Human Resource Management in Business Context

1884 Words Nov 24th, 2010 8 Pages
“Performance bonuses offer a win-win gain to both organisations and employees. Discuss, making reference to both theory and case examples”

Introduction

Is performance related pay (PRP) really a motivator for employees and is it an effective way for organisations to gain and retain high performing staff. This is questionable especially as organisations differ in size, organisational culture (therefore differing needs), the ability and/or resources to manage an effective process to support PRP. This study will explore whether performance bonuses offer a win-win for both the organisation and the employees, using primarily the public sector, with reference to the private sector.

“PRP was the ‘big idea’ of the1980s, embraced
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Intangible services are much harder to quantify.

Performance Management Cycle

Key performance indicators (KPIs) are formed as part of the performance and appraisal process to measure the output of an individual. The performance appraisal allows a comparison to be made of the actual performance against expected performance (KPIs), which is linked to feedback and whether the individual has warranted a reward.

However, there are many potential problems with the performance appraisal system. The process can become a bureaucratic process with managers seeing it as a tick-box exercise to be completed once a year. There could be a lack of understanding of the objectives by the employee, or the organisation may not have a clear strategy and furthermore the process is subjective and open to human bias. It is also very difficult to quantify individual performance such as intangible elements, as mentioned earlier. So it could be argued that the process is not very transparent.

To overcome this, Beer et al. introduced the Harvard Model (Gilmore. S, 2009, p.9) which takes into account a wider range of stakeholders interests to provide an input into the appraisal process which allows the reduction of a bias opinion of just one person. It is stated as reduction, as the process is still subjective and open to a range of perceptual errors although
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