How Payment Affects Overall Performance Management - Coursework Example

SHOULD PAY BE A BIG OR SMALL PART OF EMPLOYERS’ OVERALL PERFORMANCE MANAGEMENT? Introduction Performance management is the progression towards certainty of achievement of aims. This progression could be a set of activities that ensure that aims are being met in a well-organized manner. This benefits both the employer and employees. When employers apply performance management to their business, they need to make certain that the employees know what is expected of them. Because of this, they have to decide how to motivate them and measure them against achievement of set goals. They need to decide on the appropriate wage system. In this paper, performance management will be discussed thoroughly as to gain knowledge on its requirements, effectiveness and benefits. After we have had a clear understanding of performance management, the paper will go on to discuss what motivates employees and what doesn’t. It will see if whether pay should be a big part of employers’ overall performance management. Discussion In the process of measuring success, an employer puts pressure on them. They are constantly being monitored for where they stand. To keep them standing where they should be, an employer needs to motivate them. For example, in a retail chain, there must be a set amount of goods that a salesperson must sell. To achieve this level, there has to be performance management that involves non monetary benefits that will encourage these sales people also. A suitable compensation system must, therefore, be devised to motivate them. Performance Management To understand why a big pay should not be a great part of an employer’s performance management, it is important to first understand what performance management is all about. Performance management has been defined above very simply. According to the Australian Government, performance management is the process of setting goals and measuring the performance of your employees against them (Australian Government, 2007). Performance management involves measuring your employees’ success; how far or near they are from reaching the goals set by their leader. Like mentioned earlier, performance management, if carried out effectively, is beneficial for both the employer and the employees. It makes sense why it benefits the employer; goals are met, targets are achieved, what was expected out of the employees is reaped so your and finally and ultimately profits are gain. As a result, the organization is able to keep hold of its most competitive employees. But how does performance management help employees? First of all, it gives them the ability to reach goals. This is a great skill that is likely to help them in their future activities. Secondly, they are given fringe benefits and in some cases, a bigger pay, for their services under performance management. In addition to these advantages, performance management also helps to encourage better communication. The leader has the opportunity to give employees feedback on their work, be it positive and negative. This motivates these employees and their chances of staying with the organization increase. A motivated workforce is also an implication of higher productivity and thus, higher profits. For example, the better and more efficient the doctors and staff are in a hospital, the more patients they will generate. Also, employees who do not do well as the others are given the prospect of improving (Australian Government, 2007). Finally, when a team measures its performance against set goals and when the result is positive, it gives a sense of self satisfaction and self-actualization. Take the example of the doctors in a hospital again. There must be nothing more satisfying than achieving the goals set by these doctors. This, itself keeps the employees interested, determined and committed to meeting goals. As a final point, to gain understanding of performance management, it is important to know what makes a performance management process effective. First of all, goals must be set objectively and even more importantly, they must be communicated to the employees. The workforce must understand exactly what is expected of them and where they should stand at each and every stage of doing work. The agreed performance management process must then be documented to keep a record. Documentation is also crucial for successful measurement against set aims. A performance management plan must also be directly aligned with the organization’s business strategy (Australian Government, 2007). This is essential so that the essence of the organization’s culture itself must not be left behind by the employees in order to meet goals. Non-Monetary Motivational Factors Many employers believe that giving their subordinates a bigger pay always helps to keep them happy and thus improve their performance. But I feel otherwise. There are a number of other motivational factors that employers must keep into account when devising a plan to keep their workforce satisfied. This is true especially if the employees are people working in a hospital. They do not want a pay, they want to save as many lives as they want. Therefore, a bigger pay will not always be the answer. It will not always make employees performance better. Factors, other than a big salary, that have been known to keep workers motivated are many. Firstly, employees must be provided with an environment where their performance consequently enhances. For example, in a retail chain, it is hard to sell when people look down on you all the time. The environment must be a friendly one where employees can speak their minds with their leaders, as well as their colleagues. At the same time, it must be a competitive environment so that it encourages employees to perform better than the rest of their equals. Under a performance management plan, there is already pressure on employees. They are expected to perform well all the time in addition to which they are monitored even more to see where they stand. The employers must understand that this puts great and constant pressure on the workforce. To counter-balance this, measures by the employers must be taken to ensure that the employees can have the time to relax. Their schedules must be set as to discourage over exertion and exploitation of their skills and themselves. In simpler words, employers must expect from their employees only what they are capable of. A sales person should not be expected to sell what he cannot to customers that are unredeemable. This expectation should then be communicated with the employees. It is important to let them know that the work is not more important than the employees themselves. Various other techniques can be adopted by the management that will yield more efficient employees. Job security is one of the most important ones. No employee wants to put so much into an organization only to be made redundant at the end. Therefore, good relations with supervisors are very important. This is the supervisor’s responsibility to make sure that the workers are happy with the policies that are implemented. He must treat them respectfully and give them a feeling of belongingness. This is how the workers will feel that their job is secure. Employees should be appreciated and this should be shown to them through some kind of a plan. For example, an ‘Employee of the Month’ award can be given each month to encourage and enhance employee performance. This will be especially effective in a retail chain. More importantly, things like these are a source of motivation. Just the thought of receiving such appreciation awards which also gives them a slight level of superiority, is sufficient for employees to perform well in a team. According to a behavioral psychologist, B.F. Skinner, behavior is shaped by reinforcements. Managers should positively reinforce employee behavior that leads to positive results. And they should negatively reinforce employee behavior that leads to negative outcomes. It will not be repeated then. Speaking of teams, teamwork should be emphasized on. Rather than isolating employees and giving them their own work to do, collective work should be given to them as a team. This, firstly, has shown to improve the general level of performance in an organization. Secondly, team orientation gives employees a sense of belonging. If they feel like a part of an organization, it is more likely that they will work harder to meet its aims and help it. Factors that de-motivate employees should be avoided by employers. For example, according to Herzberg, a hygienic environment will not motivate employees. They probably will not even notice it at most times. However, an unhygienic environment will certainly de-motivate them. Doctors and nurses would find it hard to worn on patients in an environment that hinders their work. Hygiene will include things such as working conditions or maybe quality of supervision. Company strategies and administration along with interpersonal affairs are also part of it (Herzberg, Mausner, & Snyderman, 1959). Therefore, small factors such as these must be considered when trying to satisfy and motivate your workforce. According to Maslow, employees have a list of needs that need to be satisfied one after the other. The most basic need is, of course, a pay. But notice that this is only a basic need. Therefore, only a basic pay is required by most employees. It is other needs that employees also look to satisfy. The ultimate need is the need of self-actualization. I have mentioned already that pressure must not be exerted on employees. This, however, should not be taken to mean that work shouldn’t be given to them. Only work they are fully capable of must be assigned to them. The workforce must be given projects that are challenging. Maximum work should be delegated to them by the supervisors. Usually it is assumed that delegation of work means losing control over the employees. This might be true to some extent therefore work should be delegated but to some extent. It has been proven that delegation of work results in very high productivity (Harris, F., McCaffer, R., Edum, F., 2006). Also, if work is delegated to them and then if they are monitored for how consistent and close they are to meeting goals, it will give them a great deal of satisfaction to know that most of the work was delegated to them and that it was their contribution that led to success. When we talk of delegation, we think about the kind of manager or leader. How he leads his team towards meeting goals is another important factor itself to consider. Different Kinds of Employers/Leaders Why are we talking about different kinds of leaders? Leadership plays a very important role in taking your workforce forward towards set goals. If the leadership of the manager is looked down on by most employees, they will never be motivated to work for this organization. Hence, it is important to give them a leader they can look up to. There are many kinds of leadership styles that have and will improve the performance of the employees. When a manager makes a performance management plan, he must make a plan of how it will make sure that its subordinates will look at goals the same way he does. If a manager fails to show the way to his team in an effective manner, no matter how much pay he gives, the employees will not be able to perform well. This is why I say that pay should not always be a big part of performance management. For example, if the Chief of surgery in a hospital aims to find the cure to a previously incurable disease, he must make it clear to his staff just how important it is by telling them the positive points about it. Once doctors know about this positivism, they would want to save lives rather than getting paid a big salary. Therefore, a manager must decide on an appropriate leadership style. In this section, I will discuss only a couple of styles to demonstrate how they can or cannot motivate a team to perform well. There is an autocratic leader. His style of leadership is a rigid way of leading. It is when the leader feels no need to consult his team members before making important or even unimportant decisions. This makes one think that it will essentially de-motivate workers or employees. This is, in fact, very true so ideally, this style is adopted when not seeking employees’ input doesn’t motivate or de-motivate them. It could be used in a situation where the leader is extremely experienced, competent and blindly trusted by the team members and where the team members are fairly incompetent. This moves the essence of performance management itself. What is the point of measuring your employees’ performance against goals when they are not even the ones performing. Therefore, this style should be avoided when performance management is adopted. The limitations of this style of leadership are apparent; it leads to de-motivation and low self-esteem of the subordinates. They are never allowed to make decisions, even the smallest ones, and this puts pressure on their self-actualization or self-realization needs. Their job satisfaction must be close to nil. It discourages subordinates that could be potential managers and leaders to reach their aptitude. It seems like this style of leadership would hardly produce leaders in the future. Furthermore, an autocratic leader creates a very unfriendly and peculiar environment which prevents employees from showing any innovation at all. Then there is the democratic leader whose style of leadership is the opposite of the autocratic leadership style. Because of this reason, it is also called the participative leadership style; it focuses largely on making subordinates a part of the decision-making process. They are allowed in when management makes operational and even strategic decisions. Clearly, this style of leadership is adopted by managers who feel that their employees know best. It is employed in a situation where the manager trusts the skills of his subordinates or even when he wants to build upon those skills. It could be used in circumstances where the morale of the employees is low but their proficiency high. This style of leadership is like to be very successful under performance management because it encourage employees to work harder towards the goals of an organization if they are trusted enough to perform well. Consequently, the advantages of this style of leadership are that it encourages employees to stand up and come up with innovative ideas. You never know that one of these might turn the organization around and land the team at its goals. Also, it increases the self-esteem of the employees by allowing them to makes small decisions and letting them know and discussing with them the bigger, more strategic ones. It builds the skills of the workers. It motivates them and makes them look forward to every bit of their tasks. It is likely to generate great leaders and managers so it’s a style that has leaders in the making. However, encouraging participation and putting it into effect takes time so the results may be slow. Essentially, it should be used when the focus is quality and not speed. This will ultimately lead to better performance of the employees. Factors to Consider So far we have discussed the importance of motivation for employees and we have identified the different ways of motivating them. After this, we discussed how the leader plays an important role in improving the performance of employees which is the central idea of performance management. Therefore, a couple of leadership styles were discussed to give an understanding of what and what not a manager should adopt under a performance management process. This section is about other factors that have to be kept into account by the manager when deciding whether pay will be a bigger part of performance management or all the other things mentioned earlier in this paper. The first factor to really consider is the kind of workforce. If the workforce is creative and believes in competition and working to the best of their abilities, only a pay will not help them. To help them to perform better and reach the goals set by the manager more quickly and effectively, they will have to be motivated in ways mentioned above. If, however, the workforce is rigid and does not have self-confidence and does not want to take steps without their manager, a pay will make them perform better. They do not wish to be motivated. They do not want to be delegated work and authority. They only want to do their job, get paid and go home. Therefore, it is important to note that our entire discussion about motivating rather than only paying employees lied around the assumption that our employees are of the former sort instead of the latter one. The second factor to consider when making this argument about whether pay should be a big or small part of performance management is the kind of leader. We must remember that ultimately the decision about what to pay and how to motivate will be taken by the manager. If the manager feels that he just wants to get his work done, he is likely to only pay his employees for the work they do and maybe even increase pay to increase the work they do. He will not go into the hassles of “motivating”. However, if another manger wishes to make a difference and generally retain its best employees and guide them towards goals effectively will adhere to all the motivational factors discussed above and he will more probably go with the democratic style of leadership. Sometimes, both the factors: kind of employees and employer, work together to make a third factor. This is that the employer feels that he knows the kind of team he has and he will pay or motivate them accordingly. Then there is a kind of employer who never knows his team well enough and strongly believes in them and their hidden talents and capacities. For example, in a retail chain, even if employees are not performing up to the mark, the manager may still believe they have abilities to sell more. This employer will motivate them. Finally, the nature of the work has to be considered. Generally there will not be a performance management plan for workforce whose nature of the work is rigid and boring. But if there is a performance management plan for such workers, pay should be a big part of it. Let’s take the example of factory workers. They would want a piece- or time-rate wage. They do not want to be motivated. They work in the factory and get paid for the amount and/or time they worked for. Therefore, for monotonous work pay can be a big part of the overall performance management. However, if the nature of the work requires innovation and creativity as with doctors, it will be okay of pay was not the biggest part of the performance management plan. As another example, software engineers have to be innovative. To surface this creativity and move the team of software engineers working on a project closer towards their goals, they have to be motivated. Conclusion As a final point, I would say that pay should generally not always be a big part of an employers’ performance management plan. It should be a part of it, but a smaller one with the larger chunk given to motivation and leadership. Pay should be basic but motivation should keep evolving to meet the needs and abilities of the employees. It is important for managers to know in what situations motivation will work in when deciding on whether pay should be a big or small part of performance management. Only if the workers are competent and the nature of their work demands creativity, then will less pay and more motivation will work. Managers should always adopt a combination of both. Extreme motivation with no pay will hinder performance as much as big pay with no motivation will. BIBLIOGRAPHY Leopold, J., Harris, L., Watson, T., (2004) The Strategic Managing of Human Resources. Prentice Hall. (2007) Performance Management [Internet], Job Access and Australian Government Initiative. Available from: [Accessed 15 August 2008]. Harris, F., McCaffer, R., Edum, F., (2006) Modern Construction Management, Blackwell Publishing, Oxford. Herzberg, F., Mausner, B., & Snyderman, B. B. (1959). The Motivation to Work. John Wiley & Sons. New York. Read More