Performance management and its associated reward system---the tips for MBA, (HRM)
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Performance management and its associated reward system---the tips for MBA, (HRM)

Performance management and its associated reward system


The main aim of the model is to study the link between the performance at individual and organizational level and how they are aligned to the strategic objective of the company. A clear map is seen between the strategic planning and the implementation of strategy by analyzing the individual/team performance. It can be concluded that by the above table that Performance planning, designing, reviewing, managing and rewarding it are the integral parts of Performance management processes by also including the new element which is design. In this particular model it is seen that only performance reward is considered, where as it has not taken care of non performance, which is considered in future studies. By considering all the three models of performance the researcher has concluded that the last model is easy to understand and adapt in any kind of environment. But it is seen that the element of Non performance has not been include yet. In totality performance Management should serve the purpose of establishing the links between the team’s operational plans and the operational plans of the individuals there by establishing the strategic plan with relation to the organization .It also has to consider all the inputs and the processes which are necessary to obtain the output. Performance management is explained in a better way in the next section by considering some of its elements.

In performance management Organization’s goal are aligned with the employee goals. It has been stated in the literature that in order to obtain the above goals and objectives planning is to be done which should in turn adopt a participatory approach where in the goals and objectives have to be disused with the employees so that they are clear in what the company is looking for. Chances of resistance will be less in this approach. By monitoring the employee performance regularly we can judge whether the organizational objectives are met or not. In case, if it is not met then remedial actions are taken then and there.

Reward for performance management

The most common aim of the performance management is judgmental and Developmental (Pullin and Haidar, 2003). In this part we try to explore the aims and implications of performance management and its associated reward system (Chapter 9 gives us the more details on the reward issues).In this Armstrong’s (2002) concept of ‘total reward is seen which has both the non-financial and the financial elements. In The performance management which is linked up with Finance (extrinsic)rewards are given in the form of pay ,where in the payment will be at risk if the performance is not met.So basing on the performance of the person the payment is decided. In Non financial which is Intrinsic includes recognition, involvement in other assignments, recognition Increase in quality of work life etc are seen. Debate is always seen as to which has to be implemented whether extrinsic or intrinsic. Williams (2002) suggested that incase extrinsic is increased there is always a risk that intrinsic loses its value or diminishes. Armstrong and Baron (2005)suggested that there is always a tension between two and whichever is considered ultimately it should aim at the development as a whole.

Non-financial reward

Even by considering the rewards which are non-financial it is not difficult to see their impact on PMS which again focuses on development. It is clear that the review of the performance and collecting the feedback from employees are integral parts of performance management process. Once the performance review is done it is again aligned with the other HR activities like for example training can be implemented to develop the employees in the areas they lack .Incase the performance of an employee is good recognition and appraisal may be seen which therefore helps the employee to move forward .This type of performance which includes intrinsic rewards is quiet acceptable in western countries. Whereas countries which exhibit high power like China it may not be fruitful as the managers are found reluctant in a two way dialogue exchange with the employees .They are also not found interested in providing counseling to their subordinates. (Huo and von Glinow, 1995).Similar way this approach is not acceptable even in country like Russia. So depending on the cultural context the Non-financial reward system may work. So it is better to analyze the country’s culture before it is implemented.

Financial reward

Before implementing this concept the management has to analyze like to what extent the PMs can be used to drive the financial reward. We have to note a point that we are not here to disuses the outcome of contingent mechanism, we are here to discuss the how the performance management and its correlation with financial reward is lined together. PM has a goal with in it and is driven by the competencies and the objectives of the individuals. And reward is given only if the goals are met. So measuring them accurately is not an easy task and can create some problems in between as well ((Campbell et al, 1998).It is measured by considering the overall rating and problem may be created with respect to the validity and also the accuracy related with it(London et al, 2004). (Hendry et al, 2000).

Expresses his view by stating that by measuring employees’ performance it gives them a feeling that the management is controlling them rather than helping them to improve on it.

According to Lawler achievement and its subsequent system of reward should have a clear line of sight. This is derived from the theory of expectancy which says motivation can be seen only when people expect for some rewards for their effort as well as contribution. In spite of the fact that there is always a question associated with the pay linked up with the employees’ motivation, so that they can achieve high performance most of the PMS in UK still link performance to pay though the number is declining (Armstrong and Baron, 2005).

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