Describe about the Developing and Managing Performance for Reward System.
The purpose of this task is to prepare a report to the HR director and CEO of Wellton NHS Trust regarding Individual Performance Related Pay (IPRP). IPRP is a standard based reward system through which employers can pay remuneration to the employees as per their performance. This report emphasizes the importance of IPRP in NHS business operation. Employees in NHS have several job roles and therefore, responsibility delegation is one of the major factors in this industry. The purpose of implementing such payment structure is to empower motivation of the workforce (Hutchinson 2013). In this process, the company will provide remuneration based on the performance of the employees. Now, in this industry, the performance parameters may vary based on department to department. Therefore, this report will emphasize on barriers of IPRP implementation in NHS. Moreover, there are certain advantages and disadvantages of this reward structure. This report also emphasize on critical evaluation of IPRP. Based on the barriers identified, alternative payment structure will be proposed through this report.
Ability, Motivation and Opportunity
As per the theory of AMO, the performance standard of an employee depends on three elements – Ability, Motivation and Opportunities. This particular theory has suggested that the human resource management of a company must act to improve the ability of the employees by motivating them with the best possible ways (Memon and Kinder 2016). In order to increase the ability of the employees, NHS or HRM at NHS can introduce proper reward system and attract high quality employees who can guide the existing employees of the organization. At the same time, the AMO theory also suggests that the HRM of the organizations must provide enough opportunity of career growth to the employees. The recruitment of highly skilled employees helps the existing employees to improve their knowledge and skills, which ultimately enhance the growth opportunities of the employees.
Theories of motivation
There are several theories that help to understand the factors behind the motivation of the employees within the organizations. Among all the theories, the expectancy theory and Maslow’s need hierarchy theory are very important. The theories are discussed below:
Victor H. Vroom has developed the expectancy theory in the year of 1964. As per this particular theory, the performance of the employees is improved with the increased level of effort from the employees’ end (See Appendix, Figure 1). According to the theorist, the performance of an employee is dependent on several factors like, skills, experience, knowledge and personalities of the employee (Vrangbæk et al. 2016). At the same time, the theory also stated that there is a positive relationship between motivation and performance of the employees. This means, in order to improve the performance of the employees, the organization needs to motivate them by improving their knowledge, skills and personalities.
On the other side, the Hierarchy theory of motivation by Maslow, suggested that the motivation of the employees depends on their needs. The theory has talked by five levels of need, which can be seen in the following diagram:
Figure 1: Maslow’s need hierarchy
(Source: Arnaboldi Lapsley and Steccolini 2015)
This particular theory has suggested that motivation of the people is not related to the reward system; rather the motivation is related to the needs of the people. At the first level, the people are motivated by the physiological needs, which are fulfilled by providing the basic requirements like, food, shelter and clothing (Memon and Kinder 2016). When this need is fulfilled, the motivation depends on the safety needs, which can be fulfilled by providing security to the people. The next need is the belonging needs, which is fulfilled by good relationship at the workplace and family (Arnaboldi Lapsley and Steccolini 2015). After that, the people or employees seek the prestige and the accomplishment feelings and that motivate the employees or people. The last need is the self-actualization need, which can only be fulfilled by the employees (See Appendix, Figure 2).
Advantages and Disadvantages of Individual Performance Related Pay (IPRP) in NHS
In NHS, employees need to perform as per the organizational performance benchmark. There are several departments will different responsibilities. Therefore, successful implementation of IPRP would help the company in improving overall organizational performance. Through this process, it is possible to increase employee benefits as well as employee performance (Wright 2004). However, monetary benefit is not only the empowerment tool. According to Hutchinson (2013), the employers need to evaluate performance based on the job types (See Appendix, Figure 3). It would help the companies to understand the appropriate performance measurement tool. The theory of motivational hierarchy derived by Maslow shows that there are several factors that influence motivation of an individual. On the other hand, it is difficult to evaluate performance quality based on different performance parameters. In this industry, employees need to communicate with the service users and resolve potential issues. For example, if one employee has good communication skill and low process knowledge, it would difficult for the employee to satisfy the service user (Rose 2014). In such case, considering communication skill as performance measurement tool would lead the organization toward wrong direction. Following are the advantages and disadvantages of IPRP implementation in NHS.
Through IPRP, it is possible to provide direct incentive to the employees for achieving certain objectives. This process would help to provide recognition to the employees through tangible reward (Arnaboldi Lapsley and Steccolini 2015). In this process, employees will improve the performance for improving their reward. Providing rewards to the good performing staffs will improve employee retention for the company. This process helps in goad setting and achieving broad objectives.
Wrong implementation of IPRP may cause discrimination practice within the organization. This approach would prevent the organization to exploit other motivational tools, as this process is completely based in monitory reward (Trebble et al. 2015). This process depends on the judgment given by the line managers. A low quality judgment by the line managers would lead the organization toward wrong direction. This process may harm teamwork culture of the organization.
Improving performance through IPRP
The process of IPRP helps to set individual performance scale. In this process, it is possible to empower performance quality and motivation of the workforce in an effective manner. The However, the term motivation is not only limited to the monitory benefits. An organization can empower motivation of workforce with a range of motivational tools such as incentive trips, holidays and recognition (Memon and Kinder 2016). In IPRP, it is possible to pay the employees based on their performance. In this manner, employees will be motivated to improve their performance as well. The process of performance evaluation is the back bone of implementation process of IPRP (Hutchinson 2013). On the other hand, employer will pay for which an employee is eligible. It reduces organizational cost and increasing profitability.
IPRP in trust business environment
In trust business environment, there are several departments with different responsibilities. For example, in case of NHS, the trusts are ambulance trust, acute trust and mental health trust. In this kind of business environment, the organization needs to empower performance for different position (Wankhade 2015). Here, it is important to understand the performance evaluation process for each department. It would help to improve implementation process of IPRP.
Barriers in implementation of IPRP
Nowadays, Individual Performance Related Pay (IPRP) is the globally acknowledged management strategy, through which organizations are improving their performance quality (Mannion et al. 2015). However, there are some potential barriers, which may prevent an organization from successful IPRP implementation. Following are the barriers of IPRP.
Poor judgmental skill of managers
In IPRP, it is the responsibility of the managers to evaluate performance quality of the employees based on certain parameters. Firstly, the parameters should be well defined and secondly, the judgment of the manager should be appropriate (Vrangbæk et al. 2016). Wrong judgment of manager would affect motivation of a performing employee. This could affect the overall moral values of the workforce. As per the Maslow’s hierarchy theory, recognition is the most appropriate toll, which can empower motivation of an individual. Therefore, a manager should use appropriate tool for performance evaluation, so that the manager can recognize the individual with appropriate tool (Hutchinson 2013).
In order to implement IPRP, the organization needs o communicate with the employees regarding the parameters based on which the company will reward performing employees (Mesabbah and Arisha 2016). Poor knowledge in performance evaluation parameters among employees may affect the IPRP implementation plan. Employees should understand the appropriate process based on which they would be appraised. Therefore, it can be said that poor organizational communication is a barrier to the successful implementation of IPRP.
Alternative approach of IPRP
The above evaluation of IPRP emphasizes the advantages and disadvantages of this process. Apart from that, it focuses on the barriers that could arise while implementing the plan. After understanding the process of motivation, it can be said that beside IPRP, the organization should implement other motivational tools, which are beyond monitory benefits. In this process, it will be possible to encourage the employees to reach to the top position of Maslow’s hierarchy model, which is self-actualization (Trebble et al. 2015). Moreover, the company should implement motivational tools for the low performing employees. It would help to increase overall organizational performance. The motivational tools for the low performing employees could be recognition for short-term objective achievements. It would help an organization to retain both the high and low performing employees for long-term success. According to the Herzberg's two factor theory, there are certain factors that don’t have any impact on satisfaction level, but can influence dissatisfaction of employees (Wankhade 2015). Therefore, the company should provide a clean and hygienic working environment to the employees in order to increase retention.
The alternate plan proposed for improving the IPRP implementation will allow the organization to motivate all the employees from different department. In IPRP, the process depends on performance evaluation and rewards (Mannion et al. 2015). The alternative plan extends the process by adding a performance improvement plan for the low-performing employees. Communication with the employees, feedback generation from the employees and implementing motivational tools beyond monitory benefits are the steps involved in the alternative plan.
Through the above steps, it would be possible to improve performance of the low-performing employees. Therefore, it would be possible to reward those employees once they meet the parameters form getting advantages of IPRP.
While concluding, it can be said that the IPRP (Individual Performance Related Pay) would help NHS trusts to empower the high performing employees. The barriers of IPRP implementation emphasize that it could harm the implementation process. Therefore, this report consists of an alternative plan through which the organization will be able to conduct successful implementation of IPRP plan. Apart from that, the alternative plan will help to train the low-performing employees and make them eligible for gaining advantages of IPRP structure.
In order to conduct successful implementation of IPRP, NHS should identify the most appropriate performance evaluation tool for each department. Apart from that, the company should think beyond motivation through monitory benefits. In order to empower performance quality of the non-performing employees, the company should implement incentive tools or recognition as motivational tool. It would help the company to improve overall organizational performance. After reaching a particular performance benchmark, the company can implement IPRP for the employees.
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