Performance Related Pay And Employee Motivation In Organizations

The pay scale of the employees is related to the system which determines the amount of wages that are paid to the employees.

1.Discussion related to Performance related pay

Performance Related Pay and Motivation

1).The pay scale of the employees is related to the system which determines the amount of wages that are paid to the employees. Pay scale is based on more than factors related to the organization which include, the status or the rank of the employees, the level of the employees and time for which the employees have been working in the organization. Pay scale is also known as the salary structure based on which the employees are paid (Sharma, Sharma and Agarwal 2016).

Performance related pay is strongly related to the motivation that is provided to the employees so that they can give their best performance in the organization. Motivation has become an important factor that is related to the performance of the employees in the organization. The major factors that are related to motivating the employees in the organization include, creativity and the understanding related to the areas where the employees have shown good performance. The areas that are required to be improved are also related to motivating the employees in the company. The human capital of the organization is the most valuable asset that is related to the ways of increasing the revenues and the profitability. Motivation is mainly related to the ways by which the organization can assist the employees in achieving excellence (Rashidi 2015).

The different ways by which an organization can motivate the employees are as discussed further. Observing the performance of the employees over a period of time and compare the duties performed by them with the job descriptions. The employees are also provided with regular feedback so that they can improve their performance. The performance related issues of the employees need to addressed as early as possible. Providing recognitions to the employees is also a part of the motivational process. Promotions provided to the employees based on their performance is a major part of the motivation process (Gerrish 2016).

The motivation of employees is based on the Herzberg’s Two-factor theory or the motivator-hygiene theory. The factors related to the job that provide satisfaction to the employees. The major factors that are related to this motivation theory are mainly, the satisfaction and the dissatisfaction of the employees. The two major categories of Herzberg’s motivational theory are, Hygiene factors and motivational factors. Hygiene factors are mainly the factors related to the job which are based on the existence of the motivation. This further leads to provide satisfaction to the employees in the long-term (Lo, Lin and Hsu 2016).

Motivational Theories in Organization

The absence of these factors leads to the dissatisfaction of employees in the organization. Hygiene factors are extrinsic to the organization and they can also be called the maintenance factors. The major hygiene factors include, pay, policies of the company, fringe benefits, status, physical working, interpersonal relationships, job security. The pay or the structure of salary needs to be reasonable and appropriate. The policies formulated by the company have to be fair for all the employees. The employees should be offered benefits like health care related plans and family member related facilities. The conditions of work need to be favourable for the employees and they need to feel safe. The relationship within the employees and the management is also related to the hygiene factors of motivational theory (Sanjeev and Surya 2016).

The job security provided to the employees also provides motivation to the employees. Another part of Herzberg’s two-factor theory are the motivational factors. Hygiene factors are not regarded as the motivators to the employees and the motivational factors help in providing satisfaction to the employees. The motivational factors are a major part of the work process of the organization and they affect the performance of the employees. The major motivational factors include, recognition which is related to the ways by which the employees are recognised by the managers. The sense of achievement among the employees is also a part of the motivational factors. The promotional and growth related opportunities provided to the employees form a major part of motivational factors (Kotni and Karumuri 2018). The responsibility of the employees related to their job is an important motivational factor. The challenges faced by the employees at their job is related to the motivational factors.

Adam’s Equity theory is based on the balance between the inputs provided by the employees and the outputs received based on these inputs. The theory is mainly based on the belief that the employees can get demotivated in their organizations with respect to the job and the employers. This can happen if the inputs provided by the employees are more as compared to the outputs that are received by them. This can cause demotivation in the employees and their efforts towards the job can decrease (Lazaroiu 2015).

The inputs of the employees as discussed in Adam’s Equity theory are, loyalty, efforts, commitment, hard work, skill, ability, flexibility, adaptability, determination, support of the colleagues, personal sacrifice and trust in the superiors. The outputs provided by the organization include, recognition, responsibility, reputation, praise, sense of achievement, stimulus and job security. The balance between these inputs and outputs need to be managed by the organization so that the employees can be kept motivated and they give their best (DeNisi and Smith 2014).

Gender Gap in Performance Related Pay

The payment made to the employees based on their performance can help in increasing their self-esteem in the organization. The performance related pay made to the employees has positive relationship with the self-esteem. However, there are many discriminations in the organizations with respect to performance related pay. The gender gap in the organizations have been increased a lot due to the introduction of performance related pay. This has raised the growth of the inequality of income between men and women. This issue is related to the top executives and the other employees in the organization (Melnyk et al. 2014).

 The three factors which are related to gender gaps in performance related pay are that, the female employees of the company receive a low share of the incentives that are paid in the company as compared to the males. The second factor states that the female employees depict lower sensitivity related to pay-performance as compared to the males. The compensation related to the female employees are much more exposed to the decline in the value of the firm as compared to that of the male employees. The performance related payment system of the employees therefore increases the gap between the female employees and the male employees of the organization (Cascio 2014).

The two organizations that are taken into consideration for the purpose of analysing and comparing the performance related pay and rewards systems are Ladbrokes and Barclays. Barclays is a multinational bank of the British origin and has its headquarters in London. The bank has a global reach and they offer products like, personal banking, corporate banking, wealth management and credit cards. The bank has its operations in more than 40 countries and around 120,000 employees in the whole world (Barclays.co.uk. 2018). Ladbrokes plc trades as Ladbrokes Coral in the market and it is a British gambling and betting company which was previously owned by the Hilton Group. The company has its headquarters in London, United Kingdom. Ladbrokes was founded by Pennington and Messrs. Schwind in the year 1886. The company was named Ladbrokes in the year 1902 Arthur Bendir joined the organization (Ladbrokes.com. 2018).

Rewards management is related to the ways of formulating and implementing the policies and strategies that are aimed towards rewarding the employees in a fair manner with respect to their value and performance in the organization. This program helps in the creation of an efficient reward system for the employees of the organization. The rewards structure mainly consists of salary administration, pay policy, rewards, minimum wages and rewards related to teams. The different types of rewards that are provided to the employees are raise in the salary, bonuses, promotions and gifts. The other rewards that are intangible in nature include, the feedback provided by managers, trust and recognition (Jiménez-Jiménez et al. 2015).

Reward System of Barclays and Ladbrokes

Barclays has an effective rewards system for the employees so that they can achieve their goals and ambitions in the perfect way. The company provides many benefits and pay package to the employees which is designed to rewards the employees for the services provided to the organization. When the new employees join the Barclays bank they are provided with a benefits allowance. The employees have freedom to choose their benefits according to their personal needs. The major aim of the bank is to help the employees in balancing the commitments related to their work with their personal lives (Kroll and Moynihan 2015).

The My Rewards program formulated by Barclays is related to the welfare of the employees and their families. The benefits provided by this program covers the family members and the future plans of the employees. The program also offers voluntary benefits in exchange of salary sacrifice of the employees. The benefits of this program are provided to the employees the moment they join the organization irrespective of the position in which they belong. The employees can set up their emails so that they receive alerts and confirmations related to the My Rewards program. The core benefits that are enjoyed by the employees under the My Rewards program include, The Barclays Pension Savings Plan, Life assurance, Income perfection, Private Medical Scheme (PMS), Health assessment (Barclays.co.uk. 2018).

The voluntary benefits that are provided by the bank include, Holiday buy, Childcare vouchers, Bike4work, Car Scheme, Gym, Health Assessment, Healthcare Cash Plan, Dental Plan, Sharesave, Sharepurchase, Critical illness, Personal accident, Life assurance partner. The employees are also provided with free benefits which are named as, Health Gateway, Employee support and many more. However, the performance related pay programs formulated and implemented by Barclays Bank has not been quite successful. The profits of the company have reduced due to the incentives and rewards that are provided to the employees (Nguyen et al. 2017).

The company has been providing rewards and bonuses to the employees which has amounted three times the total dividend paid to the shareholders. These decisions related pay for performance that has been paid by Barclays have affected the sales and revenue of the company. The brand value of the company has however helped it to maintain the position in the market in an effective manner. The bank is now making plans so that they revive their operations and maintain the welfare of the employees at the same time (Stiles et al. 2015).

Ladbrokes Coral is one of the largest retail organizations in the United Kingdom and the performance of the employees are managed in an effective manner. The management of human resources have become the most important function of the organizations in the recent times. Performance management can be defined as the process by which the performance of the employees is planned, monitored and reviewed by the managers of the organization. The organization was established in the year 1886 and it now has its operations in other departments including Texas Homecare. Ladbrokes acquired many other organizations including Coral, which deals in betting, Stakis Hotels and many more (Sports.ladbrokes.com. 2018).

Performance management has been an important part of the management system of the organization. The system can be made effective only with the help of the managers of Ladbrokes. The strategic goals of the organization, the individual performance of the employees in teams are all part of the performance management system. The performance management plans of Ladbrokes mainly consist of six major components which include, performance appraisal system, mechanism of feedback, rewards and pay system, plans related to improvement of the employees and testing the future potential of employees. The major drivers of the performance management of Ladbrokes are the needs to synchronize the goals of the business with the goals related to human resources (Pulakos et al. 2015).

The performance management system of any organization needs to be designed effectively otherwise it can have negative effects on its profitability. The key features which help in making the performance management of Ladbrokes effective are as discussed further. The setting of goals for the organization is important so that the performance of the employees can be tracked. The staff needs to be included in the goal setting and decision-making process of the organization. The high levels of commitment, ownership and support needs to be provided by the top management of Ladbrokes. The performance management process of the employees has proven to be profitable for Ladbrokes and has helped in increasing its profitability (Shields et al. 2015).

The employees are also managed effectively with the help of this system which has helped Ladbrokes in achieving their goals. The pay for performance process that has been set up by Ladbrokes also has been effective for the proper functioning of the organization. The rewards provided by Ladbrokes to the employees has helped in increasing the profits and revenues of the company. The organization has been able to create its position in the market and satisfy their employees in the process. This process has however, increased the competition between the employees and affected their relationships in a major way (Kroll and Moynihan 2015). This problem can be solved by creating an organizational culture where the employees can understand the benefits related to the rewards provided by the company. The employees can then try to improve their individual performances by working as a team in the company and not competing with each other.

Conclusion:

The performance of the employees can be managed successfully with the help of the rewards and incentives that are provided by the companies. The incentives can be monetary and non-monetary as well. The performance related pay system of the companies can therefore provide motivation to the employees so that they can improve their performance. This system has also proved to increase the self-esteem of the employees as they receive the rewards for the excellence in their performance. However, PRP can also increase the payment gap and discrimination between the male and the female employees. The two organizations that are compared in the essay have proved that performance related rewards and payments have been successful for one organization and unsuccessful for the other organization. Ladbrokes has positively used the PRP and Barclays on the other hand has overused the rewards system and had to face losses in the company. This proves that performance management needs to be planned effectively so that the organizations can gain profits from it.

Performance related pay or PRP can be defined as the way by which the organization can manage the payment made to the employees. The payment is linked to the salary progression of the employees by assessing their individual performance. Performance related pay can also be defined as the financial rewards that are provided to the employees who have achieved their goals and targets. Performance related pay is used when the performance of the employees cannot be linked to the sales of the company or the output that is achieved (Ishizaka and Pereira 2016). The performance of the individuals is measured with respect to the performance standards of the organization. The reward policy of the different organizations can vary from each other, however, it mainly involves rewards related to cash or the increase in the rates of wages. The concept of performance related pay has grown in the recent years. However, this concept does not play an important role in improving the team work of the employees (Buckingham and Goodall 2015).

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