Strategic Reward Key Models and Practices - Essay Example

? Strategic Reward – Key Models and Practices Number Total Number of Words 500 “Efforts to reform public services will be undermined unless public sector employees recognize that their salaries should also reflect their performance rather than simply tracking the cost of living” (CIPD, 2013). Introduction The use of performance related pay is the only way to increase the quality service provided by the public sector employees (CIPD, 2013). However, majority of the public sector employees have reservations about the need to incorporate the use of performance related pay and the cost of living in their salaries (CIPD, 2013; E-reward.co.uk Limited, 2013; Weiner, 2013). In line with this, reasons behind the public sector employees’ reservation about performance related pay will be tackled in details followed by discussing whether or not these reservations are legitimate. Reasons behind the Public Sector Employees’ Reservation about Performance Related Pay Integrating the use of performance related pay in the salaries of public sector employees is not new in UK (Marsden, 2004, p. 15; Makinson, 2000, p. 5). Even though the concept of integrating and implementing performance related pay amongst the public sector employees has been a practice in some government offices in UK, it remains a fact that there is no fixed amount of monetary rewards given to each government employee. For example, the non-consolidated rewards at the Defence Aviation Repair Agency (DARA) would range between ?50 to ?150 whereas the non-consolidated rewards in the Foreign and Commonwealth Office (FCO) would range between ?900 to ?1,850 (Prentice, Burgess and Propper, 2007, p. 6). Aside from discrepancy in the monetary value of performance rewards, there will always be the risks wherein disparity between how the public sector employees would define and perceive a significant increase in their work performance as compared to how their superiors would define and perceive work-related improvements would occur (E-reward.co.uk Limited, 2013). Likewise, the HR tools and strategies used to evaluate or appraise the work performance of each public sector employee (i.e. individual and team performance) may also differ from one department to another (Shmidt, Trittel and Muller, 2011). For example, it is possible to create a plan for performance related pay using different strategies such as the following: (1) merit-based pay plan; (2) job- or skill-based pay plan; (3) competency-based plan; and/or (3) job-evaluation-based pay (Heneman and Werner, 2005, p. 45; Baldwin, 2003, p. 45, 70). After examining the potential impact of introducing a performance related pay in a German public service, Shmidt, Trittel and Muller (2011) found out that the use of different types of performance related pay schemes can lead to different effects in terms of public sector employees’ work motivation and performance and that a highly selective performance related pay will never work in government offices. It simply means that depending on the type of performance-based appraisal used by each government office, there will always be the risk wherein the public sector employees would perceive the type of assessment and evaluation process used within the government office to be ineffective, inconsistent, and unfair to some government employees (Shmidt, Trittel and Muller, 2011; Rayson, 2013). Another possible reason behind the reluctance of the public sector employees in integrating performance related pay is the fact that most of the non-performing government employees would fear that their superiors would be closely monitoring their overall work performance. Because of the on-going tight government budget, Weiner (2013) reported that the public sector employees may no longer have the opportunity to enjoy so much of work-related flexibility options. Since there is a need for the government to cut down their unnecessary fixed operating costs, some of the underperforming public sector employees may think that they can be one of the candidates in case their office would decide of the need to implement a massive lay-off or motivate some of the old government employees, who were awarded with an early access to pension, to voluntarily leave the office prior to the expected retirement age (Vale, 2013; Weiner, 2013). Basically, all these reasons could explain why most of the public sector employees are showing uncertainty with the use of this particular pay and reward method. Discussion and Recommendations It is the duty and responsibility of the public HR managers to design and implement the performance related pay effectively within the UK government offices (Weiner, 2013). To answer the question whether or not these reservations legitimate, the answer is “yes”. Even though it is not the duty of the public sector employees to dictate or decide what kind of pay and rewards strategy to be used in government offices, this group of workers will be highly affected by the implementation of performance related pay scheme. The absence of a clear and logical relationship between the monetary rewards and the expected work-related outcome or performance could make the CIPD’s newly proposed pay and reward scheme ineffective (OECD, 2005, p. 156). For this reason, the public HR managers should carefully study on how they can effectively identify the connection between the monetary rewards and what is being expected from each public sector employees. In most cases, failure to do so could make the entire pay and reward scheme useless. The public HR managers should also keep in mind that the use of selective performance related pay schemes could lead to a total failure whereas the use of conventional appraisal methods can lead to a very small positive effect on the public sector employees’ motivation and overall work performance (Shmidt, Trittel and Muller, 2011). Therefore, instead of using ineffective HR motivational and work performance strategy, the public HR managers should focus on designing and implementing a more effective work performance scheme. For instance, instead of paying too much focus on performance related pay, the public HR managers should also consider the fact that the use of intrinsic rewards like giving public acknowledgement to outstanding employees are still effective in terms of motivating the public sector employees to increase their overall work performance (Jessen, 2010, p. 2; Frank and Lewis, 2004, pp. 38 – 39). In the study of Shmidt, Trittel and Muller (2011), it was mentioned that the use of participative methods could create more opportunity for the public HR managers to renegotiate the main objectives of performance related pay with the public sector employees. Therefore, the public HR managers should allow the public sector employees to speak out their thoughts with regards to the use of performance related pay scheme. By making each employee feel important, there is a higher chance wherein the public HR manager could win the strong support of each public sector employee. Another possible reason behind a failed performance related pay within the public sector is the lack of transparency and accountability (Hutton, 2011, pp. 10 – 11). Therefore, to increase the chances of being able to solve problems related to the public sector employees’ reservations about this particular pay and reward strategy, the public HR managers should focus on designing strategies that could increase transparency and accountability when measuring the public sector employees’ overall work performance. For example, the public HR manager should make it a habit to allocate bonuses in the public together with valid reasons for rewarding each staff a bonus (OECD, 2005, p. 199). In the process of being able to improve transparency and accountability when managing the public sectors’ rewards system, there is a higher chance wherein the public sector employees would end up supporting the development and implementation of performance related pay schemes. To effectively change the pay and rewards system in UK public sectors, the HR experts should continuously persuade and educate the people on how the use of performance related pay could benefit not only the public sector employees but also the taxpayers (Weiner, 2013). Aside from informing the taxpayers on how this particular pay and reward options could increase the work performance of each public sector employees, designing a standard performance related pay appraisal scheme that is specific, measurable, achievable, and with definite time frame (S.M.A.R.T.) could work better in terms of motivating the public sector employees to further improve the quality of service they deliver to the public (Emmett and Louw-Potgieter, 2012, p. 8). Furthermore, the use of performance related pay appraisal scheme that is S.M.A.R.T. can serve as a guide on how each of the public sector employees is expected to improve their service. Conclusion It is the duty and responsibility of the public HR managers to design and implement the performance related pay effectively within the UK government offices. As a common knowledge, the public sector employees will be affected by the new pay and reward scheme. Therefore, the reservations made by the public sector employees should be considered legitimate. The use of performance related pay is a good form of pay and reward strategy particularly in terms of increasing the quality service provided by the public sector employees. For this reason, the public HR managers should exert more effort to effectively address all reservations made by the public sector employees. It is also necessary to create a S.M.A.R.T performance based criteria that could guide the public sector employees on what they are expected to do. In the process of removing the reservations of each public sector employee, the HR professionals can easily win the support of all affected individuals. References Baldwin, D. (2003). The Library Compensation Handbook: A Guide for Administrators, Librarians and Staffs. Westport, CT: Libraries Unlimited. CIPD. (2013, January 13). Majority of public sector employees have reservations about performance related pay. [Online] Available at: [Accessed 21 April 2013]. Emmett, J. and Louw-Potgieter, J. (2012). A formative evaluation of a pay-for-performance system. SA Journal of Human Resource Management, 10(3), pp. 1-12. E-reward.co.uk Limited. (2013, January 16). Reward management news. CIPD urges public sector to forge stronger link between pay and performance. [Online] Available at: [Accessed 21 April 2013]. Frank, S. and Lewis, G. (2004). Government employees working hard or harly working? Amerian Review of Public Administration, 34(1), pp. 36-51. Heneman, R. and Werner, J. (2005). Merit Pay: Linking Pay to Performance in a Changing World. 2nd Edition. US: Information Age Publishing Inc. Hutton, W. (2011, March). 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Rayson, M. (2013, April 3). The Tale of Ed and Fred… a Story from Dan Pink. Public Sector People Manager's Association. [Online] Available at: [Accessed 21 April 2013]. Shmidt, W., Trittel, N. and Muller, A. (2011). Performance-related pay in German public services: The example of local authorities in North Rhine-Westphalia. Emerald, 33. doi: 10.1108/01425451111096686. Vale, S. (2013). Can flexible working for older employees help the public sector avoid loss of skills and experience? Public Sector People Managers' Association. [Online] Available at: [Accessed 22 April 2013]. Weiner, A. (2013, January 28). Public sector staff still cold on performance related pay. [Online] Available at: [Accessed 22 April 2013]. Read More