HRM Essay Example on Performance and Compensation

Increase in market competition forces organizations to upgrade individual and group performances, thus encouraging the formation of systems which encourage well-functioning compensation programs at all levels and through which employees are motivated. One of these systems is the performance management which emphasizes on maintaining a team of competent and dedicated employees to achieve organizational goals, while at the same time maintaining a proper reward system. This report, therefore, analyses various factors including; the concept of linking employee performance to organizational goals, types of individual and group-level performance measurements, the advantages and disadvantages of individual and group reward systems, and a recommendation on the best reward system.

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Linking employee performance to organizational goals

Most organizations have moved from the common appraisal processes to a more modern and beneficial process which links employee and organizational performance through the company's visions, values, and mission. According to Daley (2012), organizations have developed a goal management process which focuses on achieving success by deliberately integrating performance to organizational goals. Cascading and aligning organizational goals with performance is a step-by-step process; whereby, the organization's mission, which defines the vision, is used as the starting point.

A strategy for achieving the vision is then devised, followed by business plans on strategy executions (Champoux, 2016). Individual team members are then assigned responsibilities and allowed to establish personal goals that are in line with the company's strategic objectives, to avoid putting effort on less critical issues. Basically, the linking process begins from the top, where individual goals are reported back. This reporting structure enables executives to monitor the progress on business plans executions. With such a contemporary management approach, organizational goals are less individual-centric and more organization-centric.

Individual and group-level performance measurements

Improving individual and organizational performance is only possible if there is performance feedback. At an individual level, measuring performance links personal behavior and organizational goals form a link between organizational goals and decisions. According to Mone, Eisinger, Guggenheim, Price, & Stine (2011), performance measurement is the first step to making organizational improvements; the means of measuring performance, however, differ according to variables such as the employee's occupation, and working environment.

Measures on performance can be categorized into two; result-determinant factors such as innovation and resource utilization, and result-related factors such as financial performance and business' competitiveness. Individual performance can, therefore, can be measured based on; productivity, performance to schedule, preventive maintenance, profit contribution and the use of 'Management by Objectives' measures. Such techniques are advantageous since they enable managers and supervisors to analyze and measure employee performance according to the organization's expectations. Paarlberg & Lavigna, (2010), however, identifies that organizations which rely on these measures only do not have a clear performance target. For instance, analyzing an individual's profit contribution only measures the effects of past actions without necessarily projecting future performances.

Individual versus group-level performance recognition.

Employing an individual-based performance recognition system is an effective way for an organization to express a clear plan on what the employee is expected to do. It is seen as the best motivational factor for individuals, and it creates healthy competition among the employees. Besides ensuring personal motivation, individual recognition is a fairer method compared to group-level recognition. Additionally, it forms a strong correlation between performance and reward, thus increasing the chances of positive performances in future (Burnett, Cushing, & Bivona, 2012). However, this system also has unwanted effects; once the employee gets recognized after making an achievement, they might become lazy since they already know what needs to be done to get rewarded. Also, it might be ineffective for employees who feel the reward is not worth the effort and at times, it puts quantity above quality. Moreover, it may cause an unpleasant work environment for employees who doubt the criteria for rewarding others (Burnett, Cushing, & Bivona, 2012).

Organizations can also use a group-based performance recognition system. This mainly motivates group cooperation to promote stronger bonds among workers which eventually results in healthier relationships and a friendlier workplace environment. Group-based performance recognition also benefits the organizations since employees can work on larger tasks (Champoux, 2016). However, such cooperation also has negative impacts such as increased conflicts. It may also lead to reduced results since employees lose a sense of how much each one contributes individually to reach the primary goal ( Paarlberg, & Lavigna, 2010). This may then cause less cooperation but increased competition among the members.

For most organizations, it is always challenging to decide on whether to link individual or group monetary rewards to their success. There are constant conflicts between cooperation and competition, the relationship between the rewards and the working model and employee expectations. According to Paarlberg & Lavigna (2010), for an organization to settle on one option, it is essential to analyze whether employees are productive when working individually or collectively.

Focusing on only one reward system might result in more conflicts and failure to appropriately reward other employs. Therefore, the best method would be an application of a simultaneous system whereby, rewarding of well-implemented group performances can be combined with individual rewarding. This would ensure that the organization gains from the benefits of having motivated workers and advocates for team-work and cooperation. The program can be monitored and evaluated through the use of a balanced scorecard system to measure the organization's progress. The management can use such a system to a balanced overview of tissues that need to be improved and what needs to be maintained. Whichever reward system an organization uses, it should be designed following the organization's values and environment and should also suit the employees' needs.

References

Burnett, A., Cushing, E., & Bivona, L. (2012). Uses of Multiple Measures for Performance-Based Compensation. Center for Educator Compensation Reform

Champoux, J. E. (2016). Organizational Behavior: Integrating Individuals, Groups, and Organizations. Abingdon: Routledge.

Daley, D. M. (2012). Strategic human resources management. Public Personnel Management, 120-125.

Mone, E., Eisinger, C., Guggenheim, K., Price, B., & Stine, C. (2011). Performance management at the wheel: Driving employee engagement in organizations. Journal of Business and Psychology, 26(2), 205-212.

Paarlberg, L. E., & Lavigna, B. (2010). Transformational leadership and public service motivation: Driving individual and organizational performance. Public administration review, 70(5), 710-718.