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Question:

Discuss about the Reward Management for Cavendish Hall Hotel.

Rewards are given to the employees of any organization based upon the performances. These rewards should be aligned with the organizational goals. When an organization achieves its goal with contribution of an employee, the reward is given for achieving the goal of an organization (Shields et al., 2015). In the report a particular case study is given, in which the Cavendish Hall Hotel introduced an individual performance related pay scheme. The newly appointed personnel manager Daphne Jones will investigate and review the effectiveness of the scheme.

The main purpose of the report is to evaluate critically the general understanding of the reward management principles, practices, policies and decision making in an organization in the context of the Cavendish Hall Hotel case study. The manager Daphne Jones will prepare this management report. The report will investigate on Individual Performance Related Pay (IPRP) scheme and the reason for its failure in the organization. The report will also analyze the advantages and disadvantages and the barriers of implementing the IPRP system. It will be concluded with summarizing all the relevant points. The report will recommend about an alternative forms of reward policy that can be implemented in the hotel.

The individual performance related pay is a standard-based system by which an employee is evaluated in an organization by his or her performance in that organization. It is related with increased payment to the employees or teams in organizations who are performed better in the organizational system. An employee is evaluated based on his work and that is applicable for setting the salaries of the employees. This is the part of reward strategic system management in business operation. Those employees who have helped in contributing the organizational success are considered in the individual performance related payment system. Therefore, it can be said that individual performance related pay is a process of managing and controlling the payment of an employee by relating his or her salary progression to the individual performance assessment, which are measured by pre-agreed goals or objectives of the organization (Shields et al., 2015). There are different schemes in performance related pay; however, its effectiveness in the organizational workflow remains a question.

The individual performance related payment system could be helpful in improving the overall performance in an organization. As PRP is related with financial payment, it could be helpful in cultural change and workflow in the organization. It could bring changes in the work culture and encourage the individual and thus organizational performances. It was started from United Kingdom and now it is accepted by many organizations all over the globe as a part of organizational reward strategies (Gerhart and Fang, 2014). It can be applied as motivational strategies to encourage the workers in an organization. In this strategy, money is used as a potentially powerful system of incentives that would influence the effort that an employee put in the organizational workflow. It can be helpful in creating appropriate behavior as money works itself as a goal as believed by some theorists. It is valuable to the employees, which works as an external status symbol and internal recognition for them.  However, some critics believe that the system of individual performance related pay create discrimination among employees and act as anti motivational tool as few employees are high performers in comparison to total number of employees. This system even undermines the equity in an organization.

Evaluation of Individual Performance Related Pay (IPRP) system

The theories and research works are based on the relationship between behavior and pay and the measure of satisfaction in the organization and employees. The most common theory related to individual performance related pay is Expectancy Theory. The recent literature has termed this type of framework as the Performance Management (PM), which is also discussed.

Expectancy Theory is primarily explained by Vroom in 1964. The theory is based on the presumption that workers would be motivated in work when they would expect that they would achieve the organization’s requirements and this effort would be rewarded in form of money or incentives (Parijat and Bagga, 2014). However, the presumption is based on hypothesis that the workers are the rational being and they know what they have to perform to achieve the rewards. In expectancy theory, the motivational force depends upon three variables, which are expectancy, which is the expectation that an employee’s effort would result in his or her performances, instrumentality, which based on the reward instrument in accordance with one’s performance and valance, which is the perceived value to the recipient regarding the rewards.

The performance management is related to improve and promote effective of thee employees. It is collaborative and continuous process from part of the employees and managers to plan control and view an employee’s objectives of the work and his or her overall contribution to fulfill those objectives. However, most of the current literatures put a caution to implement IPRP system in isolation. it needs to apply with supporting infrastructure. It should be treated as an integral part of the wider management strategy that encompasses objectives of the organization and individual contribution within the workflow of the organization. As stated in recent literature, the IPRP should be considered in broader structure of Performance Management system (Buckingham and Goodall, 2015).

The suitability of IPRP to hotel business would be described based on the case study. In Cavendish Hall Hotel, the IPRP system is active. It has been started three years ago. The new manager Daphne Jones reviewed opinions of the staffs. It is noticed that the staffs are happy with the reward system and 38% of the total staffs agreed with fair reward system compare to other people in similar job structure. However, the sense of personal accomplishment from the work is below 35%. It could be said from this data that the employees do not work for personal accomplishment, thus, the sense of satisfaction from the work only is less. However, as the people in the hotel are happy with the new scheme, it is suitable from their perspective, though the hotel is suffering from poor level of customer service. Thus, it could be said that the overall implementation of the IPRP scheme I not successful as it could not improve the business service of the hotel.

Advantages of IPRP system

The advantages of the IPRP are based on theory of motivation. It could be beneficial as it has capacity to influence the individual’s performances. However, this advantages are discussed by the motivational theorists. For example, the goal-setting and expectancy theorists give importance to cognition thought procedure, which is the decision people would take based on how far they want to participate in the workforce (Lichtenberg, Lachmann and Fosshage, 2016). The goal theorists stated that the anticipated outcomes or goals could be used as influential and motivation tool. However, these theories imply that there is no need to perform a financial reward system; rather, the management needs to set a goal, which would work as motivational tool for the employees.

However, the IPRP system could be helpful for implementing the individual performances in a way that some objectives should set for obtaining an increment. Money has its own power to motivate people as workers work for gaining money. Thus, in this system of monitory reward, goals need to be set (Bach, 2012).

There are many disadvantages of the IPRP system within an organization. The implementation of the IPRP system itself could be a disadvantage as the process is depended on the quality of the judgment considered by the managers of the organization. It minimizes the pay equity and this could itself be posing as challenges to implement the IPRP system (Kim and Hong, 2013). It could affect the organization as the focus shifts from developmental need to the financial reward as happened in the Cavendish Hall Hotel case. The employees could be de-motivated if the goals are so hard that they cannot achieve. The company should be prepared beforehand in investing lot of money and time to implement the IPRP; otherwise, it could become a disadvantage. From employees’ point of view, the achievement of IPRP needs to be laborious, as it requires wider knowledge internal and external knowledge about the company’s environment (Frey, Homberg and Osterloh, 2013). The other disadvantages include clear and understandable reward system for all the employees and the effective objective criteria.

The main barriers to the implementation of the IPRP system could be related with two main criteria. One is lack of employees support and other one is erosion of fairness and trust. Most of the employees in an organization are average or middle range performer. It could be stated that the 10% employees are top performers and 5% are the poor performers. Thus, the total 85% of the employees are the average performers (Cohen et al., 2013). For the average performer, the IPRP system has no value. Thus, they are less supportive to implement the IPRP system, as it could be disadvantages for them and could generate poor level competitiveness and de-motivation among the employees.

Disadvantages of IPRP system

As the IPRP system is based on the managers’ judgmental skills, they need to build trust and fairness in the evaluation process among the employees. Otherwise, the system itself could become a chaos within the structure of the organization and among the employees. The management of the organization should set a parameter to provide the IPRP system and it should be discussed with the employees (Cho and Lee, 2012). The parameter should be followed strictly from both the employees and managers and both of the party should have relied on the parameter. The employees should know on what basis they are getting performance related pay.

The barriers include attribution errors and lack of training to the managers. The attribution errors are part of the management system that the managers evaluate employees in comparison to other employees’ performances (Swift et al., 2013). However, the evaluation should base on the standards set by the organization. It diminishes the enthusiasm of the employees to perform better. The managers should be trained effectively to implement the PRP schemes with the workflow of the organization. They need to be trained on how to deal with PRP communication with successful and unsuccessful ones (De Waal, 2013). The managers should communicate the reasons for not paying the PRP.

It could be recommended that an alternative reward scheme could be employed in the hotel that would be used to complement or replace the IPRP system. The hotel management could employ career planning or succession planning and awards as an alternative reward tools other than the money. These alternative systems would minimize the risks of the monitory payment. It could be effective in a way that it replaces the PRP system with ‘Total Reward’ commented by Shields et al. (2015). It encompasses everything related to employment and it takes into employees’ development, flexible benefits, work life balance, flexible working hours, career opportunities and recognition. In this reward strategy, an employee could flourish in well manner. However, the management and the employees should be involved in making the design of this reward strategy ensuring its success as it is the most complex process of strategy (Terera and Ngirande, 2014).

Conclusion 

It can be concluded by stating that the evaluation on the general understanding of the reward management principles, practices, policies and decision making in an organization in the context of the Cavendish Hall Hotel case study is done properly. The challenges and barriers have been discussed also. There is alternative reward system that could be implemented within the workflow of the hotel and it is recommended to the managers to consider this reward strategy. However, if the Performance Related Pay schemes are implemented properly it has capacity to work effectively within the organization. The managers and leaders should be alert about its barriers and challenges and should remove these before implementation.

References

Bach, S., 2012. Performance management. Managing Human Resources: Human Resource Management in Transition, pp.219-242.

Buckingham, M. and Goodall, A., 2015. Reinventing performance management. Harvard Business Review, 93(4), pp.40-50.

Cho, Y.J. and Lee, J.W., 2012. Performance management and trust in supervisors. Review of Public Personnel Administration, 32(3), pp.236-259.

Cohen, R.I., Jaffrey, F., Bruno, J. and Baumann, M.H., 2013. Quality improvement and pay for performance: barriers to and strategies for success. CHEST Journal, 143(6), pp.1542-1547.

De Waal, A., 2013. Strategic Performance Management: A managerial and behavioral approach. Palgrave Macmillan.

Frey, B.S., Homberg, F. and Osterloh, M., 2013. Organizational control systems and pay-for-performance in the public service. Organization Studies, 34(7), pp.949-972.

Gerhart, B. and Fang, M., 2014. Pay for (individual) performance: Issues, claims, evidence and the role of sorting effects. Human Resource Management Review, 24(1), pp.41-52.

Kim, P.S. and Hong, K.P., 2013. Major constraints and possible solutions for performance management in Korea. Public Management Review, 15(8), pp.1137-1153.

Lichtenberg, J.D., Lachmann, F.M. and Fosshage, J.L., 2016. Self and motivational systems: Towards a theory of psychoanalytic technique (Vol. 13). Routledge.

Parijat, P. and Bagga, S., 2014. Victor Vroom’s expectancy theory of motivation–An evaluation. International Research Journal of Business and Management (IRJBM), 7(9), pp.1-8.

Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., O'Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.

Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., O'Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.

Swift, S.A., Moore, D.A., Sharek, Z.S. and Gino, F., 2013. Inflated applicants: Attribution errors in performance evaluation by professionals. PloS one, 8(7), p.e69258.

Terera, S.R. and Ngirande, H., 2014. The impact of rewards on job satisfaction and employee retention. Mediterranean Journal of Social Sciences, 5(1), p.481.

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