The Role of Employees and the HR Department
The individuals who directly carry out all business operations under the direction of management are known as employees. The HR department hires workers who meet the requirements of the open positions in order for them to carry out their jobs effectively. These facilitate the ease with which employees and ability to achieve the set goals and objectives of the organization. However, due to changes technology and other factors, employees may lack new skills of doing current jobs, and it is, therefore, the work of the HR department to offer training to them to update their skills. The HR department deals with all the employees' welfare in the firm. All other divisions submit their details on the qualification of employees they need and the department looks for the exact people to fit in those positions. Other duties the HR department include Appraisal, remuneration, promotion, rewarding, dismissal of employees among others. These paper will look at the contribution of reward principles, policies, practices, and decision making to performance management in organizations (Kim, 2011). The case study of the report is the Cavendish Hall Hotel a four-star county house hotel which had adopted the individual performance-related pay but the system has not been motivating the performance of the employees. The employees have had poor performance, and Daphne Jones as the new personal manager of the hotel tries to find out the reasons for the problems.
Motivation and Rewards
Managers must look for the best way to motivate their employees. Motivation is the key to the achievement of the organization goals and an increase in the profit margin. The behavior of employees in the firm is therefore determined to a great extent by motivation. Rewards may be the best motivators to the employees. The awards may be regarding increment in salaries, commissions, promotions among others (Atkinson, 2011). They appreciate the efforts of the employees and encourage them to perform better. Employees are human beings, and they need attention and appreciation. Therefore, employees to have better performance in a firm they must feel a sense of belonging to the company and this is achieved by the managers taking into consideration their needs. Any disputes in the business relating to employees must be solved amicably to ensure continuity of work hence reduce any possible losses that would have occurred. The hotel reward system is excellent as the employees are rewarded according to their efforts in their tasks. However, the firm gives all the employees 1% salary increment to take into account the changing costs of living. These are motivating as it is given to all the employees regardless of their levels of performance. After that, the workers are given scores by the respective department manager who guarantees them a pay rise according to their performance.
Advantages and Disadvantages of Individual Performance Related Pay (IPRP)
IPRP is a financial reward received by the employees based on their performance in the achievement of the set goals and objectives of the firm. They are informed of sales commissions, bonuses for achieving their targets, financial profit sharing, merit pay, incentives, payment based on the result, day work measurement, output and time-based payment, piecework payments to the workers among others. These methods use money as the driver for employees to perform well in the organization and meet their set target (Anon, n.d.). Some of the merits of IPRP include the following:- Continuous implementation of this system ensures high performance by the employees, thus a healthy performance-based culture is developed in the firm. - They act as guidelines for the managers to enable them to know the frameworks of settling organization goals. These allow the workers to know what is expected of them by the firm hence improving their productivity and performance. - Employees turnover over the years have been on the rise in firms, and this pay system enables a company to retain workers and win their loyalty. - It enables the employees to remain focused and do all things which are linked to the increase in payment. They will allow them to meet their targets. - A good IPRP enables the managers to recognize the best performers in the firm and be able to appreciate their efforts. - These types of rewards to the employees change their morale to work hard hence are an excellent remedy for poor performance. - Employees feel good when recognized and appreciated, and these types of pay acknowledge them with tangible rewards and improve their morale for work.According to Heathfield (n.d), these reward systems to workers have some drawbacks which include the following:- The departmental managers are the ones responsible for the identification of the performing employees, and sometimes they may be biased, hence rewarding the wrong individuals. - Managers can also set high standards for the employees which are not easy to achieve, hence frustrating their efforts. - This system may bring disputes among employees and financial constraints as it reduces pay equity and can company suffer costly equal pay challenges. - Due to the differences in pay among the employees, this can damage co-operation and team spirit in the firm, hence affecting the overall performance of the company. - These appraisal processes may be dangerous for the firm as they focus on financial rewards rather than developmental needs. - This payment system can be narrowly focused on the employees as it is made of short-term quantifiable goals, hence it can result in no performance improvement. - It creates a culture among employees of constantly incrementing pay when they meet their targets, and in times of inflation or economic crisis, the firm may not be able to meet the increased payment, thus leading to rising disputes in the business.
IPRP in the Hotel Industry
IPRP is suitable for the Hotel's business environment since employees' extra services will be noticed by the managers, and they will be rewarded accordingly. This system can greatly improve the hotel sector as employees will have the drive to serve potential customers efficiently and satisfy their needs adequately. The hotel reviews will be useful in attracting more customers, therefore increasing its profits. These systems take into consideration the needs of the hotel and the workers. Excellent performance by the worker assures him a pay rise, and the hotel, on the other hand, makes more profits.
Barriers to the Effective Design and Implementation of IPRP Schemes
Despite all these reward systems the firm has for employees, the employees are offering poor services that cost them potential customers. The employees lack professionalism and are slow in the execution of their duties like repairing destroyed items in rooms, cleaning the rooms, among others. The Hotel has lost its attraction to the visitors as it has terrible reviews, resulting in low bookings and attracting the attention of the head office (Edwards, and Bach, 2013, pp.1-17). Many theories have been used to explain the relationship between the IPRP and the performance in the organization. These approaches try to tell the impact pay raise has on the employees.Reinforcement and expectancy theories stress that extrinsic rewards to the employees motivate them to perform better in the organization. According to Suff, Reilly, and Cox (2007), they explained that in the reinforcement theory, there is a direct link between pay and performance. A raise in the payment of workers in the organization results in desired behaviors by employees which bring about high performance. Similarly, the expectancy theory of Vroom tries to explain that employees put in more effort in a job based on the expected value they get. If the amount is small, the employees make little struggles in the post, whereas high cost received makes the workers put more effort into their duties, hence they can achieve top results (Kobussen, Kalagnanam, and Vaidyanathan, 2014, pp. 1-27).According to the crowding theory of motivation, some people may not be motivated by a pay rise, and this may not have a positive influence on their performance. Therefore, a raise in pay increases the motivation of employees differently. This relies on the employees' point of view regarding the reward. If they feel a pay rise is significant to them, then they will work hard to get it, but if they are not motivated by it, then it will not affect them (Stazyk, 2012, pp. 252-257). The Herzberg and Maslow theories contradict the reinforcement and expectancy theories as they view money as a hygiene factor that can lead to dissatisfaction among employees. According to these approaches, the organization has to satisfy other needs of the employees like food and shelter to enable an increase in their performance (Young, Beckman, and Baker, 2012, pp.964-983).
Alternatives That Can Replace IPRP in the Hotel Industry
Individual performance-related pay is beneficial to the organization as it motivates the employees to work extra hard to get a pay rise. However, this system has numerous demerits such as creating animosity among the employees as a result of inequality of remuneration. This factor would hinder team spirit and cooperation among the workers. The productivity in the firm would decrease as disputes in the company lower the performance of duties. The best alternative the managers can use to reward employees and ensure the improvement of performance is gain sharing or success sharing. This option provides that the employees are rewarded equally and uniformly for the success of the organization. Through this reward system, all the employees will work jointly for the success of the firm and pay rise.
Conclusion and Recommendation
Employees' motivation is the driver of high performance in the workplace. Managers must look for effective reward systems which will ensure all employees are motivated and have high productivity. The Cavendish Hotel's IPRP reward system is not effective as the employees' performance is low. Daphne Jones must change the system to improve the performance of the hotel. According to his investigations, some issues must be looked into regarding the employees' duties. A significant number of employees do not think they are rewarded relatively as employees in other businesses holding the same jobs. Additionally, the majority see that their work does not give a sense of personal accomplishment. The workers see the pay as unfair as it is unequal among themselves. These are severe problems and are the result of low performance.As the new personnel manager, Daphne should change the reward system as it is the cause of problems among the employees. The disputes are a result of the perception of the unfair rewarding system which is low compared to other firms and also unequal. Employees should feel a sense of belonging to the organization to be able to perform better. The HR department has a duty to resolve these employees' disputes to ensure high performance in the hotel.
References
Anon, n.d. The advantages and disadvantages of Performance Related Pay. [online] ibecsfa.newsweaver.ie. Available at: [Accessed 9 Nov. 2017].
Atkinson, C., 2011. Performance and Reward in the Employment Relationship. Emerald Group Publishing Limited.
Bellé, N., 2015. Performance‐related pay and the crowding out of motivation in the public sector: a randomized field experiment. Public Administration Review, 75(2), pp.230-241.
Edwards, M.R. and Bach, S., 2013. Human Resource Management in Transition. Managing Human Resources: Human Resource Management in Transition, pp.1-17.
Heathfield, S.M., n.d. The Advantages and Disadvantages of Merit Pay. [online] The Balance. Available at: [Accessed 9 Nov. 2017]. Kim, P.S., 2011. Performance Management and Performance Appraisal in the Public Sector.
Kobussen, G., Kalagnanam, S. and Vaidyanathan, G., 2014. The Impact of Better‐than‐Average Bias and Relative Performance Pay on Performance Outcome Satisfaction. Accounting Perspectives, 13(1), pp.1-27.
Stazyk, E.C., 2013. Crowding out public service motivation? Comparing theoretical expectations with empirical findings on the influence of performance-related pay. Review of Public Personnel Administration, 33(3), pp.252-274.
Suff, P., Reilly, P. and Cox, A., 2007. Paying for performance: New trends in performance-related pay. Institute for Employment Studies. URL: http://www. Ephemerajournal. Org/contribution/% E2, 80.
Young, G.J., Beckman, H. and Baker, E., 2012. Financial incentives, professional values and performance: A study of pay‐for‐performance in a professional organization. Journal of Organizational Behavior, 33(7), pp.964-983.
Appendices
Appendix A
Crowding Out Public Service Motivation? Comparing Theoretical Expectations with Empirical Findings on the Influence of Performance-Related PayThis article draws on a sample of city managers, assistant city managers, and department heads in U.S. local government jurisdictions to examine whether theoretical assertions about the relationships between performance-related pay, public service motivation, and employee job satisfaction hold empirical merit. Contrary to theoretical expectations, findings from an ordered logistic regression and a series of Monte Carlo simulations suggest performance-related pay is associated with greater job satisfaction, especially among employees who possess stronger public service motives. Results also suggest variable pay may be particularly important to employees who have lower levels of public service motivation.
Source: Stazyk, E.C., 2013. Crowding out public service motivation? Comparing theoretical expectations with empirical findings on the influence of performance-related pay. Review of Public Personnel Administration, 33(3), pp.252-274.
Appendix B
Performance Management and Performance Appraisal in the Public Sector
The purpose of this paper is to review and discuss public performance management in general and performance appraisal and pay for performance specifically. Performance is a topic that is a popular catch-cry and performance management has become a new organizational ideology. In general, performance management includes activities that ensure that organizational goals are consistently being met in an effective and efficient manner so that it involves shared vision, management style, employee involvement, incentives and rewards, competence framework, team work, education and training, attitudes, and dialogue. Generally, there are four steps in performance management: (1) performance planning (identification of performance goals, confirmation of performance responsibilities, and setting performance indicators or performance agreement); (2) performance execution (execution of performance goals, mid-year review and regular bookkeeping on performance, accomplishment of performance goals); (3) performance assessment (performance evaluation, informing its result to each employee), and (4) performance review and feedback.
Source: Kim, P.S., 2011, April. Performance management and performance appraisal in the public sector. In CEPA meeting, New York, NY, April (pp. 4-8).
Appendix C
Performance-Related Pay and the Crowding Out Of Motivation in the Public Sector: A Randomized Field Experiment
This article advances our understanding of the effects of monetary rewards on public employee performance and of the contingencies that may moderate these effects. In a randomized control-group experiment with nurses working at a local health authority in Italy, performance-related pay (PRP) had a larger effect on task performance when the rewards were kept secret than when they were disclosed. The negative interaction between PRP and visibility was stronger among participants who were exposed to direct contact with a beneficiary of their efforts, which heightened their perception of making a positive difference in other people's lives. These results are consistent with theoretical predictions that monetary incentives for activities with a prosocial impact may crowd out employee image motivation. There were no crowding-out effects when a symbolic reward was substituted for the monetary incentive.
Source: Bellé, N., 2015. Performance‐related pay and the crowding out of motivation in the public sector: a randomized field experiment. Public Administration Review, 75(2), pp.230-241.
Appendix D
The Impact of Better-Than-Average Bias and Relative Performance Pay on Performance Outcome Satisfaction
Drawing on equity and expectancy theories, we hypothesize that the perception of accountants about their ability to contribute relative to a peer (operationalized as the better-than-average [BTA] bias) negatively influences their satisfaction with the outcomes of the performance evaluation process (operationalized as performance outcome satisfaction [POS]). We hypothesize further that the amount of relative performance pay mitigates this negative influence. We test these hypotheses using data collected from a survey of and an experiment involving 164 entry-level accountants. We found that in general our participants rated themselves better than the average audit professional and their immediate work associate; that is, they displayed a BTA bias. Moreover, we found that both the BTA bias and performance pay individually influenced POS; we also found a moderately significant interaction effect. In their entirety, the results indicate that the greater an entry-level accountant believes that she or he is better than average the more likely her or his performance outcome satisfaction will fall.
Source: Kobussen, G., Kalagnanam, S. and Vaidyanathan, G., 2014. The Impact of Better‐than‐Average Bias and Relative Performance Pay on Performance Outcome Satisfaction. Accounting Perspectives, 13(1), pp.1-27.
