Free Essay On Performance Management AND Rewards
The focus of performance management and rewards is geared towards the preparation and carrying out of human resource policies and guidelines to equitably compensate employees according to their level of performance. The central goal of this human resource function is to employ competent individuals and use reward programs to stimulate them to work towards the purpose of the organization while making it possible to retain them in the long run. In line with these objectives, the performance and reward management was developed according to the ideas provided by motivational theories. This paper aims to evaluate the different theoretical foundations that govern the role of performance and reward in motivating employees, as well as the contribution of this function to the organization as a whole. The performance and reward function is noted to work in line with the objectives of other functions of the human resource; thus, there is a need to elaborate on this discussion with the use of organizational examples.
II. Contribution to Organizations
It is the main responsibility of performance and reward management to keep the company employees’ drive and motivation to work. This human resource function is often associated with the idea of employee engagement, a notion that encompasses the workers' commitment and motivation to perform. Scholars are yet to come up with the exact way to define and measure employee engagement, but some psychologist explained that this idea “is something that individuals experience in relation to their work”(Arkin, 2011). When companies took an effort to keep their employees highly engaged and motivated, they can expect their people to show higher commitment and better performance in their work.
The performance and reward management was based on the theories of motivation where it is posited that people work with the perception that their effort will be rewarded in the process. People who are well-motivated and who have set clear goals act and expect to achieve those goals, accordingly, the achievement of the goal leads to satisfaction and the act is likely to be reinforced under similar circumstances (Armstrong, 2007). However, dissatisfaction occurs in instances where there is failure to achieve the specified goal. This is in agreement with the scientific management theory where it was theorized that: “It is impossible, through any long period of time, to get workmen to work much harder than he average men around them unless they are assured a large and permanent increase in their pay” (Armstrong, 2007). In line with the need to keep employees motivated, a well-planned reward system should be carried out by management to encourage their workers to perform better and be more productive.
Accordingly, performance rewards take several forms such as monetary compensation, skill development programs and other forms of desirable non-monetary rewards. For instance, human resource managers may opt to offer end- of year bonuses or interest free loans to workers. In whatever form, the reward system can boost the employee morale and it can do so much to “alter employee behavior (Crush). It is similarly essential to communicate to the employees the different performance rewards platform and the measurement standards used by management to achieve them. The employees should fully understand the reward policies of the company; for example, the manager may consider the implementation of a policy that gives monetary remuneration or paid leave for perfect attendance (Chelladurai, 2006). The management’s measurement policy to reward their workers is a paramount concern of most organizations, and most constantly use appraisal methods to make commensurate rewards.
III. Reward Strategies and link to Other HR Functions and Organizations
a. Learning and Development
The reward strategy as a function of human resource management is the foundation for the further development of compensation plans which are also in line with other human resource functions. The establishment of reward strategies creates the link “to reinforce the organization’s values and beliefs in such areas as performance, quality, teamwork and innovation” (Armstrong, 2002). The performance and reward system is interconnected to the learning and development strategy which is part of the human resource function; the latter as a way by which the company can provide its people with non-monetary compensation. For example, the on-the-job training, in-house development programs and coaching are a form of compensation that is geared towards the improvement of both the employee and the business (CIPD, 2015).
It is an excellent management function to provide for the skill development of employees. Training and other skills development programs may demand an asset outlay from the company, but this is actually a sound investment as it facilitates the creation of a team that is better equipped to deal with diverse work settings. In previous studies, it was found that the majority of the participating organizations that implemented talent management activities were able to observed the effectiveness of their programs (CIPD, 2015). Accordingly, the added skill set creates an opportunity for career advancement, and this makes the learning and development function became a better motivation driver than monetary rewards. There are organizations, however, that are indifferent towards learning and development programs for fear that their employees will leave after attaining better qualifications and skill sets. This fear can be resolved by proper people resourcing as it was suggested that employees stay longer with companies that keep them satisfied, motivated and valued.
b. People Resourcing
The performance and reward function is related to the people resourcing function of HR management. In all organizations, the process of hiring, training and retaining employees has a substantial cost to the organization. Companies are in competition in wanting to keep the best employees, and one way to keep the loyalty of the workers is through the use of performance rewards. While employees are motivated to work for financial rewards, studies showed that what really keeps their loyalty to the company are the intrinsic motivation. More than the monetary compensation, the workers often have to feel a sense purpose in during their employment, thus the idea that the “intrinsic rewards residing in the job itself are a potential source of motivation” (Chelladuri, 2006). For example, when workers have the sense that they can be of help to others in their current position, and they feel good about it, then are are likely to stay longer in that job. One of the common reasons why employees tend to leave the company is the feeling of stagnation and burnout. It was theorized that the reason for the feeling of burnout is that the employee does not feel appreciated in his work, thus management must ensure that they feel appreciated in their performance. The distinguished business management Professor and author Edward Lawler suggested three features to intrinsically motivate employees:
1) Feedback- employee’s must be informed about their performance after careful evaluation;
2) Self-control- the employees must feel a sense of autonomy and control in their goals; and
3) Use of abilities- the job must require the worker’s unique capability to efficiently and effectively do the job (Armstrong, 2007).
c. Employee Relations
Human resource practices have a vital influence on the behavior of employees. It was found that sincerity and honesty on the part of management in dealing with workers have a positive impact on job satisfaction. The employee relations as a human resource function works towards the development of an environment where the concerns of both the management and workers are openly discussed. There are several issues that are tackled by the employee relations function such as the quality of the workplace, compensation, relocation as well as complaints. The success of a business is highly dependent on developing a working environment that is largely geared towards creating a culture where positive behavior in the workplace is encouraged while promoting the interest of the organization as a whole. Further, there should be an excitement at work, as staffs enjoy doing their jobs as well as they find enjoyment in dealing with management and their co-workers as well. It was theorized that workers who received the fullest support from the organization are likely to find fulfillment and satisfaction in their job, thus they put better value in their work. There are instances where the employees are too engrossed in the performance of their duties, that they find little time to connect with other workers. It is the duty of the human resource management to make sure that good employee relationships are being fostered in the workplace.
d. Performance Management and Rewards and its Link to an Organization
The Intercontinental Hotel Group (IHG) is one good example of a company that dominantly use the performance and reward system. In a reported interview with Tony Voller, the Senior Vice President of Human Resources of IHG, he talked about aligning the employees' effort in delivering the requirements of the company, making them understand what is a great performance and encouraging them to be successful in the process (CIPD, 2009). Accordingly, IHG is known for being ardent in keeping its employees motivated through diverse performance management strategies. In another instance, Vicky Bourne, the head of the HR operations of Sanofi-Aventis suggested that “people are more comfortable with pay increases and bonuses if they can see a direct link to performance” (CIPD, 2009). While the health care industry, where Sanofi-Aventis belong may be different from other sectors, the spirit of employee motivation is central to its human resource management.
The process of integrating the performance and reward strategies entails the combination of the different human resource function to effectively achieve the goal of the organization. Accordingly, it is also important that reward objectives are in line with the specified business goals. Further, the employees should understand how the rewards strategies are defined and implemented in order for them to know how best to behave and work towards the achievement of organizational goals. This gives details of the alignment of how the organization plans to implement the reward system.
a. Horizontal Integration
The use of horizontal integration means the awareness of management about how performance and reward can support other human resource processes. The horizontal integration is considered as “the most important of all the managerial processes in terms of human resource management (Sowell, 2006). For instance, the reward system can have a significant influence on the ability of the company to hire and retain its employees, to encourage further skills improvement as well as the maintenance of a satisfactory employee relations in the workplace. Accordingly, it is the performance and reward management that can provide support in the identification and development of the needed skill sets and approaches that the company may require in the future.
b. Vertical Integration
There is a close relationship between horizontal and vertical integration so that while it is the latter that are often the first strategy to be resorted, the former cannot be neglected because it is also imperative to “achieve horizontal integration so that reward strategies and those concerned with employee resourcing, development and relations are mutually supportive” (Armstrong, 2002). Based on different research, it was found that the organizational technique of bundling interrelated tactics has a high probability to lead to better result.
V. Theoretical Concepts of Performance and Rewards Function
In order to be effective in realizing their goals, there is a need for the public and private organizations to hire people who are dedicated to perform at their best to satisfy their goals. One of the common ways to show that an employee was able to attain a certain objective was in being able to provide satisfactory products and services and being able to competitively satisfy the customers. The ability to provide goods and services at their best is a measure of performance made at a satisfactory level, and being able to accomplish the specified goals can bring a feeling of fulfillment to the employee. On the other hand, a less than satisfactory or a low level of performance leads to the failure to achieve goals and the worker will not only be dissatisfied but may take it against him personally.
Nevertheless, excellent performance is to be expected to be recompensed with monetary and non-monetary paybacks. Accordingly, it is the performance level that is the key qualification for future success in the corporate world. While this may not be true at all times, it has been noted that those who choose to show excellence during the performance of their duty are often those that get further backing in the advancement of their career. One of the most recent performances and reward management system today is the Total Reward Strategy, which is described as “The sum of the values of each element of an employee’s reward package” (Jiang, 2009). This strategy works further than the typical compensation package, and this is done with the purpose of allowing the workers to be fully engaged in the business operation. Under this scheme, the company and its employees work under the covenant of a give and take relationship where the employees are offered the best possible deal in exchange for their full dedication.
The performance and reward function is an integral part of human resource management. Based on this function, the management works to make sure that this strategy is fully in line with the overall organizational objective. Accordingly, to achieve a result that is consistent with the goal of the organization, the reward system must be well defined and understood by the workers in order for them to align their behavior towards the determined goal. The performance and reward policies that may not be fully understood by the concerned and this may result to behaviors that may not be in accordance with the management's aspiration. There is therefore a need for both the employee and the management to meet at a certain understating so as not to lead to a negative impact to the organization.
The different human resource functions are interrelated with each other; thus, the overall human resource strategy is planned in consideration of its different functions. The HR management is required to plan the learning and development strategy based on the performance and rewards plan. The overall design of the HR strategy must follow a certain base that is intended to provide the best result for the organization.
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