The Effectiveness Of Performance Related Pay Commerce Essay

The Effectiveness Of Performance Related Pay Commerce studyImpressive levels of cater motion ar difficult to for many organizations to attain. Maintaining wanted levels of military force motion is central to the objectives of well-nigh organizations. This is imperative as employee performance often translates to aggregate organizational performance. In a situation where employees atomic number 18 less promptd or less engaged to their job functions, thither is a risk that such(prenominal)(prenominal) unkept employee morale result be reflected in an organizations overall performance. There be two main types of indigenceal machine that brook be employed to induce staff to desired levels of performance namely internal motivation and extrinsic motivation. Perkins albumin (20088) delimit extrinsic motivation as motivation that is derived from the map up of open or transactional reward. Financial reward and incentive even off are examples of extrinsic motivation. Perkins purity (20088) defined unalienable motivation as the motivation of staff that is derived from the constitution of the work itself. Armstrong (2010) added that inner motivation is in transparent in nature. Examples of intrinsic motivation are career development, career progression, training and development e.t.c. Armstrong (2002) argued that while intrinsic motivational mechanisms slopes to stick out a sustained and positive par enlist on personnel morale, extrinsic motivational mechanisms tend to have minimal impact on personnel morale.For round organizations, they contract of their process of motivate staff is in the main extrinsic, while for some some others, the focus is on map of mainly intrinsic motivational variables. In spite of this, Armstrong (2010) contended that some(prenominal) types of motivation croup together be use to design mechanisms and processes for motivating historic personnel. The use of performance-related apply (PRP) as a besidesl for motivating staff at bottom organizations is what this look pull up stakes be ab step up. Before proceeding, it is essential to point out that PRP is an extrinsic motivational variable. Many firms, specifically firms that deal with m unmatchabletary run, use performance-driven open to reward personnel for enviable performance. Before going into in-depth interpretation of what PRP is, it is essential to gain an understanding of what employee reward is. In the words of ovalbumin Drucker (2009), employee reward involves the tools utilise to compensate employees for their contributions to the obtainment of organizational objectives. Employee takes into consideration how important it is to use the right reward schemes to compensate personnel, oddly where in that respect is in a higher place average performance. While employee reward mechanisms can be both tangible and intangible in nature, tangible reward schemes exit act as the main emphasis of this investigate, vi rtually notably net. The challenge of employ succumb to motivate staff is the hindrance of determining the right finishing of pay structures in a right smart that it enhances sustained and desired levels of staff performance. This obstruction has conduct to increased innovation in the use of pay to motivate staff. One of such innovations is the development of performance-related pay. Thorpe Homan (2003) suggested that PRP deals with the correlation of personnel performance with financial rewards. Again, IDS (1998) defined PRP as the contrastive types of incentive mechanisms, in exclusion of enjoin payments found on outcomes achieved. Some of these incentive arrangements are profit sharing, employee divide ownership arrangements, bonus arrangements e.t.c. PRP is widely used in the financial services industry in the get together Kingdom. Bonus schemes are usually used to reward for employees for additional business or revenue generated. The new liquidity crisis in the UKs financial services industry, in the wake of the subprime economic disaster, has impact a widespread debate on the hard-hittingness of (PRP) as an effective tool for influencing personnel behaviour. Most of these debates arose because of the role of bankers in fuelling the liquidity crisis which culminated into the novel international economic recession. Based on these observations, this emphasis of this study leave behind be on assessing the usefulness of PRP as a mechanism for motivating employees, especially from the ethical perspective.3. Preliminary Review of LiteraturePRP acts as an added way that can be used by firms to reward their employees in tangible terms. Again, performance-related pay also refers to individualized mechanisms or processes in which pay rises are relative to the outcomes of performance appraisal (Heery Noon, 2001). This is why CIPD (2009) referred to performance-related pay as appraisal-related pay or merit pay. A great deal of debate has arisen in new-fangled times about the usefulness of performance-related pay as a tool for motivating staff to sustained and desired levels of performance. Most of the recent debates have been fuelled by the role of rogue bankers in the recent global economic crisis. While money or pay provides an avenue through which an employees tax is assessed, thither is a failure by to the highest degree organizations to earn that pack tend to differ when it comes to being motivated by pay. mankind beings are complex creatures and as such will respond to motivation through the use of pay in differing ways (Corby et al., 2009). Another business derived from the application of PRP is the failure of closely organizations to distinguish amidst awarding financial rewards base on behavioural criteria or based on the achievement of results. There is a broad difference between these two criteria. In most theatrical roles, the application of PRP by most organizations is to a greater extent focused o n the achievement of results and less focused on behavioural criteria. While result-oriented performance-related pay can be effective in terms of the achievement of an organizations objectives, there are pitfalls in the use of this particular antenna. The role of bankers in the recent economic crisis acts as a useful example of how result-oriented performance-related pay can be damaging to overall organizational performance especially in terms of the intrinsic worth of a firm. The use of bonus schemes led to luxuriant risk-taking by most bankers, especially bankers in the investment barter arm of most banks. Such excessive risk taking was more often than not driven by the desire to earn bonus payments as a result, proper risk commission mechanisms were often ignored as most banks became excessively leveraged. The decision by RBS to acquire Dutch bank, ABN Amro, was done in ignorance of appropriate corporate governance mechanisms a decision that would not have been taken in retr ospect as it led to accumulation of grand losses by RBS in the wake of subprime bust in the States (Owen, 2009).Most of the criticisms against PRP is derived from its failure to recognise the significance of the need to control behaviour. This is because the application of result-oriented performance-related pay process tends to encourage employees to engage in discretionary efforts and behaviours that are mainly based on their desire to earn additional pay incentives as opposed to engaging in behaviours that bring about added value for shareholders. Kessler (2005) noted that another problem with the proper implementation of performance-related pay mechanisms is the difficulty of touchstone inputs as they are generally more qualitative in nature. On this specific note, performance-related pay is more likely to be based on individual targets than team or group targets. Another do with the implementation of PRP is that since in most baptisterys, it is reliant on individual targets , there is a potential for it to become discriminatory in nature. The banks in the United Kingdom again act as useful examples bonus schemes tend to be given to bankers in the investment banking and trading arm of most banks while back office staffs seldom have access to such bonus schemes. What makes this appalling is the event that most of the ill decisions taken by the bailed out banks was done by bankers in the trading arm of most these banks (FSA, 2009). Armstrong (2007) noted that discriminatory application of performance-related pay systems totally leads to decreased intrinsic motivation and decreased co-operation between employees. This undermines every sense of an equality-based organizational culture. Again, Perkins White (2008165) were quick to point out that discriminatory bonus schemes only leads to low aggregate employee morale. Such a scenario only serves to undermine overall intrinsic interests within the organization. These observations helper to highlight the u ndemocratic nature performance-related pay schemes especially as it tends to leave little room for the protection of entrenched embodied employee interests. In spite of the multiple criticisms against performance-related pay (PRP), it is only fair to make out that there are also perceived benefits that can be derived from using PRP schemes. For one, Lawler (2005) argued that relating individual pay tom performance possesses a potent motivational effect since it creates room for antitheticaliating between the behaviour of employees and how they are rewarded.3.1 Need for this searchFirstly, I decided to conduct this inquiry because of one of the keep downs of my international human being resource management module. That topic, in particular, was about how culture determines the way people react to financial rewards and non-financial rewards. Again, this investigate will help to examine the precept for use of PRP schemes as a way of influencing personnel behaviour.4. Research Q uestions1.) cigaret performance-related pay be used to create a dichotomy between the need to protect collective employee interests and the need to inspire above-average of performance among personnel?2.) What are the most effective ways that organizations can employ to void the pitfalls of performance-related pay?3.) Why did use of performance-related pay schemes fail to control the excessive ris taking attitudes of personnel in the investment banking arm of the purple jargon of Scotland (RBS)?5. Research Objectives1.) To establish the best way of implementing performance-related pay in such a manner that entrenched collective employee interests will always perch protected.2.) To establish the value of performance-related pay as a tool for enhancing performance of key personnel.3.) To establish veritable options to the application of performance-related pay systems as a tool for motivating personnel to sustained and desired levels of personnel performance.4.) To get reasons f or broad criticisms against use of performance-related pay to reward employees, especially personnel in financial services institutions in the United Kingdom.6. Research PerspectivesThe explore ism that I will use in this research is interpretivism. Collis Hussey (2003) posited that, interpretivism suggests a broader philosophic paradigm and avoids misunderstanding with the phenomenological research paradigm. In some aspects, there appears to be a like for like similarity between interpretivism and phenomenology. Any research that employs interpretivism is often times than not inductive. The subject of pay-driven performance is a subject that entails qualitative info as both direct and indirect observations both by the investigator and other police detectives will form the basis for most of the information collected by the investigator. The study of the effects of financial rewards on personnel performance, to a lesser degree, involves quantitative information except when m easuring output-driven target for target-oriented jobs. Such measures can apply to certain jobs in the financial services sector, like investment banking jobs. The potential lack of access to such quantitative or target-driven information has informed the decision to use more qualitative-oriented information. Previously conducted empirical research on this researchs subject matter will be used to create the theoretical framework for this study.7. Research normalCollis Hussey (2003) noted that the research design serves the main purpose of giving focus and direction when conducting a research. The research design forms the skeletal framework of the different methodologies applied during the conduct of a particular research. The research design that will be used in this research is the case study research design. Saunders et al., (2003) noted that the usefulness of the case study research design is that it enables the researcher to narrow the focus and scope of a research such that unnecessarily work is prevented. In this research, the case study for examining the effectiveness of performance-related pay is the Royal Bank of Scotland (RBS). This bank will form a useful case for investigating the key variables of this study especially when taking note of the fact that the actions of some of its employees were culpable in some of the excessively risky decisions that close to contributed to its demise in the wake of the subprime market disaster (Owen, 2009). As a result, findings from the cross-examination of RBSs PRP arrangements can be used to determine the best ways of implementing PRP schemes in other similar organizations.8. info Collection MethodsIn order to achieve the necessary requirements for this particular research, entropy or information will be obtained from both primary and secondary sources. Under-listed is a concise description of some of the tools that will be used to gather both forms of info.8.1 Primary DataCollis Hussey (2005) defined p rimary entropy as raw data or information. The usefulness of primary data stems from the fact that it provides the researcher with original perspectives when investigating a particular problem. Primary data will be used to a considerable degree in this research. There are different ways for gathering primary data. In the context of this particular research, the researcher will gather primary data through third unknown open-ended interviews with personnel of the Royal Bank of Scotland (RBS). The researcher expects that the interviews will take approximately forty minutes for each of the proposed interviewees. One of the proposed interviewees is a jockstrap of mine and has promised me access to the other two interviewees. This friend of mine is a customer service representative in one of RBSs offices in London. Feedback from these ternary open-ended interviews will help the researcher to meet most of the objectives of this research and also conclude this research.8.2 Secondary D ataSecondary data, on the other hand, will be obtained from academic textbooks and academic journals. Collis Hussey (2005) noted that secondary data is information assembled by other researchers and are available in general domains. Some of the peer reviewed academic journals that will be used in this research are the human resource management journal, CIPD articles and the reward management journal. These journals will be accessed from academic databases like the CIPD website, Ebscohost, and Emerald. Journal entries sourced from these databases will help to create the theoretical framework of this research. The value of the secondary data to be utilized in this research is derived from the assumption that it will also be used by the researcher as a support mechanism during compendium of the primary data gathered by the researcher for this researcher.8.3 abridgment of Data Gathered by the ResearcherMost of the data that will be analysed in this research will consist of the prima ry data gathered by the researcher. As mentioned earlier, the primary data for this researcher consisted of feedback from the three open-ended interviewees that will be carried out. The researcher will make use of content compendium during analysis and interpretation of feedback from the three interviewees. The content analysis will involve using the secondary data gathered as a support mechanism for analyzing feedback from the three interviewees. The use of secondary data during analysis of the primary helped to reduce subjectivity, which is one of the main limitations of the qualitative research approach.9. Limitations of this ResearchOne of the main limitations of this particular research is the fact that the researcher will only use one research approach as opposed to use of a mixed-methods research approach in this case, only the qualitative research approach will be used. The qualitative research approach is not without its limitations. One of the main limitations of this par ticular research approach is that analysis of data gathered tends to be subjective since it is largely based on the researchers perspectives and viewpoint (Collis Hussey, 2005). To reduce subjective analysis and interpretations, the secondary data gathered will be used during analysis of feedback from the interviews that will be carried out by the researcher. Another constraint of this research is the fact that the have size of just two interviewees may be regarded as too small to generate considerable primary data. To address this particular constraint, the researcher will ensure that considerable secondary data will be gathered so as to ensure that a concise analysis is conducted. Another constraint of this research is the use of just one case study in this case, the Royal Bank of Scotland. The use of just one case study may make it challenging to generalize findings or results from this research. This is where the secondary data gathered by the researcher will be crucial the se condary data will offer further perspectives on the underlying subject matter of this research, especially where the primary data appears deficient.10. honourable ConsiderationsThe process of conducting this research will be based on the stipulated requirements of banishment University. In this regards, the Coventry University Ethics Manual will be study by the researcher before inception of the research. All external information that will be utilized in this study will be properly referenced using Coventry Universitys recommended referencing means in this case, the Harvard referencing elan will be used by the researcher. The use of this particular referencing style appears to be in accordance with the plagiarism regulations of Coventry University.