Performance and Reward Management - Literature review Example

Performance and Reward Management Student: Lecturer: Course: Task: Date of Submission: Table of Contents Performance and Reward Management 1 1 Introduction 3 2 Background 3 3 Discussion 4 3.1 Relationship between Human Resource Management and Performance Management 5 3.2 Goal and vision alignement 5 3.3 Challenging and involving job design 6 3.4 Reward and Recognition 7 3.5 Training and development 9 4 Findings and conclusion 9 5 Recommendations 10 References 11 1 Introduction Every organisation, regardless of its goals and vision, realises its objectives through its employees. This confirms the fact that, human resource constitutes the single most critical function of the organisation (Val, Fuentes, & Dobon, 2012). As a matter of fact, organisational effectiveness is directly linked to the human talent and the extent of exploitation of the same by the management (Pablos, 2008; Tourish & Vatcha, 2005). Managing employee performance is, therefore, a critical practice in human resource management. Effective performance management results in helping employees perform at their optimum in order to help the organisation achieve its core objectives (Boxal & Purcel, 2003). Human resource management and performance management, therefore, go hand in hand in ensuring the organisation’s workforce is motivated and equipped to perform at the top level (Armstrong & Baron, 2005). This paper will analyse the best practices to human resource management in the area of managing highly performing employees. The paper will highlight key performance management issues related to highly performing employees motivation and retention. The report will also recommend appropriate practices in managing highly performing employees. The report will be structured into four major subheadings, background of the case, discussion, findings and conclusion, and recommendations. The report analyses previous relevant literature in performance management and current aspects of human resource management. 2 Background This report analyses the situation of a high-performance employee who is bored and feels unchallenged by his job. The employee considers looking for another job that is challenging and motivating. The manager of the 31-year-old employee regards him as an important part of the organisation that should not be lost. The employee holds a key position in the organisation. The purpose of this report is to analyse best performance management practices with a view to recommending a solution to this unique case situation. The manager of the key employee in this situation intends to rely on the report’s recommendations to engage and retain highly performing employees. 3 Discussion According to de Waal & Kourtit (2013), performance management is a system of maintaining and continuously improving the productivity of employees at work through planning, coaching, mentoring and providing feedback. Essentially then, the core concept of performance management is to ensure sustained good performance of employees for the benefit of the organisation. With time, performance management practices have evolved from a one-dimensional approach of favouring the organisation to ensuring both employees and organisation benefit from a performance management system (Bourne, Pavlov, & Santos, 2013). According to Maslow’s hierarchy of needs, as an individual progress in their profession, their needs evolve from basic requirements such as good pay and benefits to job satisfaction and self-actualisation (Edvinson & Camp, 2005). This proves difficult for managers to retain their highly performing employees and keep them motivated to contribute positively to the organisation. It is important that human resource function understands the unique needs of each and every employee in order to customize the appraisal system to every individual. Employees have different personal constructs and are indeed motivated by different factors to perform (Beauregard & Henry, 2009; Armstrong & Baron, 2005). 3.1 Relationship between Human Resource Management and Performance Management Performance management in most organisations is a core function of the human resource function. Human resource managers have the responsibility of ensuring that employees play a key role in helping an organisation achieve its objective. However, the entire management of an organisation is involved in uniquely in ensuring employees perform to their best. According to Theriou & Chatsoglou (2014), rigorous and strategic management of people acts as a trigger toward effective knowledge leveraging processes, as such, HRM is a critical factor in effective performance management. As noted by Boxal & Purcel (2003), human resource practices can enhance good performance in organisations in three ways. Firstly, enhance employees’ abilities and knowledge through effective recruitment and training, secondly, motivating desired behaviour through strong incentives. Thirdly, provide growth opportunities to better trained and motivated workers through work redesign and indirect forms of employee participation. Clearly, there is a strong link between employee performance management and human resource development function in an organisation. Highly performing employees have unique needs that should be understood by human resource managers in order to be satisfied (Rynes, Gerhart, & Minette, Winter 2004) 3.2 Goal and vision alignement Performance management can be directly linked to the critical role it plays in improving strategic alignment (Brumback, 2003). According to Bourne, Pavlov, & Santos (2013), effective performance management improves employee participation and alignment with the organisation’s strategic orientation. However, the eventual linkage with financial results remains to be ambiguous as noted by Bourne et al, (2013). There is a strong linkage between performance management and non-financial benefits such as positive work attitudes and consistent individual performance. Highly performing employees need to feel their contribution to the organisation beyond structured work. This is consistent with Counet & de Waal (2009) argument that employees need to be directly linked to the vision and goals of an organisation. By aligning an employee’s vision with that of the organisation, there is a high probability that he will work aggressively and consistently to achieve both visions concurrently (Beauregard & Henry, 2009). Human resource managers need to identify the individual visions and aspirations of their employees and align them with that of the organisation. When there is a discrepancy between an employee’s expectation and the reality in the workplace, the individual will start showing signs of job dissatisfaction such as absenteeism and lack of enthusiasm for work. Maiello & Randall (2008), also contend that understand the personal aspirations and desires of an employee achieves better performance at work than using benefits such as high pay. Aligning employees’ and organization’s goals and visions is indeed a positive step towards improving an individual’s performance. 3.3 Challenging and involving job design As noted earlier in this report, as an individual progress in their profession, their needs evolve from basic requirements such as good pay and benefits to job satisfaction and self-actualisation (Edvinson & Camp, 2005). Highly performing employees want an exciting and challenging job as opposed to a boring and routine activity. Such individuals need to feel in control of their destiny in all aspects of their lives including work (Beauregard & Henry, 2009). It is important, therefore, that human resource managers review their job description from time to time in order to introduce new challenges. Without job enthusiasm, employees will always deliver poor overall performance that will in effect have a negative impact on organisational effectiveness (Pfau & Kay, 2002). Highly performing employees feel that management should allow them to have some degree of influence in work assignment (Edvinson & Camp, 2005). Essentially, this means that such employees need to feel involved in designing their job. Highly performing employees would desire a situation in which they suggest improvements in job assignments, organisational processes, scheduling and performance measurements. By having such a high degree of autonomy and influence in the organisation, highly performing employees feel their job is challenging and exciting at the same time (Bourne et al, 2013). Theriou & Chatsoglou (2014) argue that involving highly performing employees in job design reviews allows them to have a sense of control over their destiny in the organisation. This improves relations and communication between such employees and the management. As a result, there is minimal resistance to strategy implementation in the organisation. Highly performing employees are personally connected and committed to plans and objectives that they help to design (de Waal & Kourtit, 2013). 3.4 Reward and Recognition Most performance management systems include a systematic reward and recognition plans. It is expected that an employee or a team in the organisation that delivers on set goals deserves a predefined reward (Counet & de Waal, 2009). This highlights the importance of involving employees in designing their jobs and adjusting performance management systems. A reward does not directly drive up the performance of an individual or a team; however, it is a way of appreciating the “priceless” contribution of employees to the organisation (Bourne, Pavlov, & Santos, 2013). According to a research by Bourne, Pavlov, & Santos (2013), most performance management systems focus on rewarding individual employees rather than teams. This is highly impactful in improving performance of highly motivated employees (Theriou & Chatsoglou, 2014). Recognition is different from reward in that the former is financial-based while the latter is prize-based. Recognition highlights the performance of an individual or team publicly (Bourne, Pavlov, & Santos, 2013). Recognition is more impactful in motivating an individual to perform even better at their work as compared to reward (Boxal & Purcel, 2003). Recognition systems work better through a formally agreed framework in order to avoid allegations of favoritism and victimization. In both reward and recognition, there is a need to align the same with organizational goals and vision. For employees to be rewarded and recognized, they have to understand the vision and goals of the organization and strive to achieve them (de Waal & Kourtit, 2013). Highly performing employees will continuously desire new challenges and recognition for their efforts in an organization. This necessitates the need to cautiously pursue informal reward and recognition approach in motivating highly performing employees (Bourne, Pavlov, & Santos, 2013). 3.5 Training and development Highly performing employees don’t rank pay as an important element in their work life, argues Maiello & Randall (2008). Such employees have needs that go beyond fair remuneration to be satisfied with their work. Career growth, learning and development are three most important factors that can retain and motivate highly retaining employees. It is important, therefore, that human resource managers develop training and development programs for their highly performing employees to motivate them. Research by Bourne et al (2013) concluded that training was the most important enabler of performance rather than a direct driver of organizational performance. Essentially, training achieves two key objectives in ensuring the ability of the organization to perform better and stimulating employees’ commitment (Counet & de Waal, 2009). 4 Findings and conclusion From the reviewed literature, it is clear that there is a critical relationship between human resource management and performance management. HR managers need to play an active role in ensuring employees perform optimally in helping their organisation reach it goals. However, in implementing performance management, managers need to understand the unique needs of every employee and more so highly performing employees in key positions. The personal vision of highly productive employees needs to be aligned with that of the organisation in order to enhance motivation at work Human resource managers need to involve employees in designing and reviewing their jobs. This is particularly important for highly motivated employees who want to have a feeling of control and autonomy in their job. In the process, reward and recognition systems will be developed and agreed upon by both parties. Highly productive employees need to be further motivated to perform better through training and development to improve their skills. This will be beneficial for the workforce in that it will also increase the skills and knowledge available to the organisation for exploitation. 5 Recommendations The manager in the case analysis needs to address the situation of an unmotivated high performer by first establishing effective communication between him and the employee. Communication allows the high performer to express his views and feel in control of the situation at work. The manager and the employee should work together to revise the latter’s job description to include more challenges and duties. A challenging but rewarding job excites high performers and motivates them to pursue higher goals. The manager should as well set goals and objectives for the employee. The goals should be consistent with the visions of both the employee and the company. Once the employee achieves the objectives, he should be rewarded and recognised accordingly. Finally, the manager should come set aside resources to train and develop the employee as a way of improving his abilities and performance. The employee will feel appreciate and consider staying longer in the company to benefit more. References Armstrong, M., & Baron, A. 2005. Managing Performance: Performance Management in Action. CIPD Publishing. Beauregard, T., & Henry, L. 2009. Making the link between work-life balance practices and organizational performance. Human Resource Management Review , 19, 9-22. Bourne, M., Pavlov, A., & Santos, M. 2013. Generating organisational performance: The contributing effects of performance measuring and human resource management practices. International Journal of Operations & Production Management , Vol.33:12, pp.1599-1622. Boxal, P., & Purcel, J. 2003. Strategy and Human Resource Management. New York: Palgrave MacMillan. Brumback, G. 2003. Blending “we/me” in performance management. Team Performance Management , Vol.9 (7/8), pp.167-173. Counet, H., & de Waal, A. 2009. Lessons learned from performance management systems implementations. International Journal of Productivity and Performance Management , Vol.58 (4), pp.367-390. de Waal, A., & Kourtit, K. 2013. Performance measurement and management in practice: Advantages, disadvantages and reasons for use. International Journal of Productivity and Performance Management , Vol.62 (5), pp.446-473. Edvinson, L., & Camp, J. 2005. Intelligent remuneration in the knowledge economy for growth of intellectual capital. Journal of Human Resource Costing & Accounting ,Vol. 9 (2), pp.112-122. Maiello, M., & Randall, K. 2008. Paying for failure (executive remuneration). Human Resource Management International Digest , Vol.181 (10), pp.114-118. Pablos, P. 2008. Competencies and human resource management: implications for organizational competitive advantage. Journal of Knowledge Management , Vol.12 (6), pp.48-55. Pfau, B. N., & Kay, I. T. 2002. Theories of Executive Human Resource Management. McGraw-Hill. Rynes, S., Gerhart, B., & Minette, K. Winter., 2004. The Importance of Pay in Employee Motivation: Discrepancies between what people say and what they do. Human Resource Management , pp.381-394. Theriou, G., & Chatsoglou, P. 2014. The impact of best HRM practices on performance - identifying enabling factors. Employee Relations , Vol.38 (5), pp.535-561. Tourish, D., & Vatcha, N., 2005. Charismatic Leadership and Corprate Cultism at Enron: The Elimination of Dissent, the Promotion of Conformity and Organisational Collapse. Leadership Vol.(4), pp.455-480. Val, M. P., Fuentes, C. M., & Dobon, S. R., 2012. Participative management and its influence on organisational change. Management Decision, (50)10 , pp.1843-1860. Read More