About Austin-Baker Limited

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Pay related to results is a scheme that offers financial incentives to workers on the basis of the appraisal of overall work performance, such as bonuses for achieved goals, a financial benefit sharing commission or workpackages (Conyon & Murphy, 2013 p.204). These systems have drawbacks and advantages under normal circumstances. Some participants, for example, will be thanked for believing and aiming that they will be motivated to achieve their set goals by financial rewards. In certain situations, too, participants may be de-motivated because of the strain generated by the money based crop when the scheme is not properly handled. Performance related pay, therefore, has drawbacks that can be difficult to design because the execution of employees does not emphasize the effort of an individual but for everyone. For example, if the PRP is too short, it may not benefit the organization, and if it’s for long-term, the employees may not be motivated enough (Conyon & Murphy, 2013 p.232). When performance-related pay is poorly managed, other running programmes may be affected. For instance in Austin Baker, there are more than 4,000 employees across the country, and for the system to operate successfully, training must be conducted. Having the fact that the employees have heavy workloads that vary from significant troughs and peaks, it will be difficult to conduct the training thoroughly.

Practical disadvantage of PRP

When it comes to the writing of the performance appraisals, it may take a lot of time before the practice is complete. This because the manager is supposed to evaluate and conducts a review to every employee who will consume all the working hours (Conyon & Murphy, 2013 p. 244). When related to Austin Bakers Company, all employees assist each other in meeting the targets. Therefore, when payment is made based on how much every employee has achieved, then some staff will be favoured.

Another disadvantage is that there will be inconsistency in keeping accurate records and notes pertaining the employee’s behavior because of the number of staff. Since the company has a lot of workers, it will be difficult for the managers to maintain and keep good records of performance because of the workload. The primary reason for this is that in order to review every employee’s performance appraisal, the manager has to do it immediately when it is still fresh in their minds but since they are always busy, they lack the consistency (Conyon & Murphy, 2013 p. 251).

Theoretical disadvantages of PRP

One negative impact of this system is that it not a pleasant experience to employees as it tends to discourage them. Instead, the process and reason for creating the PRP system is to be of positive reinforcements, encouragement and a celebration of one’s accomplishment (Conyon & Murphy, 2013 p.259). In Austin Bakers Company, staff are instead discouraged because the focus on new accounts and sales increase has brought pressure where they are expected to perform even more. This is seen when one employee suggested that the customers should instead use telephone and cash machine banking services so that they would concentrate more on opening new accounts.

It is also hard to keep biases especially during the PA process because it takes an objective process, very structured and mature manager to be bias all through the process. This instead may lead to errors during the Performance appraisal process because managers may luck understanding when it comes to fair evaluations. According to the survey done at Austin Bakers Company, both managers and staff were found to be unhappy with PRP because the pay increase is unrelated to their effort, the system was also not clear, and the tends were divisive.

2. Ways in Which Line Managers and HRM Specialists Can Be Deployed To Increase the Management System

The line manager should be able to use the performance management system as an essential approach to promoting the development and improvement of employees. The line manager should be responsible for making the employees understand the importance of the management system and encourage the employees to be accountable for their own performance and development (Aswegen & Havenga, 2012 p.463). The line managers should come up with an opportune schedule to conduct regular performance conversations with the employees. They should be put in charge of delivering regular positive and constructive feedback and develop performance notes for every employee.

The line managers should be tasked with following up on the progress of goals set by the employees and also provide information and revisit performance expectations. They should make an effort to familiarize with the different management needs of the diverse generations. The line managers should strengthen the two-way communication and promote desired behaviors in employees by coaching them. They should also support the professional and career development of the employees and still make them accountable for it and also be able to submit a complete employee review by the stipulated time.

The role of the HRM specialists should be to design the best practice performance management system and set deadlines for the completion of each step that are achievable. The HRM specialists should be responsible for the provision of training for all the executives, managers, and employees regarding the process, actions, their responsibilities, and the benefits that are to be gained by everyone which will address every group’s particular needs. The HRM should be tasked with the clear explanation of performance rating scale, the diversity between the different levels of performance, how the ratings are expected to be which includes the scores used for excellent performance and the additional actions required when performance is being judged. They should be able to provide the line managers with regular training on how to submit feedback as well as how they can coach and grow their staff. The HRM specialists should be the ones launching and managing the performance management system as well as analyze and review the results being achieved by the management system (Aswegen & Havenga, 2012 p.478). Finally, the HRM specialists should be responsible for the communication of the essential outcomes of the performance management system and the actions that will be employed as a result, to the whole organization.

3. Consequences of PRP in Austin Bakers Company

One of the consequences that will occur if the system is not changed is that employees will be principally concerned about their salaries more than the quality of work (Bandiera, 2013 p.280). This means that it is not a guarantee that every person is encouraged with money to do better. It is plausible that if someone if someone’s pay is cut by half based on performance, then his or her morale will decrease thus undermining the overall performance. The relationship on the other hand between the managers and staff will also collapse under the aspect of incentive. For instance, since the company has a lot of pressure due to increased sales and new accounts and that managers expect the employees to perfume, some of them may conceal problems by assuring the manager everything is in control. Instead of asking for help they flatter that all is well so that they may have a positive appraisal.


Based on the case study of Austin-Baker Limited, PRP is a system that will not work efficiently because of the size of the Firm. This is because the company has over 4,000 employees across the country who work under a lot of pressure caused by the increases in sales and new accounts. It is, therefore, essential that the company removes the mode of payment because there are more negative impactts


Aswegen, S. V., & Havenga, W. (2012). Introduction to human resource management. Pearson Education South Africa.460-544

Bandiera, O. (2013). Comments. Executive Remuneration and Employee Performance-Related Pay, 279-282. doi:10.1093/acprof:oso/9780199669806.003.0017

Conyon, M. J., & Murphy, K. J. (2013). New Evidence on Performance-Related Pay. Executive Remuneration and Employee Performance-Related Pay, 196-260. doi:10.1093/acprof:oso/9780199669806.003.0015

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