Strategic human resource management is a very crucial aspect of human resource in an organization. Strategic management deals with making polices and strategies that assist in achievement of goals and objective in an organization. The human resource manager requires to formulate various polices and strategies for development and upliftment of employees in the organization (Eijkenaar, 2013). This is termed as strategic human resource management. The manger tries to understand and evaluate the competencies and issues faced by the employees in the organization. After assessment the manager creates policies and strategies to help them in eliminating the factors that are hampering growth of the employees in the organization (Honeywell, Dickinson and Poling, 2012).
The report targets how the organization is responsible in improving employees performance. Each employee is entitled to receive monetary as well as non-monetary benefits. The monetary benefits are calculated on the basis of performance of individuals employees. The manger evaluates each employees performance with the help of various managerial tool and techniques. The manager evaluates amount of payment given to each employee on the basis of their performance. The research also identifies how each individual performance is affected by pay. Income is considered as an motivating factor among the employees. It is also identified that in state of discrimination based on pay scale, among employees working on same post is considered as a negative factor for the organization.
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Individual performance related to pay
In the present scenario, performance related pay have started to play a very significant role in motivating employees. Human resources of organization are termed as one of its biggest asset (Honeywell, Dickinson and Poling, 2012). The reason behind this is that two organization can have same kind of financial and technological resources but what makes one company differ from another is its skilled employees Organization are required to take care of its human resources in the most effective manner. Motivation can be defined as the process in which workers are being inspired to put more efforts and give their best towards accomplishment of organization's objectives (Perry, Mesch and Paarlberg, 2006). To a certain extent, it can be stated that the performance of individual is directly related to pay. Better pay results in better performance whereas inadequate pay lower down the overall performance of an employee. Business enterprise are required to become aware of the importance of skilled and productive workforces in its growth and success (Armstrong, Murlis and Group, 2007). Further the pay should be completely based on the kind of performance which has been given by an employee. Most of the time workers in organization get motivated with the help of monetary rewards. This means that if pay is provided on the basis of employee's performance, it will act as an driving forces and will encourage all employees to give their best.
It also happens that person who is doing more work is paid less and person which doing less is paid more. This creates de-motivation among all the workers and also force them to quite the organization. If any employee has given outstanding performance then employer is required to provide him with better pay (Cadsby, Song and Tapon, 2007). This will create a sense of satisfaction and will also encourage him to put more efforts in future. In the present scenario, it is not easy for business organization to retain their employees. Organization can link the performance of employees with various kind of monetary rewards. When workers get high pay then their motivational level directly gets enhanced (Honeywell, Dickinson and Poling, 2012). Majority of the employees seeks for monetary rewards thorough which they can meet the needs of their families. At the time of measuring performance of employees, businesses are required to be very transparent and clear. High pay should be provided only to those employees, which has delivered outstanding performance in achieving organization objectives Conroy and Gupta, 2016). At the time of determining pay scale, businesses should focus more on the kind of performance which has been delivered by the employee (Perry, Engbers and Jun, 2009). Organization are required to take care of employee motivation. Further it can be stated highly motivated employees can help organization to gain competitive advantage. Therefore, it can be stated that performance pay have direct impact on employee motivation. The workers become aware of the fact that better performance will results in better pay. This also acts an driving forces and encourages employees to give their best towards organization success (Armstrong, Murlis and Group, 2007).
Motivation is another aspect that is affected by the pay scale given by an organization. It is clear that employees feel highly motivated with appraisal and hikes in the incomes. This is because the monetary income is directly affected to their safety and security beliefs (Perry, Mesch and Paarlberg, 2006). As per Maslow Hierarchical theory if an employees safety and security needs are fulfilled they feel inspired to work. This is because momentary income provides them self actualization and confidence (Belogolovsky and Bamberger, 2014).
Employee tend to become more confident when they receive a good pay scale or income. In many cases it is linked with their self esteem factor as well. Individuals feel if they are not getting paid up-to their monetary requirement then their social stays might deplete in the society. It is this negative beliefs which creates myths among employees to receive high income (Conroy and Gupta, 2016). At many instances n company can only pay high when the employees posses greater qualification skills. Unless and until those skills are fulfilled the employer will not recruit the employee. Apart from this discrimination based on pay scale also liberates negative thinking among employees. The organization must pay attention to provide equal pay to employees working on similar post. A highly motivated employee tends to yield more productivity and greater quality of performance for the organization (Honeywell, Dickinson and Poling, 2012).
Performance related pay is must in organization as through this it becomes easy for management to enhance motivation level of workforce and supports business in satisfying need of its workforce in most efficient manner (Armstrong, Murlis and Group, 2007). Further, various issues are present which business has to deal with by undertaking the concept of performance related pay and such challenges can be type of occupation and individual differences (Honeywell, Dickinson and Poling, 2012). Generally jobs associated with the field of marketing allows individual to earn high income and due to this reason performance related pay is high in such case. Moreover, in jobs like finance and HR no such monetary benefits are provided to the employees who are working in the organization (Furnham, 2005). Therefore, due to this basic reason type of occupation directly affects the performance related pay being provided to the staff members within the company. Further, it is also associated with the motivation level of the employees as staff members working in marketing department can be provided more pay and individuals working in other departments may not have right platform due to which they can receive good pay related with the performance (Cadsby, Song and Tapon, 2007). In short, to represent overall performance within the workplace it is necessary for individual to have right platform and can enhance motivation level of the employee. Individual difference is also another type of issue being linked with performance related pay as staff members present within the workplace may not prefer to work with each other and this can lead to decline in level of overall performance which is not at all beneficial for any individual working in the organization (Perry, Mesch and Paarlberg, 2006).
Apart from this, many time it is possible that the criteria considered by business for measuring overall performance is not appropriate due to which dispute arises in between the staff members and they does not prefer to perform efficiently (Armstrong, Murlis and Group, 2007). This has direct impact on business productivity also especially when proper criteria is not undertaken by company for judging performance of workforce in the market. Therefore, it is the first and foremost duty of management to take corrective actions so that performance related pay within the workplace can be successful and it can allow business to be successful in the market where operations are being carried out. This can be fruitful for business if employees are provided proper monetary benefits on the basis of their actual performance and can act as development tool for the entire company (Honeywell, Dickinson and Poling, 2012). Further, organization can easily retain its staff members for longer period of time if they are delivered right pay keeping in view their overall performance. Sometime, it becomes difficult for company to judge overall performance of employees within the workplace and due to this basic reason many issues arises. Apart from this, performance related pay can also decrease motivation level of staff member as they may not be provided monetary benefits as per their performance (Cadsby, Song and Tapon, 2007). So, companies have to ensure that system being developed by them for rendering performance related pay to workforce is appropriate and is capable enough of meeting with their expectations (Cornelius, 2001).
As per the above discussion performance related pay helps in increasing performance of employee as well as organization but sometimes inappropriate evaluation of performance affect the payment system and policies of the company. Due to his reason company does not provide appropriate salary to its employees and per their actual performance. It increases the de-motivation and job dissatisfaction among personnel (Honeywell, Dickinson and Poling, 2012). It leads the decline in the total performance and productivity of the organization as well (Prasad, 2010). So, organization needs to focus on appropriate evaluation of employee’s performance otherwise performance based pay can de-motivate them (Armstrong, Murlis and Group, 2007). There are different methods which can help in analyzing performance of employees such as rating scale methods, essay appraisal method, 360 degree performance appraisal methods, ranking method, and confidential report system, etc (Honeywell, Dickinson and Poling, 2012). All these are most appropriate for analysis the performance of every employee. On the other hand, company can also use goals, performance indicators and targets for analyzing performance (Perry, Mesch and Paarlberg, 2006). Appropriate analysis of the performance plays very important role in deciding suitable salary for every employees which will lead increment in job satisfaction and motivation. Overall, appropriate analysis of the performance leads most appropriate salary for employees which helps in encouraging personnel for increasing their level of performance (Lucio, 2013).
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With the help of this report it is articulated that in each and every organization, the salary of all human resources should be given according to their performance criteria not on the basis of other reasons. This report evaluated that performance related pay have started to play a very significant role in motivating employees. The present report also includes the the importance of performance measure. According to the performance level each and every employee should be fairly been awarded with their salaries and it will also motives them to work better. The term motivation can be defined as a process in which employees are being inspired to put more efforts and give their best towards accomplishment of organization's objectives.
On the basis of entire study it has been find out that performance related pay play a great role in motivating employees to work hard. Thus, it is recommended that firms must implement procedures related to performance related pay at the workplace. If employees will perform good then they will get higher pay and if they will give poor performance then they will get less amount from employer. Every person wants to earn more and more money and due to this reason employees will try to give their best. Hence, this be beneficial for both employees and organization. Employees will get more salary and firm will get a excellent work. Many times in an organization it has been find out that person who is doing more work get a less salary and other person who is working less get a more salary. Due to this reason dissatisfaction comes in existence among the employees and they do not cooperate with each other in proper manner. Hence, it is recommended that firms pay a salary to the employees according to work done by them. Along with this it must also consider quality of work done by the employees. If employees will get salary as per work done by them then their satisfaction level will be at peak and they will deliver excellent performance in an organization. It is also recommended that top management must be fully committed towards performance linked pay system and must time to time bring changes on same. This is because that whenever anything new is bringing in an organization then some error remains in the changes that management implement at the ground level. Hence, time to time performance linked pay system must be evaluated by the managers in order to make sure that this system will be developed with passage of time. With the removal of these errors mentioned system will get improved and employees satisfaction level will get increased in an organization. In an organization many times it has been seen that inappropriate standards are determined for the performance measurement. Due to this reason many employees who work hard does not get any monetary benefits from an organization and they get dissatisfied. Hence, it is recommended that firms must follow a concept of management by objectives. Under this concept firm top managers will establish a contact with the employee's and will discussed determined standard with them. On the basis of such discussions such standards can be determined on which both entities are agreed. By doing this employees satisfaction level in an organization can be increased. In an organization some times performance are not evaluated in proper manner. Due to this reason employees get satisfied. Due to lack of proper evaluation some of the employee's deprived from getting monetary advantages which they deserve due to their good performance. Hence, it is recommended that top managers of an organization must try to identify these issues and must formulate a strategy in order solve these problems that lead to dissatisfaction among the employees of an organization.
Books and journals
- Armstrong, M. Murlis, H. and Group, H., 2007. Reward Management: A Handbook of Remuneration Strategy and Practice. Kogan Page Publishers.
- Belogolovsky, E. and Bamberger, P.A., 2014. Signaling in secret: Pay for performance and the incentive and sorting effects of pay secrecy. Academy of Management Journal.
- Cadsby, C.B., Song, F. and Tapon, F., 2007. Sorting and incentive effects of pay for performance: An experimental investigation. Academy of Management Journal.
- Conroy, S.A. and Gupta, N., 2016. Team Pay-For-Performance The Devil is in the Details. Group & Organization Management.
- Cornelius, N., 2001. Human Resource Management: A Managerial Perspective. Cengage Learning EMEA.