HRM and the Performance related pay

Essay by mimituUniversity, Bachelor'sB+, May 2006

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Before I get started with the arguments related to for and against individualized performance related pay I would outline the reason why such arise at all in any industry and why at first place managers have decided that such a method should be applied in order work to be performed more efficiently.

Everything starts with the assumption that pay does not have to "chaotic" in means that every worker should be paid this what he deserves in matter of the firms interests. Examples would be given later on in the arguments posted so for now on we should accept it as a simple fact.

The creation, implementation and supervision of such paying strategy is clearly on the shoulders of the Human Resource Manager of the firm. Of course this strategy should be at first place consistent with the economical sector, the job design and description.

Individual performance-related pay is defined by ACAS 1990) as: "a method of payment where an individual employee receives increases in pay based wholly or partly on the regular and systematic assessment of the job performance".

The base idea of this new strategy is to be changed the whole culture of organization by accepting "new" values that the management thinks are necessary for good. Is this possible? Now we would see.

Arguments "for" individualized performance related pay.

1. Almost all of the employees agree with the fact that: "the able and industrious employee should be rewarded more generously for that ability and industry than the idle and incompetent" according to (Kessler, 1984). The simple meaning of that sentence is that if for example we have two employees working for the same firm on the same job, the first being in this position for quite some years, knowing the basis and the standards of the job,