• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Under what conditions is a group performance related pay scheme likely to fail? Should organisations employ only individual PRP schemes?

Extracts from this document...

Introduction

COURSE TITLE: MN 207: Human Resource Management Under what conditions is a group performance related pay scheme likely to fail? Should organisations employ only individual PRP schemes? Performance related pay (PRP), or merit pay, as it is often called, can be defined as the explicit link of financial reward to individual, group or company performance, or any combination of the three. In simple words, this means that the better the individual, group or company performs, the higher the financial reward will be for the worker. This reward can be in the form of a pay-rise, bonus, benefit such as a company house or car, or any such financial incentive that will in effect, motivate the employee to work even harder, and produce even better results. There are also different fixed types of PRP schemes, such as commission, profit-related pay, piece-rate (which is a more primitive method, as compared to the now modernistic methods that have been incorporated into management). PRP schemes are often categorised into three stages; The nature of the performance criteria, how performance against such criteria is assessed, and how this assessment is linked to pay. In accordance to these three approaches, it is possible to differentiate between individual schemes, and group approaches. This brings us to the focus of the discussion, which questions what could bring about the failure of group PRP schemes. ...read more.

Middle

individual appraisal with a superior, often against mutually agreed targets Either by a predetermined bonus or by movement within an incremental salary band Group PRP schemes Group or company performance, either in terms of profit or project targets According to a pre-determined formula based on company results for a specified period In terms of a regular bonus or various forms of share options applicable to all those involved in the scheme This brings us to individual PRP schemes. This is a system, which fulfils a number of functions that are relevant to organisational effectiveness. It has some features which are very favourable; Firstly, financial gain to the company is a prospect, since this system reduces the fixed pay-bill. This is done by the company paying out only based on what they get back in return, that is quality goods. Secondly, it is an effective method in terms of recruiting, and retaining because of the assumption that it will be attractive to quality employees, and unattractive to poor workers, whom the firm would be glad to part with. Also, it is a fairer method of payment, this being because it does not reward both, high and low performers equally, but only rewards them based on output, or productivity. Lastly, it is held to focus effort where the organisation wants it, strengthening the performance, planning process, and generally encouraging a performance-oriented culture, emphasising results rather than effort. ...read more.

Conclusion

PRP works against creating a climate of openness, trust, joint problem solving, and commitment to organisational objectives. This is again in terms of specialisation taking place. The worker will concentrate on only his specific task at hand, and the rest of the company objectives will get left behind. On the other hand, group schemes provide the chance for the company objectives on the whole to get achieved, as well as the smaller tasks simultaneously being carried out. Also, as mentioned earlier, individual PRP can also divide the workforce into those supporting the plan, and those against it, which could create adversarial relationships within the workforce. As one can see, there are advantages and disadvantages to both, individual and group PRP schemes. I don't think it possible to be able to generalise and say that one is better than the other, and that firms should use only one or the other. It mostly depends on the type of goal the firm is setting, what they want to achieve, and how they want to achieve it, which can help decide which system to use when. PRP schemes on the whole, are being used so far and wide these days by firms, and it is essential to the overall success, and progress of the firm, that they know when to use which type of scheme. Thus, I think it is not possible to say that organisations should employ only PRP schemes, I think it mostly depends on the situation, and the goal to be achieved. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE People in Business section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE People in Business essays

  1. Report: Type of ownership of J-Sainsbury

    An objective is usually to be quantified (expressed as a number). To achieve your objective successfully you must use the SMART rule. Specific Measurable Agreed Realistic Time constrained Businesses adopt a variety of objectives, which include making a profit, providing quality products, helping the society and caring for the environment, all of which combine in the overall business aims.

  2. Does performance related pay motivate or de-motivate employees?

    pay is not related to performance, but to having the 'right' relationships and an ingratiating personality". (Jeffrey Pfeffer, 1998) If the reward plan is seen to be unrealistic, for example promotion on the basis of seniority, it may definitely have a negative effect on motivation.

  1. Functional areas at Alton Towers

    * Separate entrances for staff and customers. * Locked gates and high metal fences. * Restricting key holders to the premises. A typical job role in the security department is a security guard who ensures the safety of paying customers is on hand in case of attacks and break-ins and keeps a watchful eye on the specific area of the business he/she has been appointed to.

  2. Performance-related pay (PRP) is a method of payment adopted by organizations to correlate employee ...

    * Equity theory is based on the concept that employees need to be treated fairly at work and in relation to other employees. Employees calculate fairness subconsciously by comparing the ratio of their inputs to outputs. Equality between the two contributes to maintaining motivation.

  1. The human resource function

    - Since 1971, the female labour force has increased by 40%. � Age- the trends for different age groups will affect their plans to recruit. There has been a huge increase in the number of women aged between 25-44 who want to work.

  2. Human Resource Planning.

    Boots would look at recruiting people that who are young, as they want young and active staffs. They would employ young people so they can gradually train them as they go along. By doing this Boots can offer a better service to there customers.

  1. Human Resource Planning.

    Job adverts therefore take many forms, according to current requirements. Good advertisements contain at least the following: Job title. This should form the main heading, possibly in bold print. Job description. This should highlight the major requirements of the job in a concise format.

  2. Detailed GMP inspection Report OnShetland SeaFish (Hull) Ltd.

    This system could also be extended to incorporate hand swabbing, so as to gauge the effectiveness of the staffs hand washing. A comprehensive pest control contract is in place with "Rentokil" and no infestation reported. The only addition to this regime would be to introduce catch tray analysis.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work