The development of business activities - Essay Example

People resource-REPORT – By using appropriate literature and models of motivation, performance appraisal and reward systems Critically evaluate the current performance management and reward procedures 2. What changes would you make to improve the current performance and reward system? Justify your assignment by making appropriate references to current literature (journals, books on line sources etc). – The case of DIY Stores 1. Introduction The development of business activities worldwide led to the differentiation of the plans used for the management of various organizational sectors; human resources management had to change in order to meet the requirements of the market; however, it has been proved that not all firms have the resources or the leadership required for designing and implementing effective HR schemes. Many theoretical models have been created for the support of entrepreneurial plans – including the HR policies; these models have not performed to the expected level perhaps because the persons involved in the relevant initiatives did not have the skills or the motivation required. Current paper focuses on the examination and the evaluation of performance management and reward procedures used by DIY Stores, a British firm operating in the area of DIY equipment. Despite the fact that the performance of the firm since its establishment has been significant – currently the network of the firm is estimated to include 250 stores across Britain – resulting to the increase of the number of its employees – have being estimated to 12,000 across the country, severe failures have started to appear in the firm’s human resources management – problems that have also affected the firm’s profitability. A series of plans and initiatives are suggested for the improvement of the firm’s performance management and reward system – relevant theories are also employed – as appropriate. It is proved that there are still many chances for the firm to overcome the crisis in its human resources management sector; appropriate actions need to be taken for achieving this target. 2. Performance Management and Reward Procedures at DIY Stores One of the major obstacles towards the increase of performance of the firm’s stores across the country seems to be the lack of fair and effective performance appraisal methods and reward systems; despite the fact that the performance appraisal methods should be based on the close cooperation between managers and employees (Falcone et al., 2007, 5) in DIY the level of cooperation among employees of different levels seems to be quite low. In fact, the store managers do not particularly interested in communicating with the employees of the store that is under their supervision – rather they are likely to emphasize on the increase of the profitability of the store – an increase for which they are going to be rewarded – through the Performance Related Pay (PRP) scheme applied on all the firm’s stores across Britain. At a next level, employees in DIY do not participate in the procedures related with the appraisal of their performance – even if their participation in the relevant schemes is required – as noted in the study of Harrington (2007, 58) where emphasis is paid on the importance of performance reviews conducted by employees. It should be noted that no training of employees seems to be included in the firm’s current performance management system; training should be offered to employees and refer not only to the aspects of the firm’s performance management system but also to their skills – aiming to increase the employees’ skills and capabilities; such a training scheme would help towards the improvement of employees’ motivation and – therefore – to the increase of their performance and their productivity – an issue highlighted in the study of Palladino (2007, 180). The most important problem in the firm’s current performance management system is related with the organizational structure; because each store manager is rewarded in accordance with the performance of the store which is under his supervision a strong competition has been developed among the firm’s employees - efforts are made by the store managers to increase their store’s performance compared to the other stores of the firm – in other words an internal competition has been developed which prohibits the establishment of communication and cooperation among the employees of the firm’s stores. As a result there is no integrated corporate culture and mission – or if existed it is not taken into consideration by the employees who focus – under the orders of the store manager on the increase of their store’s profits; the unavoidable result is the lack of commitment of employees to the organization (Purcell et al., 2008, 28). The sense that only the performance of the stores managers is important for the organization is strong among the employees of the firm’s stores – this situation needs to be changed – using the suggestions and the theories that follow – in order to help the firm improve its employees’ performance – a fact that will lead at a next step to the improvement of the firm’s profitability – referring to the organization as an integrated entity and not as a consortium of business entities – an assumption that can be developed if monitoring the firm’s current structure and practices. 3. Suggestions for improving the current Performance and Reward System One of the priorities for the firm’s HR managers would be to increase the motivation of their employees; this target would be achieved by introducing an effective motivation plan – designed in accordance with the existing motivation theories but also the firm’s current status and needs. In the context of this plan rewarding of employees could be used for enhancing them to increase their performance. In any case the passion of employees for their work should be increased – an issue highlighted by Colan (2008, 25) who suggested the Passionate Performance scheme for modern firms that need to improve the performance of their employees. However, the active participation of the firm’s leader is required for the success of the above scheme. The importance of the participation of leaders in the efforts aiming to increase the performance of employees is also noted in the study of Deeprose (2007); in the particular study the increase of the employees’ performance is related with the provision to them of reward – in case of an ‘above-average performance’ (Deeprose, 2007, 17). It should be noted that the provision of rewards to employees should be developed within a specific framework; rewards need to be clearly related with the achievement of specific organizational targets otherwise their use could be of no importance for the increase of the employees’ performance (DuBrin, 2008, 401). From a similar point of view, the active participation of the firm’s employees to the performance management system used across the organization seems to be of significant importance for the improvement of their productivity (Swanson et al., 2009, 157); the above researchers also consider that the encouragement of the critical thinking of employees in the workplace is of significant importance for their performance. The restructuring of the firm’s existing performance appraisal system would be particularly helpful towards the identification of the actual performance of employees. The new performance appraisal system should be based on a series of criteria; in any case it should include ‘traditional’ objectives – like ‘responsibilities, duties and targets’ (DelPo, 2007, 45) – but it might also include ‘individualized performance objectives’ (DelPo, 2007, 45) if the structure and the resources of the firm would be offered for the establishment of a scheme of this type. Particular attention should be based on the development of the employees’ skills – the increase of the employees’ ‘contextual performance’ – i.e. of their ability to handle different tasks within the company – should be the main target of the relevant scheme (Shields, 2007, 40); the increase of the employees’ ‘task performance’ could not support effectively the increase of employees’ productivity – since only their skills on specific tasks would be improved. The firm’s performance management and reward system could be restructured using the Hierarchy of Needs theory (Maslow, 1943-1954); in the context of this theory the needs of the firm’s employees would be put in an hierarchy (see Figure 1, Appendix) and would form the basis for the firm’s performance management and reward system. Taking into consideration the employees’ needs – as described in the relevant theory – would increase their commitment to the organization, a fact that would lead to the increase of their performance, Currently, there is the sense that the firm’s performance management and reward systems have been developed only for addressing the needs of the stores managers. Another theory, the Two Factor theory of Herzberg (see Figure 2, Appendix) is also available to the firm’s HR managers – and its leaders; the above theory requires similar action with the Hierarchy of Needs theory; more specifically, at a first level, the most important needs of employees (hygiene factors) should be served – ensuring that employees are not dissatisfied – at a next level, further measures (motivation factors) should be taken – possibly in the form of rewards and benefits – aiming to increase the employees’ motivation. The restructuring of the firm’s existing performance management and reward systems could be based on the Performance Prism developed by the Cranfield University in 2002 – in accordance with this model (Figure 3, Appendix) the firm’s employees are treated as all other stakeholders; the increase of their performance would be achieved by giving emphasis on the five factors included in the particular model. The advantage of the specific model is that it could be used for the increase of the satisfaction of all firm’s stakeholders – including its customers and suppliers. Another theoretical approach that would be valuable towards the increase of the employees’ performance would be the Human Capital Index developed by Wyatt (2007); this theory emphasizes on the necessity of the firm’s support to the employee’s career priorities and objectives – this support has to focus on the career path used by the employee to achieve his/ her professional objectives. In the context of this theory the firm should focus on the employees’ personal but also their professional needs – an approach similar to the Hierarchy of Needs theory and the Two Factor Theory presented above. The restructuring of the firm’s performance and reward systems should address a series of fundamental issues, like the level of employees’ compensation, (Tuzovic et al., 2005, 255), the requirements for the employees’ promotion (Epstein et al., 2006, 125), the potential participation of employees of all levels to the firm’s capital – in the context of schemes providing to employees of all organizational levels the right to acquire the firm’s shares (Morris et al., 2006, 326, Chen, 2007, 65), the recognition of the firm’s contribution to the organization – possibly by special benefits and rewards related with the performance (Milne, 2007, 28, Pegg, 2009, 5), the improvement of the communication between employees of low levels and the firm’s managers (Slatten, 2009, 431) and the development of changes in the firm’s corporate culture – aiming to improve the cooperation among employees of the firm’s stores (Gandossy et al., 2009, 67). The effectiveness of the plans suggested above could be measured and evaluated either through the potential increase of the firm’s profitability or by using appropriate theoretical models – an indicative one is the Human Capital Index (HCI) model developed by Wyatt (see Figure 4, Appendix); the specific model is used in order to identify the effects of a firm’s HR policies on the firm’s shareholder value – an activity that can offer valuable information on the quality and the performance of a firm’s HR plans. In the above model, close relationship seems to exist between the career type and the career path. In the firm under examination employees are not given the necessary incentives in order to increase their performance – apart from the store managers who get extra rewards in accordance with the profitability of their store; in this context, even if the career type chosen are appropriate the career path is extremely hostile – employees at lower levels – even general managers – have to hope on their promotion for the improvement of their compensation – even if their performance is high. 4. Conclusion The development of specific strategic plans – in the context suggested above – could held towards the improvement of the performance of the firm’s employees; however, it should be taken into consideration that these plans are likely to require additional measures for their successful implementations – an indicative example is presented in the study of Chang et al. (2006, 397) where the existence of commitment performance appraisal is set as a condition for the success of any pay-for- performance plan. Additional requirements and terms may also appear in relation with the strategic policies chosen for the improvement of the firm’s performance and reward system; an indicative example is given by Garg (2006) who emphasized on the importance of ‘a dynamic managerial learning framework’ (Garg, 2006, 572) for the success of any performance management system. In the same way, the criteria used for the development of strategic plans for the improvement of the firm’s current performance and reward system can be differentiated. The above issue is highlighted in the study of Sarmiento et al. (2007) where it is noted that ‘job satisfaction, age and education levels are significant predictors of job performance’ (Sarmiento et al., 2007, 915). The firm’s leaders should decide on the criteria on which the restructuring of the firm’s current performance and reward systems will be based; the potential need of additional criteria for the completion of the above project would be also decided by the organizational leaders; their skills and capabilities are the main criteria for the successful implementation of the relevant strategic plans – as in the case of all other critical strategic initiatives. References Chang, E., Hahn, J. (2006) Does pay-for-performance enhance perceived distributive justice for collectivistic employees? Personnel Review. Vol. 35, Issue 4, pp. 397-412 Chen, M. (2007) Incentive and Dilution Effects of Employee Stock Bonuses and Stock Options: Evidence from Taiwan. Journal of Chinese Economics and Business Studies, Vol. 5, No. 1, pp. 65-73 Colan, L. (2008) Engaging the Hearts and Minds of All Your Employees: How to Ignite Passionate Performance for Better Business Results. 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Paton Professional Milne, P. (2007) Motivation, incentives and organisational culture. Journal of Knowledge Management, Vol. 11, No. 6, pp. 28-38 Morris, D., Bakan, I. (2006) Employee financial participation: evidence from a major UK retailer. Employee Relations, Vol. 28, No. 4, pp. 326-341 Paladino, B. (2007) Five key principles of corporate performance management. John Wiley and Sons Pegg, T. (2009) Creating engagement through employee benefits. Strategic HR Review, Vol. 8, No. 2, pp. 5-12 Purcell, J., Kinnie, N., Swart, J. (2008) People Management and Performance. Taylor & Francis Sarmiento, R., Beale, J., Knowles, G. (2007) Determinants of performance amongst shop-floor employees: A preliminary investigation, Management Research News. Vol. 30, Issue 12, pp. 915-927 Shields, J. (2007) Managing employee performance and reward: concepts, practices, strategies. Cambridge University Press Slatten, T. (2009) The effect of managerial practice on employee-perceived service quality: The role of emotional satisfaction. Managing Service Quality, Vol. 19, No. 4, pp. 431-455 Swanson, R., Holton, E. (2009) Foundations of Human Resource Development. Berrett-Koehler Publishers Tuzovic, S., Bruhn, M. (2005) Integrating customer orientation, employee compensation and performance management: a conceptual framework. International Journal of Business Performance Management. Vol. 7, No. 3-4, pp. 255-274 Appendix Figure 1 – Maslow – Hierarchy of Needs theory (1943-1954) (source: Value Based Management net) Figure 2 – Herzberg – Two Factor Theory (1959) (source: Value Based Management net) Figure 3 – The performance Prism – Cranfield University (2002) (source: Value Based Management net) Figure 4 – Human Capital Index – Wyatt (2007) (source: http://www.kuducroc.com/1/WatsonWyattHumanCapitalIndex/screenshot.gif) Read More