia wherein it is seen that the employees are unable to perform as
per the expectations of the firms. Thus, it is likely that if the firms take the help of the process
of performance management then they would be able to create the kind of workplace
environment or culture wherein the employees would be able to maximise their performance.
Furthermore, they can also take the help of the construct of performance appraisals for
regularly monitoring the performance of their staff and also for the purpose of offering them
feedback on the basis of their performance which will in turn enable them to improve their
performance in an effective manner.
Bhuvanaiah and Raya (2015) have noted that the entity of reward and recognition is
an integral part of the process of performance management used by the business firms and is
generally being used to improve the performance of the employees. The construct of reward
and recognition enables the business firms to appreciate the hard work put in by the different

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employees by way of offering suitable rewards, recognitions, perks and others to the
employees and thereby motivates the employees to perform in a much better manner as per
the expectations of the firm (Adler et al. 2016). More importantly, the construct of reward
and recognition also acts as a motivating factor for the employees who are not performing on
par or on standard with the expectations of the firms by way of showing them the rewards,
perks and others that they would get if they perform as per the expectations of the firm
(Landy, Zedeck and Cleveland 2017). The resultant effect of this is that the system of reward
and recognition had emerged as an important determinants of the performance of the
employees and it is generally seen that within the spectrum of the firms which are taking the
help of the concerned construct the employees are likely to perform in a much better manner
in comparison to the firms which do not (Gabriel et al. 2016). This is important from the
context of the clothing industry of Australia wherein it is seen that because of the Herculean
sales targets that the employees or the workers are being given they often fail to get the right
kind of motivation for the achievement of the same (Cadez, Dimovski and Zaman Groff
2017). More importantly, it is seen that despite being one of the leading industries of the
nation of Australia the firms related to the clothing industry do not have adequate reward
system which will motivate the employees to perform as per the expectation of the firms.
Thus, it is likely that through the usage of adequate reward system the firms related to the
clothing industry would be able to improve the performance of the workers in an effective
manner. On the score of these aspects, it can be said that the system of performance
management and rewards have become an integral part of the modern business firms which
greatly affect the performance of the workers.
Issues related to performance management and rewards
Heffernan and Dundon (2016) have noted that the different business firms face
various kinds of issues related to the effective usage of the process of performance

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management and also the rewards system which in turn significantly reduce the effectiveness
or the efficiency of the concerned constructs. Some of the most important issues in this regard
are the lack of strategic focus of the firms, usage of ineffective leadership styles, lack of
stakeholder review, inadequate feedback and others (Lueg and Radlach 2016). As stated by
Mone and London (2018), an important issue that the different business firms face related to
the effective usage of the constructs of performance management and reward system is the
fact that they do not always have clear strategic goals or objectives. In this regard, it needs to
be said that the entities of strategic goals or objectives are important because of the fact that
the entire business activities as well as the actions of the employees are directed towards the
achievement of the concerned strategic goals or objectives. Furthermore, the entire
performance goals or the performance management process used by the firms or for that the
reward system which is being used are dependent on these strategies objectives or goals
(Nguyen et al. 2017). Thus, it can be said that if the strategic goals or the objectives of the
firm are not clear then it can act as a significant issue for the firms regarding the performance
system that they are using. This becomes even more important from the context of the
clothing industry of Australia wherein it is seen that seen that despite having effective
strategic goals or objectives the firms are merely focusing on the enhancement of their
profitability or financial returns (Ibisworld.com.au 2019). This in turn leaves the employees
related to the firms of the clothing industry in a dilemma regarding whether they should focus
on the increase of the profitability of the firm or the attainment of its strategic goals.
Another important performance management and reward system issue that the firms
face is on the score of the ineffective review of the demands or the expectations of the
stakeholders. It is seen that the performance management or the reward system devised by the
business firms are in complete disregard of the needs or the expectations of the employees or
the stakeholders whom they are likely to affect the most (Shields et al. 2015). The resultant

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effect of this is that the performance management or the reward systems used by the firms fail
to fulfil the basic needs of the employees from the firms or for that matter motivate them to
perform in an adequate manner. For example, within the clothing industry of Australia it is
seen that the firms simply focus on monetary rewards for the improvement of the
performance of the individual employees and completely disregard the other needs of the
employees. The performance management or the reward system used by the firms related to
the clothing industry of Australia are completely designed from the perspective of the firms
rather than taking into account the expectations or the needs of the employees (Greene 2018).
The firms related to the clothing industry of Australia merely take into account the
quantitative performance of the employees and completely disregard the contribution made
by the employees towards the growth of the concerned firms. This in turn hinders the
formulation of an effective performance management or reward system by the firms related
to the clothing industry of Australia and thereby negatively affects the performance of the
employees related to the same.
Foss et al. (2015) are of the viewpoint that firms fail to determine the exact amount or
nature of rewards that they need to offer to the employees for the enhancement of their
performance. For example, it is seen that if the firms offer too much rewards to the
employees then it makes them complacent and thereby takes a negative toll on their
performance. On the other hand, if the firms offer inadequate rewards then this dissatisfies
the employees and thereby once again adversely affects their performance (Gabriel et al.
2016). Thus, it becomes very important for the firms to determine the exact nature or the
amount of rewards that they need to offer to the employees so as to enhance their
performance. Some other important issues related to the performance management or reward
system that the different Australia firms related to the clothing industry commonly face are

7PERFORMANCE MANAGEMENT AND REWARDS
inadequate support from the management team or the leaders of the firms, inadequate training
and others (Manroop 2015).
Possible ways of addressing the issues
There are various measures that the firms related to the clothing industry of Australia
can take the help of for the resolution of the different performance management or reward
system issues that they face. One of the most important ones in this regard is taking into
account the expectations or the needs of the employees or the workers during the formulation
of the reward system or the performance management process. This in turn will help the
concerned firms to effectively improve the performance of their employees by taking into
account their expectations or the needs from the firm which will in turn motivate them to
perform as per the expectations of the firms. In addition to this, the firms for the improvement
of the performance of the workers needs to offer adequate training to them so that they are
being able to perform as per the expectation or the needs of the employees. More importantly,
the management or the leadership style and also the organisational culture are also important
determinants of the performance of the employees and thereby it becomes all the more
important for the firms to formulate effective management or leadership styles and
organisational culture for the improvement of the performance of the employees.
Furthermore, the firms by taking into account the contributions of the employees towards the
growth of the firms rather than merely focusing on the quantitative data regarding the
employee performance would be able to improve their performance in a significant manner.
Reflection
I would like to say that presently I am working as a sales assistant in one of the major
firms related to the clothing industry of Australia. More importantly, I personally believe that
the findings of the paper are important from the perspective of my line of work since the firm

8PERFORMANCE MANAGEMENT AND REWARDS
that I work for does not have an effective performance management or reward system. As a
matter of fact, we are given aggressive sales target and also the prime focus of the firm is
solely on the revenue earned by it and this in turn had given rise to an aggressive workplace
culture or environment wherein the basic needs or the expectations of the employees are not
being fulfilled. In this regard, I would like to say that there are various issues related to the
performance management or reward system that the firm is presently facing. Some of the
most important ones in this regard are ineffective training, inadequate support from the
leaders or the management team of the firm, lack of clarity in the strategic goals or objectives
of the firm, complete disregard of the expectations or the needs of the employees and others.
Thus, on the basis of the findings of the paper I would recommend the usage of effective
leadership and management styles, adequate training, taking into account the expectations or
the needs of the employees for the formulation of the reward system, taking into account the
contribution made by the employees towards the growth of the firm rather than primarily
focusing on the quantitative data regarding the employee performance and others.
I am of the viewpoint that the firm which I work for need to take into account the
above-mentioned measures for the formulation of an effective performance management and
reward system in the future. This is important because of the fact that they would enable the
concerned firm to improve the performance management and the reward system that it is
presently using and thereby substantially enhance the performance of their worker. More
importantly, this is also important from the fact that it will help the concerned firm to
motivate the workers by showing that the firm is willing to take into account their
expectations or needs and thus they would be able to maximise their production or
productivity. It is on the score of these aspects that I would say these aspects of the construct
of performance management and reward system are likely to have important implications for
the concerned firm.

9PERFORMANCE MANAGEMENT AND REWARDS
Conclusion
To conclude, the different business firms extensively using the construct of
performance management and reward system for the improvement of the employee
performance. This is important on the score of the fact that the overall productivity of the
business firms is inextricably linked to the individual performance of the employees. More
importantly, the construct of performance management enables the firms to create the kind of
workplace culture or environment wherein the employees would be able to maximise their
performance and thereby help the concerned firms in the attainment of their business
objectives or goals. The construct of reward system is an important one in this regard since it
helps the firms to motivate the employees to perform in an adequate manner by rewarding the
hard work that they are putting in for the sake of the firm. These aspects of the construct of
performance management and reward systems become apparent from the above analysis.

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