Where performance related pay may enhance the performance of the employee
Performance related pay is in general used when employee’s performance cannot be measured approximately and so it is measured from the number of items an employee has produced (output) or sales achieved. Performance related pay is a form of motivation because the more they produce the more they receive in terms of pay. In other words performance related pay is best used in jobs where the aim is to produce e.g. manufacturing jobs.
In the case study it mentions AJP has a 15% wage over its manufacturing competitors. So therefore AJP would be looking to lower this and so performance related pay will be best used in AJP’s manufacturing operations. Also labour relation issues involving hourly paid workers are full of uncertainty. Most of AJP’s competitors outsource their manufacturing work to smaller firms with lower cost structures and this places outsourcing pressures on AJP. Employees of AJP may fear they will be made redundant in order for AJP to keep up with competitors in saving costs. So by introducing performance related pay in manufacturing the amount of pay employees receive will reflect the amount of work they have produced. This will enhance the performance of an employee because he/she knows the more they produce or do the better pay they will get. By people getting paid for the amount of work they do instead of a fixed pay then this can help AJP in their outsourcing as they can see who is performing and who is not and therefore leading to the reformation of workforce keeping people who help the company grow and people who don’t. So AJP should use performance related pay in manufacturing because they are under pressure from competitors in terms of outsourcing and so instead of paying workers all the fixed rate of pay they will be getting pay related to their performance and this can help save money as people who under perform will not get the same wages as people who do perform. Also by using performance related pay it motivates workers to produce more as they will get more pay which then leads to being more motivated which can lead to more items being produced and AJP receiving more profit as workers are producing whole loads of high quality goods.
How employment legislation affects the working environment to which the conforms
Employment legislation are their to give employees rights in order to be protected. These legislations are Acts of parliament and cover issues such as:
- Discrimination at work in terms of race, disability and sex
- Minimum pay
- Working hours
- Redundancy pay
- Health and safety at work
The Government has the following Act in place in terms of health and safety:
- The Health and Safety Act – This involves the employer giving a written statement to all its employees stating clearly its health and safety policies. The statement must include how accidents must be reported, list of staff trained in first aid and where first aid equipment can be found, list of all safety representatives and name of senior manager responsible for health and safety policies.
This means AJP will be required to follow this act because it has been passed down by the Government. Because the Government has passed down this act it means this legislation will affect the working environment AJP offer to their employees because AJP will be required to follow the terms of the Health and Safety Act and therefore provide a safe working environment for its employees to work in. Because it’s an Act of parliament it means AJP will have to abide by this act and this affects the working environment because AJP will be expected to follow the contents involved in the health and safety act and this leads to a better and safer working environment for its employees.
Other legislation which can affect the working environment is working hours because if AJP for example don’t obey laws and force workers to work long it can lead to stress and illness but by following the law it affects the working environment because it puts less stress on employees and less likely to be ill and therefore be more motivated to work. Also legislations in discrimination at work can affect the working environment because if AJP do not follow legislations involving this it can lead to employees being de motivated but by following the law it affects the working environment because it means people are less likely to be discriminated which can result in a happier environment to work in and workers being more motivated.
Overall employment legislation affects the working environment because it means companies such as AJP have to follow these laws in order to prevent problems from happening such as employees getting injured at work and employees getting discriminated against. Therefore AJP have to follow employee legislation in order to set an good example and prevent problems from happening and these legislations are put in place to protect employees rights and this leads to the working environment being affected in a positive way by employees being more protected and having more rights.
Motivational effects of employee incentive schemes
Businesses such as AJP recognise it is important to retain key employees for the company to grow. So companies decide to share based incentives and the benefit of this is it allows employees to benefit from the companies success. Other forms of incentives can include cash based incentives, Inland Revenue Approved Share Option Schemes and Enterprise Managements Incentives.
AJP also used the share option and allowed all employees to buy shares in the new company. The motivational effects of employee incentive schemes can be beneficial to the business and employees because by offering share options AJP hope it motivates employees to work much harder and produce more because the more they produce or work harder the more likely the company has of doing well and in return they get more in their shares. Basically AJP can use this as a form of reward and can act as motivation because they hope it encourages harder work which can result in higher profits for AJP and employees getting rewarded in their shares for the contribution.
Motivational effects of employee incentive schemes are:
- Lead to employees working harder
- Producing higher quality of work
- If used in manufacturing can lead to more goods being produced
- Can lead to job satisfaction due to the offering of rewards
- Can lead to a more better working environment as most employees are likely to be motivated and therefore more willing to work and help each other
Overall AJP offer share options and this can act as a motivational effect because employees know the harder they work, the more they produce the more likely AJP have of doing well and should they do well they will be rewarded in share options.
Evaluate how motivational theories have contributed to the success of the organisation
Here is a list of the motivational theories:
- Frederick Taylor and Scientific management- he worked as a factory superintendent from his studies of how people made axels he concluded that people get jobs their because they were friends or relatives with the manager, some employees did not work hard enough because they were afraid it would throw some of their friends out of work, employers tried to pay workers as little pay as they can, employees weren’t instructed properly so It lead to workers performing badly. Taylor suggested the following things to improve matters: only money motivates employees to perform harder therefore should be paid on a piecework system, properly trained managers should run the company and supervise employees with, employees must be trained properly to do tasks efficiently, employees should be recruited properly through tests and interviews and employees if motivated by good wages should work efficiently without being questioned what is required of them
- Abraham Maslow and the hierarchy- he believes all motivation comes from meeting unsatisfied needs. So he placed these in ranking order in which must be achieved in the correct order. The pyramid includes physiological needs, safety needs, social needs, esteem and self actualisation.
- Douglas McGregor and theory x and y- theory x states all employees are lazy, unambitious and hate extra work. They hate change of any kind and are not interested in future success. They have no interest in which the way the organsiation is run and are preferred to be told what to do. Theory y is the opposite employees are interested in work and want their opinion to be heard in the way things are run. They will be given more responsibility and will work without any supervision .they would also accept any change which is in the best interests of the company.
- Frederick Herzberg and the two factor theory- first factor are satisfiers and these include achievement, recognition, responsibility, advancement, personal growth and actual work itself. The second factor is called hygiene factors which don’t motivate people are pay and conditions, status in organisation, job security, benefits, relationships with fellow employees and the quality of the organisations manager.
- Equity theory- means people are better motivated if they feel they are fairly treated by their bosses and are level with other employees
AJP have a very high and improving level of employee morale and this can lead to AJP’s success because with high morale it leads to workers being more motivated therefore leading to harder work which can improve quality of products produced and lead to higher profit for AJP. The high level of employee morale has been the result of the values embodied in the leadership pf Svensson and McGinn, complete set human resources and labour relations policies and benefits inherited from AT&T and offering share options to employees. AJP have used one of Fredrick Taylor’s ideas of money motivating employees to work harder because by offering employees stock shares it will lead to them working harder because they know the more they work the more money they are likely to get in return and this has contributed in high morale. AJP have also used the esteem part of Maslow’s hierarchy because by offering share options it means employees are recognised for the work they put in and is a way of paying them back and this is a way of improving morale among employees.
AJP enjoy a strong reputation and good success record in terms of recruiting, promoting, retaining minorities and women, maintaining the successful approaches to managing diversity. By having a strong reputation in these things it means AJP have a good record in recruiting this leads to them recruiting the right candidates who make good employees which can contribute to the success of the organisation. AJP would have used Frederick Taylor’s theory which is employees should be selected through tests and interviews and make sure they are right for the job and also the equity theory which is people are better motivated if they feel they are fairly treated by their bosses and are level with other employees. AJP would use these theories because they are about recruiting the right people and making people equal within an organisation and they have done this by having a good recruitment record and having a successful approach to managing diversity and so this leads to AJP hiring more better employees and having better relations within the organisation which has contributed with the success of AJP.
To continue their current success AJP have several plans laid out such as the GROWS strategy which includes workplace which is a goal to promote an open, supportive and diverse workplace and therefore AJP can use Maslow’s social needs part of the hierarchy because this includes affection/love/care. Also AJP have continuous training in order so employees can do high value added work and they can use the Frederick Taylor theory which is employees must be trained properly to do specific tasks.
Overall AJP have used motivational theories to contribute to its success by taking approaches which some motivational theories have suggested such as Fredrick Taylor’s idea of money motivating employees to work harder and AJP have done this by offering share options and this ahs lead to high morale among workers. So AJP have used some of the things each theory has suggested and taken the approach they think would help with the success of the organsiation such as Maslows theory of social needs and AJP have used this in terms of managing diversity. This ahs lead to AJP being successful In things such as recruiting and morale among workers which has helped contribute to the success of the organisation.
Evaluate and analyse any areas of potential conflict that might arise in the management of the HRM function
One area of potential conflict for AJP’s HRM function could be the labour relations issue involving hourly workers. It can cause conflict because the future is full of uncertainty and challenges and therefore some members of HRM may want to axe hourly employees and some may want to introduce performance related pay and by members having different views it makes any decision difficult to make.
Another are of potential conflict can be the issue of employee safety and security. It can cause conflict because it can lead to issues like deciding whether AJP’S current safety policies are good or not and this can lead to conflict as some members will say yes it is still good and some members not agreeing and saying there is room for improvement.
An issue which can cause potential conflict is managing absenteeism and turnover. It can cause conflict because issues such as reviewing whether AJP’s employees have a low level or high level of staff being absent or leaving the business. If its high then it can lead to members having different opinions on how to improve the levels of absenteeism and turnover.
One other issue that can cause potential conflict is the type of training that employees should be offered and this can cause conflict because members will have different opinions on which method should be used. This can make any decision on which method is best to use difficult.
Issues involving trade unions can also cause potential conflict because if for example theirs a strike action on a wage rise then members will debate whether to give them the pay rise or whether not to.
Overall these issues can cause potential conflict because these are issues which involve employees and therefore are important. Because different members of HRM will always have different views on each issue it results in decisions hard to make as opinions are divided. Potential conflict will arise in issues such as Labour relations, employee safety, turnover and absenteeism and training because these affect the organisation and so must be taken seriously and so by debating and viewing opinions it helps influences a decision which in the companies bets interests. The advantage of debating these decisions is that it can help influence a decision which helps the company in a positive way but a disadvantage is debating can make any decision hard to make as members have different opinions on an issue.
By analysing all issues involved in HRM I think labour relations, employee safety and security, absenteeism and turnover, training and trade union issues are the ones which would cause potential conflict because these issues would be the ones which has the most impact on AJP meaning any decision made would therefore be hugely important and so this causes potential conflict wants everyone in HRM wants to have their say. The issue which would cause most conflict would be labour relations because AJP have a issue involving hourly employees. The issue which would cause less conflict would be staff absenteeism and turnover as there is no evidence showing whether AJP have a problem in this or not. Overall by looking at the issues which can cause potential conflict I think they would cause problems as these are issues which could or have affected AJP so any decisions made would be important for AJP.
