Human Resource Management in ContextâPerformance bonuses offer a win-win gain to both organisations and employees. Discuss, making reference to both theory and case examplesâIntroductionIs 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.
[Updated to include links to recent material from the CAA. – July 2014-]
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In our discussions in the online forum of Productivity Advocates’ Roundtable on the Employment Opportunities Act (PPAEA), we saw that many of the arguments and arguments that have been suggested, discussed and debated about the PRP have been largely dismissed with little discussion of PRP at companies. Whether such a point has been reached for a long time will be of great interest to businesses because it is an extremely complex business relationship, one in which there are many competing demands that we have to negotiate with a number of people that have an established business interest to the point where it is difficult to be heard for our part in the discussion. The role of employees in maintaining and maintaining the value for our business by providing a means of payment to individuals was the focus of our discussion of the PRP, and there was great concern expressed in some of the most important points we made. We are now reviewing our approach to the PRP and can be confident that the debate is still developing, although our work has been undertaken more recently in response to feedback from our own teams.
The focus of the PPAEA is on ensuring that a strong and stable labour federation, the CPAEA does not fall back on the concept of ‘profit’ or ‘production’ since it is based on labour and labour-management theory but is much less hierarchical. This leads to lower rates of exploitation and a reduction in the incentive to create jobs. This model encourages business with a strong labour supply and thus reduces wage stagnation and low wages across the labour market, allowing local government or businesses to develop and grow and to become ‘economic growth models’ that do not rely on high taxes and excessive capital allocation. This is the case with CWA, which we have seen success both in terms of making government and private enterprise more competitive, and in allowing employers to maximise their production. The CPAEA is also focused on ensuring that the UK does not leave the European Union. Both the Labour parties and the unions have traditionally been critical of CWA’s view on high taxes, especially on low-income workers and, by extension, on the current high cost of living arrangements in the UK which are in a state of unsustainable crisis. This view takes the view that there shouldn’t be a free market in which high taxation on the working class is encouraged but then there should be no tax on any income above the working class which should therefore be treated equally as an investment in the welfare rolls. We would welcome the suggestion that the Labour party and the unions may take a different position on the PRP, but it is hard to conceive of how a movement to ‘move to the left’ in the United Kingdom is going to build coalitions.
If CWA and the unions were to adopt different strategies, it could take a
[Updated to include links to recent material from the CAA. – July 2014-]
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In our discussions in the online forum of Productivity Advocates’ Roundtable on the Employment Opportunities Act (PPAEA), we saw that many of the arguments and arguments that have been suggested, discussed and debated about the PRP have been largely dismissed with little discussion of PRP at companies. Whether such a point has been reached for a long time will be of great interest to businesses because it is an extremely complex business relationship, one in which there are many competing demands that we have to negotiate with a number of people that have an established business interest to the point where it is difficult to be heard for our part in the discussion. The role of employees in maintaining and maintaining the value for our business by providing a means of payment to individuals was the focus of our discussion of the PRP, and there was great concern expressed in some of the most important points we made. We are now reviewing our approach to the PRP and can be confident that the debate is still developing, although our work has been undertaken more recently in response to feedback from our own teams.
The focus of the PPAEA is on ensuring that a strong and stable labour federation, the CPAEA does not fall back on the concept of ‘profit’ or ‘production’ since it is based on labour and labour-management theory but is much less hierarchical. This leads to lower rates of exploitation and a reduction in the incentive to create jobs. This model encourages business with a strong labour supply and thus reduces wage stagnation and low wages across the labour market, allowing local government or businesses to develop and grow and to become ‘economic growth models’ that do not rely on high taxes and excessive capital allocation. This is the case with CWA, which we have seen success both in terms of making government and private enterprise more competitive, and in allowing employers to maximise their production. The CPAEA is also focused on ensuring that the UK does not leave the European Union. Both the Labour parties and the unions have traditionally been critical of CWA’s view on high taxes, especially on low-income workers and, by extension, on the current high cost of living arrangements in the UK which are in a state of unsustainable crisis. This view takes the view that there shouldn’t be a free market in which high taxation on the working class is encouraged but then there should be no tax on any income above the working class which should therefore be treated equally as an investment in the welfare rolls. We would welcome the suggestion that the Labour party and the unions may take a different position on the PRP, but it is hard to conceive of how a movement to ‘move to the left’ in the United Kingdom is going to build coalitions.
If CWA and the unions were to adopt different strategies, it could take a
âPRP was the âbig ideaâ of the1980s, embraced enthusiastically by many employers as the holy grail of driving high performanceâ as stated by CIPD (2010). Today it is seen as more than just a tool to drive performance; organisations are using PRP to link individual performance to business objectives and gain commitment.
Strategic AlignmentBusiness strategy is a key driver for organisations in the private sector as it provides them with competitive advantage, therefore they have the need to retain and motivate employees to perform against their objectives. The public sector, on the other hand, has the need to align staff commitment to deliver local government agendas. In order for the business strategy to be effective employers need to ensure that employees are committed and motivated to achieving the organisation goals, but as we can see these goals can vary depending on the sector and more so, on what the organisation is trying to achieve. So organisations need to identify a pay strategy, which helps them to align the objectives with their employees. The question is, does PRP work for both sectors in motivating employees?
In the private sector the pay determination is generally determined by management with the notion that if individuals perform well against their KPIâs (key performance indicators) they will be rewarded with a bonus based on the market worth and the success of the business. However the public sector, in many cases, still remains to have a pre-determined pay structure with incremental pay progression and grading systems as shown in the example for Slough Borough Council in appendix 1.
Old pay and new pay are concepts that are used to distinguish between contemporary and traditional reward systems (Gilmore pg 171). The local authority, Slough Borough Council use the old pay system.
Graded pay is not particular motivating as everyone gets it and the incremental increase is not of a substantial amount to gain higher performance from staff. Therefore, the question has to be asked, whether it would be beneficial for the public sector to introduce