Performance and compensation management-Annotated bibliography - Essay Example

? Annotated Bibliography: Yoshio Yanadori & Janet H. Marler, Compensation Strategy: Does Business Strategy Influence Compensation in High-Technology Firms?, Strategic Management Journal, 27: 559-570 (2006) This article addresses a salient question pertaining to the link between employee compensation and the technology firm’s thrust on innovation. The empirical examination by the research team of Yanadori and Marler conclusively proves that there is a strong correlation. The compensation packages for several R&D employees in the high-tech industry were studied longitudinally. The results show that those companies which have adopted a competitive strategy that is based on technological innovation has “significant influence on the relative pay level, compensation time horizon, and stock option vesting period lengths of this stragetic employee group”. The findings presented in the article are on expected lines, for innovation offers the foremost competitive advantage in the high-tech industry. Hence it is not surprising that compensation packages are so structured that employees helping the company gain strategic advantage are generously rewarded. For scholars looking at critical interpretations, this prevalent compensation model in the high tech industry can be questioned on back of the widening gap between managerial and entry-level incomes in recent years. Johnson, Liway & Shields, John, Lessons from management-union partnership in teacher performance appraisal in the New South Wales public education system, International Journal of Human Resource Management, 18:7 July 2007, p.1214-1227 This article focuses on performance appraisal – a key component of human resource management. Although appraisals are usually performed at the level of an individual employee, there is still scope “for employee voice/participation, both individually and collectively, and for varying degrees of management – union cooperation”. The New South Wales public education system case study leads to surprising findings. Despite the collective clout of the two thousand strong public school teacher union – the NSW Department of Education and Training – their history shows minimal confrontation with management. The study suggests that there is an acceptance of the merits of individualism over collectivism – a fact attested by the union’s acceptance of an individualized performance appraisal system that has been in place in the last decade. But this pragmatic concession on part of union has not diminished its power and potential for collective action in other areas. This article takes up an often neglected area of HRM research, namely that of a public school system. While government run institutions are usually seen as less merit-based, the successful implementation of an individualized performance appraisal programs in NSW questions this assumption. It proves how meritocracy can co-exist alongside political quotas for recruiting personnel (as in affirmative action programs in the United States). Fang Lee Cooke & Kun Huang, Post-acquisition Evolution of the Appraisal and Reward Systems: A Study of Chinese IT Firms Acquired by US Firms, Human Resources Management, November-December 2011, Vol.50, No.6, p.839-858 The article studies how performance appraisal and reward systems change for an IT firm after they have been acquired. In the case of the four Chinese IT firms being acquired by the larger US firms, the influencing factors were found to be “business strategy, organizational structure, resource-based power of the acquiring and acquired partners, management competence, labor market factors and the cultural norms of China”. The researchers find definite though not drastic changes to the performance appraisal programs before and after acquisition. One of the major obstacles to streamlining change is the reluctance of Chinese managerial staff to accept these changes. The acquirers have allowed more time for their Chinese managers to adapt to the new realities. As a result there is a divide in terms of HRM practices and strategic alignment across the two regions. The findings of this study are very important given that China is likely to remain a key partner to the US in the neo-liberal project. The attitude of American managers to not force their Chinese counterparts into strategic alignment is laudable, as it speaks of their long term vision with the acquired firm. It also shows that they have given leeway for local socio-cultural sensibilities. Edward E. Lawler III, George S. Benson & Michael McDermott, What Makes Performance Appraisals Effective?, Compensation & Benefits Review, 44(4) 191-200, October, 2012 The article argues that, despite their obvious flaws, performance appraisal systems are essential to competent HRM practices. The review of literature conducted by the authorial team leads to the inference that “performance management systems are effective when they are based on goals that are jointly set and are driven by an organization’s business strategy.” The utility of competency models cannot be overstated. Along with tangible financial incentives in the form of salary hikes and bonuses, symbolic measures as senior management participation and leadership will also enhance the organization’s overall performance. An often neglected area of appraisal is that of the appraisers themselves. Hence a competent strategy will address this area as well. The strength of this article lies in its advocacy of simple, practical yet logically sound principals of performance appraisal. This approach is in stark contrast to the theory-based appraisal methods of numerous other scholars. The authors’ ability to link performance appraisal standards to the overall effectiveness of the organization is another merit. John Shields, Dow Scott, Richard Sperling and Thomas Higgins, Rewards Communication in Australia and the United States: A Survey of Policies and Programs, Compensation & Benefits Review 41(6) 14-26, October 2009. How information about rewards are communicated to employees? The article answers this question in the context of American and Australian businesses. The five key components of rewards communication studied in this research are: “organization reward strategy and philosophy, base pay, base-pay increases, short-term variable pay and benefits”. What the study found is that even small details matter, for, beyond the mere communication of economic incentive, the style and thrust of the message can have a bearing on future employee motivation and rates of retention. What’s even more interesting is the relation between the effectiveness of rewards communication on overall organizational performance. The study found that despite easy availability of information relating to rewards, many employees remained under-informed about them. Across the two countries, most employees remained poorly informed about “pay ranges, average pay rates and performance targets”. This article brings to light the importance of rewards communication, which is usually an underrated HR activity. Sensitivity to employee psychology and comprehensive knowledge of the arithmetic of the compensation program are essential to success. Jeffrey Pfeffer, Six Dangerous Myths About Pay, Harvard Business Review, May-June 1998. Written in a free-flowing style, this article attempts to disillusion managers about prevalent myths associated with compensating employees. These myths are: 1. Labor rates and labor costs are the same thing. 2. You can lower your labor costs by cutting labor rates. 3. Labor costs constitute a significant proportion of total costs. 4. Low labor costs are a potent and sustainable competitive weapon. 5. Individual incentive pay improves performance. 6. People work for money. The author offers detailed rationale for dismantling these myths. In addition, he also offers general guidance for HR managers. One such is the suggestion that minor changes to compensation packages can mitigate negative aspects of the company’s culture. Another is that merit-based pay systems will have to be deployed with great discretion, as they usually consume sizeable resources while not even guaranteeing employee satisfaction. Moreover, an individual’s contributions to the company can at best be only roughly measured. The article is very insightful in pointing out long-standing myths about pay. The article is persuasive in showing that pay is not the most important motivating factor in employee performance, as a “work environment high on trust, fun, and meaningful work” will be more productive and cohesive. An important feature of the article is its useful guidelines for HR managers. Read More