Performance-Related Pay System - Essay Example

UNDERSTANDING MANAGEMENT By Location Understanding Management Introduction The LIPC Company has adopted a performance related pay system in an effort to promote productivity. The decision to adopt the performance related pay system came after the job roles were reviewed by delegates from the Chartered Institute of Personal Development. The performance-related pay system involves the entry of an employee’s performance into a main computer, which is programmed to automatically calculate and determine the pay, and rewards that the employees at each grade and level of performance should receive. However, the system has received increased criticism from most of the departments. A close analysis of the design, fabrication, and assembly departments reveals that the workers have exhibited mixed reactions towards the new system adopted. This paper will critically analyse the management theories applied in each department. Analysis of the Design Department Workers in the design department have made it clear that their job description involves a high level of creativity and complexity. Therefore, the employees feel that the performance related pay system does not compensate them appropriately. Since they apply their creativity in their daily activities, they have the conviction that such talent deserves proper recognition and rewards. In addition, the employees have highlighted that the products of their creativity should be considered as their intellectual capital (Markert 2008, p. 41). Unfortunately, the company has been against this idea. In the view of the management team, all the creations of the design produced by the department staff members remain to be the property of the company as long as such individuals are staff employees to the company. Although the company management is unwilling to consider the issues raised by the employees in this department, they do not consider replacing the staff members. The management team is well aware that employees with the level of talent required are rare. The board members have tried negotiation with the professional staff members without any success (Zgarrick 2012, p. 67). The professional work-based assessors have made it clear that the payment and reward system adopted by the company has negative effects on the quality of the designs. The assessors suggest that the company should hire the staff members as consultants and not full-time staff members. The management approaches used by LIPC Company reveals that the classical management theory is in place. The classical management theory focuses on proper organization in an effort to register increased productivity. Usually, the management team using the classical management theory is likely to develop strategies for promoting efficiency. For example, the performance-based reward and payment system adopted by the company seeks to promote productivity. The company also promotes the division of labour I each of its departments depending on the capacities of the individuals (Markert 2008, p. 41). The classical management theory operates using the autocratic leadership style, which does not give employees an opportunity to participate in decision-making. Therefore, employees face the compulsion of embracing commands from managers. Evidently, there is a salient need for the department to adopt the human relations management approach because the classical management theory does not seem to be effective. Since the classical management theory does not give regard to human relations that determine the level of employee motivation, there is a salient need for change (Nguyen & Crow 2013, p. 891). Adopting the human relations management theory can register increased performance of the professional staff members without subjecting them to the new payment and reward system. The management team has exhibited extreme rigidity despite the opinion of the employees. The management team has failed to recognize the creativity of the staff members and focused on promoting productivity using a performance-based payment system. Analysis of the Fabrication Department The fabrication department is the only one that has benefited from the performance-based pay and reward system. The new system seems to have motivated the employees to put in more working hours while exhibiting high levels of commitment. The workers in this department have requested for further training in an effort to increase their levels of productivity. The department seems to be trading on the right track. The management has implemented a human relations approach because it has given attention to the needs of the employees. The attitude exhibited by the workers in this department makes it evident that it has a positive contribution to the increased productivity. The introduction of a new payment and reward system served to satisfy some of the levels of needs highlighted by Maslow (Zgarrick 2012, p. 78). The fact that their basic needs have been satisfied, the workers have requested for further training in an effort to achieve self-actualization. Without doubt, the fabrication department is likely to register better performance if the training programs are implemented. Training will serve to empower the employees further prompting them to take up new roles and responsibilities. The fabrication department should reinforce the human relations approach, which is likely to register positive outcomes in the future. The management team should seek to ensure that the company recognizes and appreciates interpersonal and organizational relationships that determine the attitude exhibited by the employees (Nguyen & Crow 2013, p. 893). Notably, the company management should ensure that the interests of the employees are given a priority so that they are more motivated. Analysis of the Assembly Department The assembling department of the LIPC Company seems to have many complexities. The department was focused on routine work in accordance with specialization and division of labour as highlighted in the classical management theory. The workers in this department function as machineries and perform highly mechanical works that require minimal training. The department has failed to give attention to the needs of the employees. The employees have made it evident that they need to allow some time to rest so that they can rejuvenate and register increased productivity. The company has failed to consider such grievances and needs. The company even threatens to relocate the work of employees in this department to Vietnam and India where labour is likely to be cheaper (Zgarrick 2012, p. 80). The aspect of relocating the department’s activities may translate to the dismissal of the employees. Evidently, the assembling department has adhered to a bureaucratic approach as well as the classical management theory. The bureaucracy in this department is evident in the way the employees face the compulsion of accepting the final decisions made at the top level of management. Employees are not given an opportunity of actively participating in the decision-making process. The fact that the department has been applying the classical management theory, it has failed to recognize the value of employees as critical stakeholders in the company. Therefore, the management team needs to adopt a human relations management approach (Markert 2008, p. 41). Such an approach will require the development of positive working relations as well as teamwork within the department. In addition, the human relations approach will require the management team to empower the employees and satisfy their various needs in accordance with the Maslow’s hierarchy of needs. The management team should get rid of bureaucracy and begin to involve employees in decision-making processes. Participative decision-making may have positive impacts on the level of productivity because employees learn the company’s goals and focus on them. Therefore, the management team in the department should adopt the relevant strategies for implementing a human relations management approach (Nguyen & Crow 2013, p. 894). A close analysis of the three departments reveals that the employees need a voice. The company seems to promote the bureaucracy and an autocratic leadership style, denying the employees an opportunity to participate in decision-making. The company has disregarded the value of human relations in the organization. The management team imposed a new system in an effort to promote increased productivity. However, the system only registers positive outcomes in one department. The department workers are yet to achieve remarkable motivational levels that can continue increasing their level of productivity. Therefore, all the three departments need to give attention to human relations perspectives. The workers in the design department need recognition as well as increased personnel development because of their outstanding talent. Human relations can serve to retain the employees with outstanding talents (Nguyen & Crow 2013, p. 896). If the company adopts the idea introduced by the assessors, it is more likely to lose the talent in the end. The classical management theory proves ineffective in departments that require high levels of creativity. It is impossible to exert control over operations in a department that relies on talent. Therefore, LIPC Company should recognize that the classical management theory has numerous drawbacks that may contribute to employee turnover. In the assembling department, the management needs to adopt the pluralist perspectives in order to give employees a voice. The pluralist perspective will seek to ensure that employees can join trade unions that can negotiate the working conditions, as well as the employment terms. Trade unions will defend the employees in case the company decides to relocate the assembling function to a foreign country. Conclusion Without doubt, the LIPC Company requires adopting the management approaches that give attention to human relations. After implementing a new payment and reward scheme, the company has received mixed reactions from the employees. The employees in the design and assembling departments need to have a voice in the organization. The management team has failed to give attention to their outstanding needs while seeking to increase productivity. Adopting a human relations approach in each department can yield positive results for LIPC Company. Bibliography Nguyen, T, & Crow, G 2013, Classical management theory, The handbook of educational theories pp. 891-896 Charlotte, NC, US: IAP Information Age Publishing PsycINFO, EBSCOhost, viewed 4 March 2015. Zgarrick, D 2012, Classical and Modern Views of Management, New York: McGraw-Hill AccessPharmacy, EBSCOhost, viewed 4 March 2015. Markert, J 2008, Weberian and Human Relations Management Theories: An Applied Micro-Macro Reconciliation, Michigan Sociological Review, p. 41, JSTOR Journals, EBSCOhost, viewed 4 March 2015. Read More