Unit 6 Business Decision Making Assignment - IPRP
Diploma in Business
Unit Number and Title
Unit 6 Business Decision Making IPRP
This business decision making IPRP coursework delves with the aspect of reward management in which a critical assessment is made regarding individual performance related pay (IPRP) as well as the possible barriers that will be having an impact on its implementation as well as efficiency in The Trust. Barriers to the effective design as well as implementation of IPRP schemes needs to be taken into consideration and also alternative reward approaches that might be used for complementing or replacing IPRP.
Critically evaluate the contribution of reward principles, policies, practices and decision making to performance management in organizations
To begin with, let us first discuss about individual performance related pay (IPRP). Individual performance related pay is considered to be the pay that varies depending on the performance of an individual, team or organization. Better performance is a standard we are striving for in every activity of our lives by doing a difficult work effectively and as a result, commanding praise as well as reaping rewards. The application of IPRP occurs on individuals in association with the structures of salaries, grades as well as performance and rating associated with competence. The Individual performance related pay is normally related with the evaluation of the performance by the management, which depends on measures that are considered quantitative as well as qualitative. In respect of IPRP, payments occur normally in respect of increase in pay and the payments and the payments mostly occur annually. (Armstrong, 2010)
Individual performance related pay (IPRP) are mainly implemented by the companies in respect of different reasons, such as,
- Strengthening the relationship between performance as well as reward
- Driving the implementation of organizational strategy to individual level
- Retention of top performers by rewarding them in respect of prolonged superior performance
- Sending a clear message to non-performers, that generally accompanies the aspect of counseling or training (Palmer, 2011)
- Institutionalizing a performance culture in the organization
- Facilitating as well as necessitating performance contracting that results in reviewing as well as assessing performances
- Differentiating rewards in a justifiable manner (Armstrong, 2010)
- Linking the tedious salary and wage bill to the financial outcome of the company.
Advantages and disadvantages of individual performance related pay as a performance management tool in the NHS are mentioned as under,
- Individual performance related pay (IPRP) assists in facilitating the implementation of general strategic aspects in the organization due to its clear as well as understandable structural aspect associated with objectives as well as appreciated behavioral aspect that occurs in the place of work.
- Individual performance related pay (IPRP) does the attraction of efficiently skilled staffs having the expectation that their qualifications as well as performance outcomes will be rewarded in a proper way. It also assists in the retention of the staffs that are highly specialized at the same time doing the reduction of poor organizational performers. (Dabrowska, 2011)
- Individual performance related pay (IPRP) process provides the flexibility as well as capability to the staffs for rewarding high performers in an adequate way for their results which as a result will be motivating the staffs and as a result, provide improvement regarding the performance of the company. This flexible condition assists in facilitating every changing aspects that occurs externally but more often than not in the organization’s internal environment since it assist in enabling individualization of spurs that encourages individuals for the maintenance of needed structure of organizational viewpoint, behavioral aspects as well as attitudes. (Dabrowska, 2011)
- Individual performance related pay (IPRP) process assists the organizational culture, values that are existing as well as innovative aspects and in certain scenarios IPRP assists the changing aspect associated with the culture of the organization, when it is considered essential by the senior managers.
- Every target and criteria to evaluate must get the consent of all the staffs commencing with top managers, through line managers and concluding with the junior staffs and this is considered to be a disadvantage because this process is very much time-consuming guaranteeing that the designed objectives are having the consistency with basic strategic aspects and probable to actualize in accord to the functional staffs at the lowest stage.
- Staffs must make an endeavor for creating suitable situations that will assist the staffs in the realization of their individual objectives at the same time while actualizing the ones related with the company. This is considered to be disadvantage because this is very tough to actualize and this is considered to be the major component to determine the method’s success. It takes into consideration the requirements to have a broad plan depending on basic strategic aspects as well as vision of direction toward which the development of organization will occur in the future. (Dabrowska, 2011)
- Taking into consideration the effectiveness of this process, the preparation must be done efficiently beforehand that has the involvement of a huge amount of time as well as money. The crises that might take place at this level is referring to the circumstance that there occurs the postponement of results most of the time that will resulting in the top management’s reluctance towards investment in IPRP.
- There occurs a lot of inconveniency from the employer’s viewpoint regarding the implementation of IPRP in the company since it is considered laborious. There is a requirement of a broad knowledge in respect of the organization, extensive research as well as knowledge regarding the internal as well as external organizational environment. (Dabrowska, 2011) Individuals having the responsibility in respect of IPRP, prior to bring it into effect should acknowledge in a precise manner what specific staffs in the organization are doing and what is needed to be done for increasing their performance.
Ways of improving organizational performance through IPRP
- It is considered to be an appraisal evaluation in respect of the past that depends on the individual data or the previous work behavior as well as performance of a group. This helps in improving organizational performance by linking the wage directly with the accomplishment of the objectives associated with the job. (McDaniel, 2011)
- Since, it is not suited for every staffs therefore, focus is being given only on the selected ones such as production workers, managers as well as salesmen thus improving the performance of the organization with the help of IPRP.
- There occurs the classification of staffs into various groups of performance in accord to the standards, thus having an improvement in the performance of the organization with the help of IPRP. (Armstrong, 2011)
- Since, there is the involvement in the aspect of bonus as well as increase in the rate of wage or salary, there will occur improvement in the performance of the organization with the help of IPRP.
Suitability of IPRP to the business environment of the Trust
IPRP is considered suitable for the business environment of the Trust only when,
- The cultural aspect is considered to be entrepreneurial having an emphasis towards development, competitiveness as well as actualizing financial goals.
- Top management completely believes that IPRP will be able to bring cultural changes that lead to essential improvement in the performance.
- IPRP are in place that will be including the agreement of goals that integrates with the entire organizational goals involving feedbacks as well as reviews and providing a clear source to make pay decisions that are considered to be fair as well as have consistency. (Perkins, 2011)
- Line managers are expert in the method related with goal setting as well as providing feedback to assess performance.
- There is clarification in respect of the staff’s expectation regarding what they require doing for the actualization of reward.
- There is a tradition towards the involvement of the staffs to make decisions regarding issues affecting them. (Perkins, 2011)
- The Trust is having the affordability for awarding IPRP increases in a sensible manner.
- There is integration of the IPRP methods with other personnel as well as development practices.
Barriers to the effective design and implementation of IPRP schemes
- IPRP delivers insufficient reward – It has been seen that during the times of low inflation or pay restraint, awards are considered to be very small for providing motivation. Therefore, the implication for the organization is not too rely extensively on payment as a main force for motivating the staffs because there will be situations when they likely to have inadequate resources for actualizing satisfactory influence with financial reward. (McCalman, 2015)
- IPRP damages creativity and intrinsic motivation – The intrinsically motivated through financial incentives gets demotivated and in addition to that, once the behavior gets associated with the reward, its performance does not occur without the reward. This provides the suggestion that pay is considered to be assistive but not main driver regarding the culture of the organization and that there must occur the development of systems that takes into consideration other components of the entire system of HR. (Palmer, 2011)
- Lack of staff support – The staffs do not agree with the management regarding what is constituting as effective performance as well as they are not trusting either the manager’s competence or integrity towards making decisions that are considered to be correct. Studies have stated that staffs tremendously assist PRP in theory but then make it’s withdrawal in a rapid manner when they see schemes are functioning in manners which they are perceiving as unfair or delivering small rewards. (Lind, 2014)
Alternative reward approaches for complementing or replacing IPRP
- Flexible Benefits Approach – The flexible reward system are having the ability to fit with the strategic aspect of the business in respect of the company. Organizations have began understanding that it is not adequate in just copying the reward strategy of another organization but designing one particularly regarding their requirements which will eventually be functioning for them. (Lancaster, 2010) Every company is considered to be distinctive in respect of how work occurs, in what ways decisions are made, in what ways sharing of information is done, in what ways management of staffs is done and so on.
- Performance based rewards Approach – Management is required avoiding the aspect of rewarding individuals depending on their expectations. It has been advised that employers are required rewarding the top performing 20% of their staffs, and it is quite challenging for the creation of a high performing culture without having the ability to strongly recognize as well as reward positive outcomes. Through the development of a performance based rewards approach will be discouraging inefficient performers to stay and drain resources as well as build attractiveness for the top performers in staying in the company. It will also be encouraging the medium standard performers in striving in respect of actualizing better outcomes. (Lancaster, 2010)
- Total Reward Approach – Total Reward Approach is being utilized as a non-financial process to motivate as well as engage the staffs, a holistic approach for rewarding and is considered as a complete value proposition that the employer’s offer. Total rewards approach takes into consideration extrinsic rewards as well as intrinsic rewards taking into consideration development of staffs, work-life balance, flexible benefits, flexible working hours, recognizing achievements, career scopes as well as any intangible benefits.
This coursework has discussed about developing and managing performance focusing on the aspect of reward management in which the advantages as well as disadvantages on individual performance related pay as a performance management tool in the NHS has been considered. Also, in what ways IPRP can make the improvement regarding the performance of the organization are being considered and also the suitability of IPRP to the Trust’s business environment has been taken into consideration as well.
Armstrong, M., 2010. Armstrong's handbook of reward management practice: Improving performance through reward. Kogan Page Publishers.
Armstrong, M., Brown, D. and Reilly, P., 2011. Increasing the effectiveness of reward management: an evidence-based approach. Employee Relations, 33(2), pp.106-120.
Dabrowska, A., 2011. Advantages & disadvantages of PRP. [Online available at] https://hrconsedo.wordpress.com/2011/08/08/advantages-disadvantages-of-prp-from-employer%E2%80%99s-point-of-view/ Accessed on [24.10.2016]
Lancaster, G., 2010. Essentials of Marketing Management . Taylor & Francis.
Lind, P., 2014. Monitoring Business Performance. Routledge
McCalman, J., 2015. Change Management: A Guide to Effective Implementation. SAGE.
McDaniel, C., 2011. Essentials of Marketing. Cengage Learning.
Palmer, A., 2011. The Business Environment. McGraw-Hill Higher Education.
Perkins, S.J. and White, G., 2011. Reward management: alternatives, consequences and contexts. Chartered Institute of Personnel and Development.
Coursework 2: Appraisal management report
This coursework delves with appraisal management in which there is a need to do the evaluation of appraisal as a tool for performance management. There is also the need to showcase in what ways the appraisal decision should be integrated with other tools as well as techniques of management for supporting performance development within a high performance work system.
Analyze the design, implementation and impact of high performance work organizations
Appraisal as a performance management tool: To begin with, let us first understand what is known as performance appraisal. Well, performance appraisal is the aspect of evaluating the performance of an individual in a systematic manner. It is performance management tool that is utilized for holistic development of a staff as well as the establishment. The measurement of performance occurs against certain factors like job knowledge, output quality and quantity, initiative, abilities for leadership, supervision, dependability, and so on. (Hislop, 2013)There should be the confinement of assessment to past and potential performance as well. The past oriented methods are rating scales, checklist, forced choice method, forced distribution method, critical incidents method, field review method, essay method, cost accounting method, and so on. The future oriented methods are management by objectives, psychological appraisals, assessment centers and 360-degree feedback. (Bernardin, 2013)
Improvement of organizational performance through performance appraisals
- Improving communication – Most of the time, staffs as well as managers do not share a good rapport. The crisis that gets triggered due to lack of communication can sometimes be resolved with a performance appraisal. When the appraisal is used as a scope for describing the criteria that assists in judging the performance, then it will help the staff in having an improved knowledge of how the work can be performed in the best possible manner. (Townley, 2014)
- Providing a career path – The performance appraisal is considered to be the best scope for addressing the long term objectives that might not be present in the day-to-day to-do list. This assists in making the staff feel satisfied as well as valued by providing the staff with the scope of being of greater use for the company. A successful career path gets inspired by loyalty as well as stability and assists in the improvement of the bottom line particularly when the main concern of the staff is associated with business health as well as the career of the employee. (Armstrong, 2014)
- Encouraging good work and improvement – Performance appraisal is considered to be the perfect time for highlighting areas in a diplomatic manner that has the requirement for development. With the help of receiving additional training even the most valuable staff could get benefitted. There is a requirement for being specific by citing examples as well as explaining in a clear manner what needs to take place for turning things around. (Townley, 2014)
- Improving decision making ability – When an organization is having comprehensive knowledge regarding performance of the staffs, decisions regarding business gets easier. To fill open positions with available employees assists in strengthening the company as well as promoting loyalty. Appraisals are also providing a structure when decisions are being made in respect of compensations as well as layoffs.
Characteristics of effective and ineffective appraisal design and implementation:
Effective appraisal design
- Clarity in objectives – The appraisal objectives should have clarity as well as remain specific. An efficient performance system will always be having particular appraisal traits for matching the job description of the staff.
- Validity and reliability of data – A performance appraisal system that is considered efficient is providing data that is having consistency, reliability as well as applicability. Data is supplied in accord to the goal serving the function regarding performance appraisal as well as succession planning. (Armstrong, 2014)
- Criteria for performance should be well defined – Performance appraisal that is considered efficient is having standard forms for appraisal, rules as well as processes for appraisals. It will be having well-defined criteria for performance as well as standards.
- Economical and less time consuming – Performance appraisal systems that are considered to be efficient are designed for being economical as well as consuming less time for bringing optimum beneficial aspects. (Chukwuba, 2013)
- Should initiate follow up – There is the requirement for arranging a post appraisal talk in respect of the staffs for receiving their manager’s feedback. It will assist the organization for learning regarding the crises as well as challenges that are faced by the staffs as well as discovering appropriate training.
Ineffective appraisal design:
- Unclear performance criteria – Managers made it clear that to appraise managerial performance will surely face failure in the absence of clearly established criteria for performance that will be judging their performance.
- Superior lacks information on actual performance – There is a tremendous pressure associated with evaluating the managers as well as monitoring the performance of the managers on a daily basis for being in a position for knowing what their subordinates are in fact doing. (Chukwuba, 2013)
- Lack of focus on management development –From the manager’s perspective, ineffective appraisal designs are considered that fails in focusing towards the factors that are associated with the development of management as well as improvement of performance.
Evaluation of the components in a high performance working system:
- Increased opportunity for participating in decisions – The capability of a staff for participating in the process of making decisions is regarded as one of the essential components of a high performance working system since it is allowing the staff in making decisions that influence their immediate surroundings that as a result influence the overall establishment. (Hislop, 2013)
- Training – This component provides the staffs with the skills that are necessary regarding job performance more effectively and the scope for assuming better scope in the organization. It also provides a means for cross-training the staffs in various abilities for ensuring that staffs realize various roles in an establishment. (Brashers, 2013)
- Employee incentives – In the absence of this component, there will occur failure in the system. The organizations are required finding a means for linking pay with performance for incentivizing a staff to concentrate on results that are favorable to themselves as well as the overall organization. (Espinilla, 2013)
Other tools of management for supporting performance development:
The other tools of management to support performance development are key performance indicators, missions and vision statements, as well as management dashboards. Key performance indicators are considered to be most extensively used tool to support the development of performance in a high performance working system. Mission and vision statements are to make sure that every effort for performance improvement is associated with the encouragement of usage to support development of performance in a high performance working system. (Brashers, 2013)The management dashboards are associated with bringing together information related with performance that assists in easy communication as well as understanding of levels of performances. All these tools of management collectively assist in performance appraisal process for an organization.
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This coursework is associated with appraisal management that discusses about analyzing the design, implementation, as well as impact of high performance work organizations. In this respect, it has been discussed as to what extent performance appraisals might improve the performance of an organization, also the characteristics associated with effective as well as ineffective appraisal design as well as implementation and evaluating the elements in a high performance work system.
Armstrong, P., 2014. Limits and possibilities for HRM in an age of management accountancy. New Perspectives On Human Resource Management op. cit. at, pp.154-166.
Bernardin, H.J. and Wiatrowski, M., 2013. Performance appraisal. Psychology and Policing, 257.
Brashers, D.E. and Hogan, T.P., 2013. The appraisal and management of uncertainty: Implications for information-retrieval systems. Information Processing & Management, 49(6), pp.1241-1249.
Chukwuba, K., 2012. Performance appraisal in the workplace. Journal of Management and Marketing Research, 9, p.1.
Espinilla, M., de Andrés, R., Martínez, F.J. and Martínez, L., 2013. A 360-degree performance appraisal model dealing with heterogeneous information and dependent criteria. Information Sciences, 222, pp.459-471.
Hislop, D., 2013. Knowledge management in organizations: A critical introduction. Oxford University Press.
Townley, B., 2014. Selection and appraisal: reconstituting. New Perspectives on Human Resource Management (Routledge Revivals), p.92.