'Prp Theories\r'

'HUMAN RESOUCE MANAGEMENT content 1. Introduction1 2. Literature refreshen2 2. 1Emergence of PRP2 2. 2 pattern of PRP3 2. 3Relevant theories of PRP4 2. 3. 1Maslow’s pecking order of unavoidably & angstrom unit; Herzberg’s motivational surmisal4 2. 3. 2 equity sup lay in PRP5 3. berth study6 3. 1 encase 1: â€Å"Why Do Companies Use implementation-Related chip in for Their decision maker Directors? ” (Bender, 2004)6 3. 2Case twain: â€Å"Evaluating murder-related chip in for dressrs in the interior(a) health helper” (Dowling & deoxyadenosine monophosphate; Richardson, 1997)9 4. bring outline and military rating of PRP Theory in Business Organisations11 4. 1Comparison11 4. Contrast12 4. 3Performance related present possibility in patronage physical com poses13 4. 3. 1Motivates employees and meliorate their movement14 4. 3. 2Facilitates switch over to systemal cultural14 4. 3. 3Encourages the internalisation of functioning norms15 4. 4Problems of PRP in work out15 4. 4. 1Setting public presentation marks16 4. 4. 2 judging and ratings17 4. 4. 3Reward17 5. Conclusion18 Reference19 Appendices21 1. Introduction Nowadays, tender-hearted election Management has start a strategic and co here(predicate)nt approach to a greater extent than than(prenominal) than just managing the competencies and skills of employees in an organization.\r\nArmstrong (2002) noniced that HRM is to a greater extent more cerebrate on battalion non agate lines, and so does line of work organization (Lewis, 1998). Yet, quite a little brook been practice as an great role of business. To this extent, this essay go forth take a critical look at PRP which is based on tidy sum, and similarly considered as an of the essence(p) and sensitive violate of the HRM in organizations today. The root starts with a brief review of recent literature which reports studies of PRP schemas. It continues with describing deuce case stud ies related to the practical discrepancy to PRP theories.\r\nIt goes on to our own independent critical outline by comparing the PRP theories and practice in real world. Finally, on that point atomic number 18 results being drawn nigh the nicety of PRP in a explore surroundings. 2. Literature review 2. 1 Emergence of PRP Performance-related assume (PRP) emerged in the previous(predicate) 1980’s which attempts to relate respective(prenominal)istic act at act upon to reinforce, aiming to reconstruct a motion people ad gravel military operation-oriented finishings. Besides business brass instruments, some familiar institutions such(prenominal) as governments and universities also adopt PRP as an inhering level for championing mensurates.\r\nBy comparing with another(prenominal)wise stipend final causes, the PRP base was satisfying-heartedly accepted by employers and played a much more absolute heart and soul on improving employees’ demean our and organisations’ culture. According to the IPD search into performance get byment practices in 1997, 43 per cent of respondents had PRP; additionally, IBS research in 1998 showed that 61 per cent of answers satisfied their chastity wage up. These figures make it easy to see that PRP score been wide applied among organizations whatever business the like or public facility (Armstrong, 2002).\r\nThere argon a potpourri of reasons wherefore organization may applied PRP. Armstrong and Murlis (1994) give tongue to that ‘it is right and proper for people to be rewarded in accordance with their contribution’. According to Pilbeam & Colbridge (2002), in that location ar a number of factors contributing to the upshot of PRP, which is identify in Figure 1. The Thatcher legacy and ‘ try’ surveys in the public sector increasingly competitive environment and concern with employee performance unitary and neo-unitary employment relations pers pectives\r\nReassertion of the ‘right to manage’ and increasing managerial control Influence of HRM demagogy & Strategic integration of reward Trends towards individuality and the weakening of collectivism Emergence of PRP Figure 1: Factors contributing to the emergence of PRP (Pilbeam & Corbridge, 2002) 2. 2 Concept of PRP ACAS (1990) defined individual performance-related pay (PRP) as â€Å"a method of stipend where an individual employee receives attachs in pay based wholly or part on the regular and systematic assessment of job performance”.\r\nAdditionally, Murlis (1996) claimed a signifi pottyt distinction between the utilise of PRP to managing performance straight from the motivational stimulation of pecuniary rewards (motivation) and the use of PRP to identify different levels of performance (reward). base on these points, PRP faecal matterister be commented as a combination of collar key factors: motivation, performance and rewards, w hich deform in twain ship drive outal that motivating people to achieve expected performance; and recognise these people who have achieved successful performance.\r\nBased on these ternary factors and their bloods, Pilbeam and Corbridge (2002) identified three stages for PRP application: Firstly, view individual performance criteria by imposition, discussion or arrangement firstly; secondly, assessing performance against individual performance criteria which formal in stage1; thirdly, allocating pay to the assessment of performance by the exercise of managerial prerogative. 2. 3 Relevant theories of PRP 3. 2 2. 3. 1 Maslow’s hierarchy of needs & Herzberg’s motivational theory in PRP Maslow’s (1943, 1987) hierarchy of needs and the ii factor theory of Herzberg (1959) indicated that pay can be considered as the some effective way to satisfy benevolent’s need and further to cause people to work more effectively, which means appropriate payme nt can speed employee to achieve successful performance that maximizing organisation’s benefits.\r\nKessler and Purcell (1922) noted that employees forget be easily motivated if at that place is a cultivate and close relationship between performance and reward. Therefore, PRP ends could motivate the employees to increase their causal agents to accomplish good performance. 2. 3. 2 Equity theory in PRP The Equity theory of Adams (1965) identified that employees have a strong need to be treated fairly which can be equilibrate by an equity between their input like work performance and output like rewarding.\r\nComp argond to other types of pay like non-incentive pay which is based on corporally-negotiated rule, PRP associates employees’ productivity with their behaviour, rewarding employees for their successful performance, which is much more fair and reasonable. From these theories, we can see that PRP has brought a atomic reactor of potential benefits on improvi ng HRM efficiency of organization. However, there ar some myopicages in PRP application in practice, which will be discussed in following two empirical case analyses. 3. Case study 3. Case one: â€Å"Why Do Companies Use Performance-Related dedicate for Their Executive Directors? ” (Bender, 2004) The paper snaped on the contend of rewards to the listed companies’ executive director. There are variable ways to pay the rewards. Thus the performance-related pay introduced to this paper. At the opening of this paper prior research introduces three types of theory to explain why companies use performance-related pay: result theory, motivation theories (expectancy, equity), and institutional and legitimacy theories.\r\nResearch scheming utilised 12 companies’ interviews with 35 persons who stand in different positions. These interviews lasted for two years from December 2001 to may 2003. The interviews reflected different opinions about the find of PRP. Som e of the answers present PRP could motivate people to do work headspring: Alan Wilson, chief executive of Skandia UK regarded pay as a motivator; a HR director idea if everyone was paid the same base salary, they would always do the same.\r\nBut a part of the respondents denied that PRP made an effort in motivating people in the work. A chief executive officer argued that whether PRP works depends on which market you were in and also on when the people were on level salaries. Also another respondent held a apathetic idea on motivation of PRP to managers. A CEO categorized his employees into two types: one type give chase money and the other worked for vocational interests and he agnise that PRP was in a position to exert modulate on those who chased money and not on employees worked for vocational interests.\r\nAt the end of this part the actor reaches the conclusion that lack of money is a de-motivator. Furthermore, interviews demo some different ideas: a) makement repr esents personal value of employees. The more contribution you have made, the more you can earn; b) Focus and fairness: according to the answers from interviewees, we can find that the company adopts PRP with the intention to make executives focus on their work efforts and fairness can change employees’ performance; c) The need to provide alignment: here is a large number of factors forge performance in long-term and some of those cannot be detect currently; d) Other reasons to introduce performance-related pay: the fatality of government to adopt PRP and because of everybody has it so you has to have it; e) Problems with performance-related pay: a consultant pointed out that PRP system would fill unpredictable problems especially in long-term and it is difficult to select appropriate measure and targets. Market Practices regard for Legitimacy Need to Attract and Retain\r\n see a performance-related reward intention Set performance measures and targets and use it to co mmunicate strategy Directors’ actions and behaviours Business performance Performance-related award Monetary award Increased human capital for future negotiations Effect on individual’s self worth Figure 2: Why Companies use performance-related pay (Bender, 2004) In the final exam part, the author summarizes this case study according to three theories mentioned at the beginning of our description and draws figure 1 to show why companies performance-related pay. . 2 Case two: â€Å"Evaluating performance-related pay for managers in the content Health Service” (Dowling & Richardson, 1997) This paper includes 4 sections. constituent 1 explains the NHS system which means the performance related pay system for general management in 1989. Section 2 shut downs the evaluation criteria and explanatory framework. PRP is introduced on the hatchway of management. According to Cannel and Wood’s survey, PRP could be introduced to cut across problems with exist ing systems, o encourage employees’ motivation, to improve colloquy with work force, to reduce problems of recruitment. Kessler suggested that the PRP exponent also be use to improve the fairness of a payment system, to reduce union influence and the importance of collective bargaining, can also give additional influence to line managers. The purpose of PRP is said to reward those manage who achieve a more than competent pattern of work and motivate managers to perform better.\r\nSection 3 values the efficiency of the system and four measures are utilized to check the outcome of the scheme. Managers had to be assessed by their supervisors and receive reward based on their performance if they had finished targets set at the beginning of the year. In NHS, the HR department designed the PRP system in hallow to motivate managers. However, through self-reported data from the managers cover by the PRP system, a majority of respondents saw the scheme as having little or no effe ct on their motivation to do their jobs well.\r\nAlso the authors did not found solid evidence to show that there are corresponding negative consequences of PRP. The initial testing of the raw data clearly suggests that the three elements of the scheme achieved different degrees of success. The objective-setting elements seemed to be widely supported. It could be sight that the schemes rewards were either not appropriate or not sufficiently kind to act as a motivator. PRP include the way in which performance standards are set and monitored.\r\nSection 4 explains the effects of PRP in the NHS. About 85% respondents showed satisfaction with the objective â€setting process. Furthermore, they also agreed that the challenge offered by the objective measures increase their determination to achieve their goal set before. On the other hand, there was also much critical comment on reward system such as subjectivity and appraiser bias. In addition, the PRP reward system was always cash limited. 4. Analysis and Evaluation of PRP Theory in Business Organisations 2 3 4. 1 Comparison\r\nBoth of the two cases are involved in the topic of PRP, and focus on the effectiveness of PRP scheme. In addition, both of the researches partly agree that PRP is successful in some areas or in some extend, however, PRP is still not a perfect scheme out-of-pocket to various reasons. As what has been pointed out to be the problems in PRP, among all of the reasons mentioned in the written document, the objective-setting process has been pointed out in both of the researches, which indicates that this might be one of the key points which should be considered to improve PRP scheme.\r\nWhat is more, both of the papers mention that PRP is introduced in order to â€Å"attract and retain executives with the potential of large earnings”(Bender, 2004) and â€Å"to improve the fairness of a payment system, to bring employee commitment” (Dowling and Richardson, 1997), which can be considered as the positive points of PRP. 4. 2 Contrast The methods utilize in the research in the two cases are different. The case about PRP in the National Health Service used both quantitative and qualitative date from a questionnaire survey (Dowling and Richardson, 1997).\r\nWhile, the case conducted by Bender (2004) used qualitative date from an interview survey. Moreover, the perspectives used in the two papers also vary. As to the reasons why PRP is not more successful, Dowling and Richardson (1997) consider that there are three kinds of employees as being particularly important: firstly, those who think that the objective-setting process of PRP is coped with terribly; secondly, those who think the assessments are handled badly; lastly, those who believe that the rewards are not attractive enough to encourage their motivation.\r\nThey hold the opinion that PRP has a less important influence on these people, which indicates that the advantage of objective-setting process, a ssessments and rewards might lead to improving the effect of PRP. While, the paper conducted by Bender (2004) indicates that the reason that PRP is not so successful is also related to the market in which directors are. Besides, salary and rewards are not the solely recourses that could motivate managers. For instance, leisure can also play a significant role in the performance of managers. Additionally, PRP scheme has less important impact on those people who mainly work for vocational interests.\r\nMeanwhile, this paper (Bender, 2004) pays more attention to the reasons that PRP is used by companies. The writer points out some more reasons from interviews with directors other than the strong points of PRP which have been mentioned above. To be on the button, pay can be deemed as a symbol of worth and how much one can earn is associated with the self jimmy for the executives. In the end, we can see from the two papers that PRP has develop successfully from 1997 to 2004 because w hat are reflected in the papers shows us that PRP has been used much more and been recognized in a wider range.\r\nAs a result, we can conclude that with the use of PRP, this scheme has become and also will become more and more mature and grant a lot to business organizations. 4. 3 Performance related pay theory in business organizations This section conducts analysis of two empirical cases critically and assesses the value of PRP theory and benefits it achieves in business organizations. The whole objective of pay related systems like the PRP and other HRM theories is obviously to bring or add to the value of business organizations. When we take a look at the first paper, it is obvious that on the average PRP increases an organization’s value.\r\nThe following are the perceived benefits of the PRP theory: 4 5. 1 5. 2 5. 3 5. 4. 1 Motivates employees and improve their performance The human needs hierarchy theory of Maslow (1943, 1987) and the two factors theory of Herzberg ( 1959) indicate that in modern society satisfying human needs like payment is in a position to motivate people to work harder. Furthermore, in business organisations payment related to performance can stimulate people to accomplish the performance that organizations want. Kessler and Purcell (1992) claimed that if direct relationship exists between effort, performance and reward, employees would be motivated.\r\nPRP schemes act exactly as this direct link motivating the employees to increase their efforts. 5. 4. 2 Facilitates change to organisational cultural Kessler and Purcell (1992) argued that PRP refers to flexibility, dynamism, entrepreneurial spirit and careful allocation of resources, leading to a performance-orientated culture. Therefore, the introduction of PRP facilitates change in business organizations culture from collectively negotiated formula to individual contribution, which assists in solving problems, increasing value of organizations, and reducing problems of r ecruitment and retention. 5. 4. Encourages the internalization of performance norms â€Å"PRP can encourage the internalization of the organisation’s goal or norms of behaviour among the employees of the organization” (Geary, 1992). In the implementation of PRP, the organisation’s norms of behaviour can be enhanced by rewarding congruous work effects and by sound incongruous performance. Thereby, it strengthens management control and clarifies job roles deep down organizations. 5. 4 Problems of PRP in practice Theoretically, PRP can arrest many benefits for organizations, which have been demonstrated above. However, there are always gaps between theories and practice of PRP.\r\nIn this part data from the NHS case will be utilized to illustrate some problems of PRP. Figure 3 above shows that only 2 percent respondents consider PRP as the motivator for them to work harder while respondents with opposite idea accounts for 45 percent. Also 67 percent respondents heart neutral idea on the question of whether PRP scheme affect motivation to do the job and 77 percent respondents did not feel more co-operation after the introduction of PRP scheme. Question| Negative Positive| Does PRP have effect on your motivation to do the job well? 2| 3| 67| 25| 4| You consciously work harder because of the PRP scheme. | 45| 26| 17| 10| 2| You focus on PRP objectives rather than other activities. | 34| 34| 20| 10| 2| PRP changes co-operation level among colleagues| 2| 12| 77| 8| 1| Figure 3: PRP in the National Health Service (Dowling and Richardson, 1997) 5. 5. 4 Setting performance objectives It is essential for organizations to set up clear and measurable objectives so that the behaviour of employees can be guided by objectives. However, imposition and slenderness of PRP in objective-setting could lead to failure of the implementation.\r\nWhat’s more, short term approach stemming from narrow and misleading objectives could make employees ignore i ntangible aspects and long-term tasks. Therefore, the weakness of PRP in objective-setting could discourage behaviour that is not financially rewarded and balk business organizations from functioning well. 5. 5. 5 Assessment and ratings Assessment and ratings are indispensable stage of PRP system. In practice, two crucial elements during these processes, scales of ratings and fair appraisals made by managers are difficult to achieved, which make employees not satisfied with ratings addicted to them.\r\nAs Belfield and Marsden (2002) argued that the use of PRP will do more harm than good if the right monitoring environment is not in place. 5. 5. 6 Reward PRP regards reward as the motivator for employees to work hard, which is often not the case in practice. Maslow’s theory of the power structure of Needs (1943) stated that payment is not the only need of human beings. Besides payment, people also have mental requirements such as belongingness needs, esteem needs and self-act ualization. 5. Conclusion\r\nAfter critical analysis and assessment we can finally reach the conclusion that in theory PRP is in a position to provide business organizations certain benefits such as motivating employees, improving their performance, attracting executives, facilitating change in organizational culture and encouraging the internalization of performance norms. However, due to imposition and narrowness in objective-setting, unfairness and inaccuracy in assessment and ratings, and diversification of human needs, theoretical benefits of PRP cannot be reached.\r\nTherefore, more attention should be paid on the gap between HRM theories and their application in practice so that HRM theories can assist business organizations in increasing their values. Reference ACAS, 1990. Appraisal-related Pay. London: ACAS. Adams, J. S. , 1965. Inequity in neighborly exchange. In: Berkowitz, L. ed. , Advances in experimental social psychology. in the raw York: Academic Press, 267-299. Ar mstrong, M. , 2002. Employee reward. 3rd ed. London: hired Institute of Personnel and Development. Armstrong, M. ; Murlis, H. , 1994. Reward Management, London: Kogan Page.\r\nBelfield, R. ; Marsden, D. , 2002. Matchmaking: the influence of monitoring environments on the effectiveness of performance pay systems. Centre for Economic Performance, London School of political economy and Political Science, London, UK. Bender, R. , 2004. Why Do Companies Use Performance-Related Pay for Their Executive Directors? Corporate Government, 12(4), pp. 521-533. Dowling, B. ; Richardson, R. , 1997. Evaluating performance-related pay for managers in the National Health Service. The Intematioruil Joumal of Human Resource Management, 8(3), pp. 348-366. Herzberg, F. , 1959.\r\nThe Motivation to work, New York: John Wiley. Geary, J. F. , 1992. Pay, control and commitment: linking appraisal and reward. Human Resource Management Journal, 2(4), pp. 36-54. Kessler, I. ; Purcell, J. , 1992. Performance-rela ted pay: objectives and application. Human resource management Journal, 2(3), pp. 16-23 Lewis, P. , 1998. Management performance-related pay based on evidence from the financial services sector. Human Resource Management Journal, 8(2), pp. 66-77 Maslow, A. H. , 1943. A theory of human motivation. psychological Review, 50, pp. 370-396. Maslow, A. H. , 1987.\r\nMotivation and Personality. New York: Harper ; Row. Murlis, H. , 1996. Pay at the Crossroads. London: Institute of Personnel Development. Pilbeam, S. ; Corbridge, M. , 2002. People Resourcing: HRM in Practice. 2nd ed. Harlow: FT Prentice Hall. Appendices Tow papers: Bender, R. , 2004. Why Do Companies Use Performance-Related Pay for Their Executive Directors? Corporate Government, 12(4), pp. 521-533. Dowling, B. ; Richardson, R. , 1997. Evaluating performance-related pay for managers in the National Health Service. The International Journal of Human Resource Management, 8(3), pp. 348-366.\r\n'