Strategic Human Resource Management: Performance Pay and Zara Analysis

This report delves into the realm of Strategic Human Resource Management (SHRM), examining the efficacy of individual performance-related pay (PRP) in enhancing employee performance. The report uses Zara, a fast-fashion retailer, as a case study to evaluate the extent to which PRP can stimulate higher performance levels. It explores various circumstances that motivate employees, such as fair appraisal techniques and clear communication, while also identifying situations where PRP might falter, including budget constraints and lack of employee engagement. The report emphasizes the importance of aligning work with employee skills and addressing individual differences to foster motivation. Furthermore, it discusses the significance of a healthy work environment and the potential negative impacts of favoritism or inadequate income on employee morale and productivity. The analysis highlights the multi-faceted nature of SHRM and the need for a comprehensive approach to employee management to achieve organizational goals.

Strategic Human
Resource Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Critically evaluate the extent for the individual performance related pay that can stimulate
higher level of performance of employees..................................................................................1
Circumstances that tends to motivate employees and situations in which it does not work so
well..............................................................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Strategy is considered as the multi-dimensional concept that goes effective beyond the
traditional competitive strategy and it is the broad concept that set specific direction. Along with
this, it define the proper pattern of action, policies and decisions that tends to guide the group
towards the goals. Strategic human resource management tends to design and help organisation
in terms of meeting the requirements of employees and also promote the goals and objectives of
company. Along with this, the human resource management deals with various aspects of
organisation that tends to influence employees like recruiting, pay, benefits, training and
administration (Han, 2019). It is the proactive management of people that require better thinking
and also meet the requirements of employees. To carry forward this report, Zara is considered
which is a Spanish apparel retailer and specialise in fast fashion and other products like clothing,
shoes, beauty, perfumes, accessories and so on. It is the biggest company in Inditex group and
also manage up to 20 clothing collections in a year. Moreover, the report tends to evaluate the
individual performance related pay that tends to stimulate the higher level of performance from
the employees and consider circumstances of IPRP that leads to motivate employees.
MAIN BODY
Critically evaluate the extent for the individual performance related pay that can stimulate higher
level of performance of employees
The performance related pay system is undertaken as the remuneration system in which
the reward for employees are prominently depends on the performance of employees and Zara as
well. In terms of this, individuals who are recruited for the same project and in which one
individual substantially surpass and the other ones contribution should be rewarded on the
grounds of finance (Järlström, Saru and Vanhala, 2018). For this, the system of performance
related pay introduced in an attempt for the public sectors. In terms of this, there is an
expectation in order to increase the efficiency and productivity of Zara for the legitimate efforts
of workers that are properly recognised as the performance indicator and also feel motivated as
they are committed for their job.
Performance related pay is the method of compensation which significantly accept the
sound management practice which is important to pay as compared with other awards and some
of them tends to deny as the powerful motivator. It is undertaken as the principle of performance
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pay in which two or more people are employed to perform the same job and one individual
perform higher level than others and also paid more for his performance. Besides this, PRP tends
to motivate for the effectively perform more than their current level and also measure various
methods as it tends to create healthy competition. This process is linked with the result of annual
salary that review the proper assessment of the individual performance as company tends to
encourage the culture for high performance and reward high achievement employees. In order
increase the performance of employees, the manager of Zara tends to perform PRP process to
stimulate performance which is discussed as under:
 Zara need to use appraisal technique which is helpful for them to assess the performance
of employees with effective result and also review in terms of determining the pay award
and value which is received by employees. For this, Zara need to check that its
employees need to prominently perform management process by making sure that
performance should be measured and should achieve higher performance rating.
 Line managers tends to develop significant objectives for reviewing the performance of
employees and appraisal against each other as they are properly trained and competent
for the overall procedure (Kaufman, 2019). In terms of this, employees of Zara who are
not performing properly, for this line managers should have the capability to hold
complex chat with them and develop effective plan of action in order to enhance the
performance of employees.
 In terms of this, small budget is also available for the performance related pay that review
for the resulting pay which increase and may not enough to encourage workers for their
effective performance or at higher level and to differentiate among different levels of the
performance of employees (Li, 2018). In terms of this, employers of Zara does not have
sufficient budget for their performance related pay that look things from the other way in
terms of the payment for the annual pay reviews and recognise the performance of
employees.
 Here, if employees does not involve in the performance process and does not have proper
faith regarding the performance related pay system. Employees engagement in Zara tends
to enhance by making sure that they are properly understood in order to offer their skills
by brushing it up with training and the system processes. Considering this, employees in
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this scheme has the great place to start their thing but if the scheme is already in place
then employers need to seek feedback from employees at the end of pay review cycle.
Therefore, communication is the key factor of business world which is undertaken as the
prominent key regarding the human interaction. As communication is placed in the heart of PRP
process and for this, management and HR department tends to communicate efficiently to their
employees regarding the reason for selecting the significant objectives for the execution method,
performance management system, pay and rewards schemes and so on that are linked with PRP
(Longoni, Luzzini and Guerci, 2018). In addition to this, there has been various reasons of
employees of Zara for the switching system which is based on the performance related pay but
out of this the significant reason to promote the culture for change management. As it depicts the
effective encouragement for the staff by offering incentives that depends on the performance
instead of focusing on the length of service by introducing the greater flexibility and equal
treatment that tends to accomplish by the employees of Zara. It leads to motivate overall team to
effectively work and contribute for the overall productivity development and solve the problems
regarding the hiring and retention of employees.
Moreover, in Zara employee productivity stimulated by various factors as on the
significant among them is the PRP as it is useful for company in order to increase their
productivity for various reasons. As in first situation there is the chance of imbalance the
information regarding the abilities and competence that induce the amount of efforts that are
required. Moreover, in the process of hiring PRP system which is used as the technique of
overseeing and encouraging only those individuals who are capable and productive.
Circumstances that tends to motivate employees and situations in which it does not work so well
Motivation is considered as the key performance component which suggest the
performance regarding the function of ability, motivation and opportunity. In terms of this,
ability depicts the competence of team to perform their task and opportunity depicts the timing
and situation around the task. For this, managers influence the employees to become more
productive by considering the understanding of the sources of motivation and also create sources
of motivation for their employees (Looise and van Riemsdijk, 2020). In terms of this, employees
of Zara suffers because of favouritism as they fact partiality around them that tends to
demotivate their performance and tends to cut down their efforts. In relation with this, the
managers of Zara need to do equal treatment with their employees and timely conduct
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performance appraisal which is useful in order to boost the overall performance and make their
efficient to perform their job role. Despite from this, it is important for the manager of Zara to
consider the needs and requirements of employees which is helpful to accomplish their targets
and objectives which is helpful in order to create sources of motivation for their employees. For
this, proper satisfaction of employees of employees is important in terms of motivating them to
perform effectively and tends to achieve suitable goals and objectives. In regard of this, there are
some situations as well in which employees does not work well which consider, unhealthy
working environment, culture, partial performance appraisal and so on (Macke and Genari,
2019). Like if the managers of Zara make partiality among their employees and it tends to
demotivate employees in order to perform well and it automatically leads to impact the sales and
profitability of company. For this, the managers of respective company tends to organise proper
training and development program as it useful in making them more efficient and provide them
satisfaction regarding their needs and job (Pattanayak, 2020). In terms of this, the needs of the
employees manifest themselves by the desire in order to acquire their new skills and also take
new challenge on the side of new way that leads to accomplish life goals of employees. Along
with this, proper motivation tends to design the working settings which is based on the
observations of individual and other components that get proper empirical support.
 In terms of this, situation include the kind of occupation, if employees does not get work
or task according to their skills and capabilities or that matches with their interest then
they get discourage in order to perform their job role (Starr, Ganco and Campbell, 2018).
For example, in Zara their managers tends to delegate work as per the skills and
experience of employees that matches the interest level as well because it is useful in
making them more efficient towards their work and make them efficient enough to
perform task and meeting the required deadlines.
 In regard of this, it also include the standard of income as if workers does not get proper
income which tends to consider the income level among employees. For example, if the
workers of Zara does not get proper income then it tends to discourage their overall
performance as it leads to develop dissatisfaction among them. Employees start thinking
that they give their level best in company but they does not get proper pay in terms of
their overall performance (Stewart and Brown, 2019). Furthermore, considering this, it is
not worthy for the image and reputation of company and in terms of this, manager should
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opt proper factors which is useful for the company in terms of accomplishing their image
and reputation. Effective image also helpful for Zara in order to become the leader of
market and attract maximum number of customers towards their performance.
 Individual differences, refers to the difference in behaviours, attitudes and attributes of
individuals and more specifically of employees. These differences make people unique
from one another and it implies their indifferent motivational factors which encourages
them and make them work with utmost potentials by their will (Zaid, Jaaron and Bon,
2018). For instance, employees may be motivated by making higher pay slip at the end of
the month in which they will be motivated by Individual Performance Related Pay
system. On the contrary some may want to reach to higher position in company and they
will not be satisfied with higher pay and this will demotivated them causing to leave the
job.
CONCLUSION
By considering the above discussion, it is identified that strategic human resource
management is the sum total of strategy and human resource management which is the
distinctive approach for the management of employees in order to seek achieve competitive
advantage by strategic deployment using integrated array for structural, cultural and personnel
techniques. It also tends to evaluate the performance pay of individual and on that basis their
level of work and efforts to accomplish their goals and objectives. It also describe the situation
which is useful in order to motivate employees and other circumstances that discourage workers
for their efforts and performance.
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REFERENCES
Books and Journals
Han, J. H., and et. al., 2019. The goldilocks effect of strategic human resource management?
Optimizing the benefits of a high-performance work system through the dual alignment
of vertical and horizontal fit. Academy of Management Journal, 62(5), pp.1388-1412.
Järlström, M., Saru, E. and Vanhala, S., 2018. Sustainable human resource management with
salience of stakeholders: A top management perspective. Journal of Business
Ethics.152(3). pp.703-724.
Kaufman, B. E., 2019. Managing the human factor: The early years of human resource
management in American industry. Cornell University Press.
Li, Y., and et. al., 2018. From employee-experienced high-involvement work system to
innovation: An emergence-based human resource management framework. Academy of
Management Journal. 61(5). pp.2000-2019.
Longoni, A., Luzzini, D. and Guerci, M., 2018. Deploying environmental management across
functions: the relationship between green human resource management and green
supply chain management. Journal of Business Ethics.151(4). pp.1081-1095.
Looise, J. K. and van Riemsdijk, M. J., 2020. 15 Globalisation and Human Resource
Management: The End of Industrial Relations?. European Labour Relations: Volume I-
Common Features, p.300.
Macke, J. and Genari, D., 2019. Systematic literature review on sustainable human resource
management. Journal of cleaner production. 208. pp.806-815.
Pattanayak, B., 2020. Human resource management. PHI Learning Pvt. Ltd..
Starr, E., Ganco, M. and Campbell, B. A., 2018. Strategic human capital management in the
context of cross‐industry and within‐industry mobility frictions. Strategic Management
Journal. 39(8). pp.2226-2254.
Stewart, G. L. and Brown, K. G., 2019. Human resource management. John Wiley & Sons.
Zaid, A. A., Jaaron, A. A. and Bon, A. T., 2018. The impact of green human resource
management and green supply chain management practices on sustainable performance:
An empirical study. Journal of Cleaner Production. 204. pp.965-979.
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