Managing Personal and Human Resources - Coursework Example

Managing Personal and Human Resources Introduction In the contemporary society, one of the most important developments in the field of organization is the growing significance given to human resources (Beardwell and Claydon, 2010). Human resource generally is a term used to describe the people who constitute the workforce of an organization (Muller-Carmen et al., 2008). In addition, human resource is the name given to the function in an organization which entails formulation of policies and strategies involving the management of persons (that is the human resources). Furthermore, the function is responsible for employee motivation, communication, performance management, and administration as well as organization development, recruitment of new employees as well as their management and the giving of direction for them to work towards the success of the organization (Pfeffer, 1995, and Boxall, 1998). Besides, human resource focuses on planning for the future ventures as well as setting objectives involving people in the organization (Bratton and Gold, 2007). Most importantly, the function is responsible for managing people as well as the workplace environment and culture to ensure that employees contribute productively and effectively to the overall organization direction and the attainment of the organization’s goals and objectives (Beardwell and Claydon, 2010). Ultimately the role of human resource is very important and cannot be ignored in managing an organization. It is one of the main pillars that hold the organization together and help in attainment of the overall objectives. Managing personal and human resources is deemed as one of the main factors that result to the success of an organization. This essay will focus on the management of personal and human resources and in particular the essay will assess how companies can use pay linked to performance to increase organizational effectiveness. How companies can use pay linked to performance to increase organizational effectiveness In this age of globalization which is characterized by increased competition, there is an excessive pressure for companies to constantly increase performance, attract and retain the best personnel and improve business results (Muller-Carmen et al., 2008). However, most companies fail to recognize that giving the right rewards and pay to the right individuals may speed up and guarantee high performance and company effectiveness (Heneman and Gresham, 1998). It is apparent that most companies pay their personnel the same although some are better performers compared to others. This has led to underpayment of employees who possess higher skills, and overpayment of staffs with low skills. It is true that one way of measuring the effectiveness of an organization is through productivity (Muller-Carmen et al., 2008). High productivity can only be achieved if the employees are well motivated. Companies can use pay linked to performance as a tool of improving motivation amongst employees. Research has proved that employee tend to link their performance with the amount of pay they receive (Lawler et al., 1995). Furthermore, employees will increase their productivity standards if their performance is well rewarded. Consequently, the poorly performing employees tend to improve on their productivity in order to achieve higher rewards like their colleagues, which in return contribute to the general success of the organization. Studies have proven that companies that pay their employees based on obsolete pay solutions are less successful, as this result to flattening of work performance, reduction of motivation and squelching the bottom line (Boxall, 1998). Although pay is not the only factor that results to employee motivation, research has revealed that, it is a very influential method of communicating a company’s direction, values, and standards of quality and performance expectations. Pay is one of the rewards that are highly appreciated by employees as they tend to realize that their worth is recognized as is being appreciated by the organization. In this case, pay should be linked with the business in order to ensure effective delivery of the company’s operations. In this globalized economy, pay is an essential factor improving workforce performance (Byars and Rue, 2006). Companies should develop a compensation program with a main aim of motivating the staffs to perform their best. In the United States, compensation programs gained a lot of importance when companies recognized that they were at a high risk of losing market to foreign competitors (Pfeffer, 1995). These programs were launched with an aim of eliciting personnel cooperation and amplify effort on job in order to increase the companies’ effectiveness by making the products better and more competitive (Pfeffer, 1995). Such programs encompassed merit pay, variable pay, alternative pay and pay for performance. Both the management and the staffs agree that pay linked to performance is very desirable. According to studies, the workforce feels that their performance level should be the main variable in deciding the amount of money to be paid (Lawler et al., 1995). The majority of employees also believe that performance is an important indicator of pay increase. Consequently, employees tend to concentrate more on boosting their performance. The expectancy theory To ensure success of pay linked to performance, it is essential to have a compatible company situation. The expectancy theory is used to examine the feasibility of having pay linked to performance in an organization. This theory is useful in establishing whether [ay linked to performance is viable in an organization or not. The theory will be explained under various components. Valence According to the theory, the staffs must feel that the pay being provided by the company is significant in satisfying their requirements. Even though some researchers claim that the most universal tool for satisfying people’s needs is money, its value however varies from one person to the other (Fox et al., 1993). This means that, a pay linked to performance program can only work best when pay is extremely valent to the individuals covered by it. However, the valence can only be determined through research and in this case; companies should carry out a thorough study amongst the workforce in order to determine the degree into which their work performance can be determined by pay increase (Hall and Torrington, 1998). This is evidenced by the fact that increase in productivity amongst employee can only be realized if such staffs are well motivated through proper means. As put forth by Fox et al. (1993) pay linked to performance programs should only be installed in situations whereby the staffs have a high requirement for money. Furthermore, in situations whereby the company’s management requires the motivational force of employees to be pay for performance, it is essential to consider the groups of persons who have a need for money (Fox et al., 1993). Otherwise, the program may not be effective in achieving success. Performance-reward connection It is apparent that for pay linked to performance to work, there should be a clear linkage between performance and pay. However, studies have revealed that this is not easily attainable as companies are multifaceted social systems whose personnel are subject to diverse sways on their performance (Hall and Torrington, 1998). Furthermore, the complexity of pay-performance connection is usually boosted by numerous problems. For instance, employees and the management do not usually agree on the level of performance; some staffs tend to rate their levels of performance at a higher level than does the management (Marchington and Gemgulis, 2000). In this case, companies should formulate better strategies that will ensure that pay linked to performance is well understood by the employees and also ensure that the staffs view their pay is linked to performance. The performance effort connection Evidently the personnel should view that their efforts results to performance. Pay linked to performance assumes that the level of performance differs amongst the staffs and that such a variation can be observed (Wood, 1998). However, this is not the case in most jobs as the difference is impossible to measure. As a result, the success of pay linked to performance program can only be successful if companies come up with clear ways in which the performance levels amongst employees will be measured (Milkovich and Newman, 2005; Beardwell and Claydon, 2010). If such a program is not realized, thus it may become difficult to establish high performers from low performers. Conclusion It is clear from this assessment that pay linked to performance is one of the ways in which companies can improve their effectiveness. This is one way of motivating employees, however, according to research; increase in productivity amongst employee can only be realized if such staffs are well motivated through proper means (Heneman and Gresham, 1998). As put forth by Fox et al, (1993) pay linked to performance programs should only be installed in situations whereby the staffs have a high requirement for money. Furthermore, in situations whereby the company’s management requires the motivational force of employees to be pay for performance, it is essential to consider the groups of persons who have a need for money (Lawler et al., 1995). Furthermore, companies should ensure that they come up with better strategies of measuring employee performance in order to ensure satisfaction amongst the staffs, which as a result, will lead to increased organization effectiveness. References Beardwell, J. and Claydon, 2010. Human Resource Management: A contemporary Approach, (6thed), Harlow: Prentice Hall. Boxall, P. 1998. Achieving competitive advantage through human resource strategy: Towards a theory of industry dynamics. Human Resource Management Review, vol. 8, no. 3, pp. 265 – 88. Bratton, J. and Gold, J. 2007. Human Resource Management: Theory and practice, (4th ed). Basingstoke: Palgrave Macmillan. Byars, L. & Rue, L., 2006. Human Resource Management; 8th Ed. Boston: McGraw-Hill. Fox, J., Scott, K., & Donahue, J., 1993. An Investigation into Pay Valence and Performance in a Pay-for-Performance Field Setting. Journal of Organizational Behavior, Vol. 14, pp. 622-636. Hall, L. and Torrington, D., 1998. The Human Resource Function: the Dynamics of Change and Development. London: FT Pitman. Heneman, R.L. & Gresham, M.T., 1998. Performance-Based Pay Plans. Performance Appraisal: State-of-the Art Methods for Performance Management, San Francisco: Jossey-Bass. Lawler, E., Mohrman, S. and Ledford, G. 1995. Creating High Performance Organizations: Practices and Results of Employee Involvement and TQM in Fortune 1000 Companies, San Francisco: Jossey-Bass. Marchington, M. and Gemgulis, I., 2000. Best practice, human resource management perfect opportunity or dangerous illusion. International Journal of Human Resource Management, vol. 11, no. 6, pp. 1104-1124. Milkovich, G. & Newman, J. 2005. Compensation, 8th Ed. Boston: McGraw-Hill. Muller-Carmen, M. Croucher, R. and Leigh, S. 2008. Human Resource Management: A Case Study Approach. London: CIPD, chapter 11, 12 and 13 Pfeffer, J. 1995. Producing sustainable competitive advantage through the effective management of people. Academy of Management Executive, vol. 9, no. 1, pp. 55-69. Wood, S., 1998. Human resource management, LSE Research Seminar. London: Routledge. Read More