Human Resource Management in a Business Context
3rd edition
April 2007

by Alan Price

Human Resource Management in a Business Context provides an international focus on the theory and practice of people management. A thorough and comprehensive overview of all the key aspects of HRM, including case studies, articles from HRM Guide and other sources, key concepts, review questions and problems for discussion and analysis.
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Performance management systems

The strategic aspects of performance-related pay processes are exemplified in the integration of appraisal and performance-related pay processes within performance management systems. These links have information about rating scales of various kinds (including trait, competency and behaviourally-anchored systems:

'Fat cats still getting fatter' - More than three quarters (77%) of UK employers have bonus schemes but managers are the most likely to benefit.

Many modern systems are based on 360-degree assessment.

Protecting Integrity in Governance with 360-Degree Feedback - In the wake of recent corporate scandals, 360-degree feedback has emerged as a tool that may help prevent future disasters.

Management by objectives (MBO)

The origins of strategic performance management can be traced to the concept of management by objectives. This is a technique to establish individual performance objectives which are tangible, mesaurable and verifiable. Individual objectives are derived or cascaded from organizational goals.

Prescriptions for performance management systems

A number of authors have set out to create templates or rules for performance management systems. This section of Human Resource Management in a Business Context describes two such methods.

Reward management

Reward or compensation management is an aspect of HRM which focuses pay and other benefits on the achievement of objectives. Typically, it incorporates other changes in pay administration and policy, including:

* decentralization of responsibility for setting pay levels
* uniform appraisal schemes
* flexible working practices
* performance-related pay

Recent Mercer research in Canada indicates that variable pay can improve both productivity and employee satisfaction. See Manufacturers could do more to link pay to performance
Also see this perspective on incentives: Keep Those Coals Away From Newcastle When Offering Incentive Awards For Improved Performance

The basis of performance-related pay systems

What is performance-related pay for? This section of Human Resource Management in a Business Context details appraisal-related and collective performance schemes.

Flavour of the (last) month?

A decade ago, Rosabeth Moss Kanter observed that whenever any US organization came up with a 'new' pay scheme, a merit element was involved. Today it continues to be applied, even to the public sector.

Criticisms of performance-related pay

There is a widespread opinion among senior managers that PRP must be a good thing - but the evidence for its effectiveness is not overwhelming. (...) However, research does indicate that most employees are unhappy with PRP. Questions of fairness, managerial judgment, reward value, relationship to company performance, demotivation, flexibility, and conflict with team philosophy are discussed in this section of Human Resource Management in a Business Context.

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Human Resource Management in a Business Context3rd editionApril 2007

Performance management systems