People are the most valuable assets of any organization. They must be carefully deployed and managed to ensure optimum utilisation of resources. As per the given case, Cavendish Hall Hotel is a 200 bedroom, four-star county house hotel located in rolling hills. The hotel has introduced an individual performance related pay (IPRP) scheme but now it is facing various ongoing performance problems. Ways to overcome these problems by adopting Performance Management System have been depicted here. Performance Management System is a process where managers and employees work together to ascertain the overall contribution of employees. The study shows the need, advantage; disadvantage of IPRP and steps that Cavendish Hall Hotel can take to improve the performance of its hotel. Along with that, ways in which organization can overcome the hurdles related to reward and incentives have been assessed here. Various performance management tools have also been discussed in this report.
Coursework 1: reward management report
Individual performance related pay in business environment
It is a combination between financial rewards and company's performance. The main aim of this scheme is to give rewards based on performance of each individual. It ensures the control of managers over his employees. IPRP is suitable in the business environment of Cavendish Hall Hotel because main objective of IPRP is to improve performance of all employees by:
- Specifying each employee the objectives and targets related to Cavendish Hall Hotel.
- Giving emphasis on performance oriented culture.
- Setting objectives and standards that need to be met by the employers.
- Giving rewards based on performance.
- Giving more emphasis on teamwork and individual performance.
- Motivating staff members.
If any manager of Cavendish Hall Hotel assures implication of these above rules successfully, then it is an indication that he can use PRP advantageously. The incentives will not only motivate everyone to work harder but will also make them aware about the business in which Cavendish Hall Hotel is involved.
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Barriers in implementing individual performance related pay
There are various barriers in adopting performance-related pay. Whole performance is measured on the basis of a single parameter instead of various measuring tools. This may result in causing a hostile attitude of employees towards Cavendish Hall Hotel because there are situations when there is low customer volume and at that time, manpower strives to achieve attention of a single customer(Lewis, 2014). This may however please the customer but increases resentment between employees. It also makes employees work at unsafe speed and does not take into account all factors. Various issues that affect the performance of an employee negatively are as follows:
Compensation Package: The main aim of an employee at the time of joining an organization is not only to satisfy their personal desires but to fulfil their financial needs. Good financial status not only helps an employee to fulfil his basic needs but also enables him to achieve various social ambitions (Rigby and Bilodeau, 2005). Due to an unsatisfied pay package, it is possible that employees will feel distressed due to non fulfilment of their expectations. Hence, they can be reluctant to do any additional or challenging new task.
Reward system: Reward is the best kind of motivation that a person can earn. In general parlance, performance and incentives are linked with one another (OCED, 2005). Rewards can be different depending up on the performance.
Training and development: The main aim of providing training is to promote change for the betterment of people. It upgrades the skills of a person which may result in providing desired change which an organization wants to achieve (Razmerita, Kirchner and Sudzina, 2009). Thus an organization should always boost its performance by removing complex activities that do not add to the firm's growth and providing training to those who require it.
Balancing work life: All employees want balance between work life and personal life. Stress arises when any person either keeps his personal obligations or professional obligations pending (Tangen, 2005). Work-life balance is very much related to the performance of an organization and individual. This balance results in job satisfaction, positive thinking, etc.
Working environment: The environment in which employees function badly affects the quality of work which they perform (Raza, 2014). If the environment is motivating and cooperative, then employee automatically gets motivated to do good work and perform in a better way. Most of the innovations and creativity begin with a creative work environment. There are various internal political reforms, rigid organizational structures and conservatism that can hamper an individual’s growth.
Overcoming barriers in Performance Related Pay
This approach is a core management strategy which challenges other organizations that do not have pay policies related to the work done by their employees (Kagaari, Munene and Ntayi, 2010). The most critical part for Cavendish Hall Hotel is that of deciding incentives for hard working people and maintaining their payroll budgets. Various barriers in implementation of PFP system that can be faced by Cavendish Hall Hotel are:
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Unwillingness of people to adopt PRP: There is a common notion formed in the minds of people compelling them to think that if business has grown in so many years without any PRP system then, it can do the same in long run as well. It is important for them to know that all employees perform differently depending upon time, position, capability, involvement and motivation (Kagaari, 2011). Human resource which has performed their best and has raised their contribution in success of the company is required to be rewarded by a token of appreciation. Organizations need to know that in case of developing a standardized approach and setting objective for individuals will anyhow increase the productivity and motivate people to stay and grow within organization.
Challenges for managers: Strong and significant cultural changes are often challenges for managers and employees as well. This system followed by organizations must be transparent and accountable with differential rewarding patterns (Rea, and Rea, 2002). This will help in ensuring trust and confidence in top level managers. Managers must also adapt to the ever changing environment.
Budget considerations: Implementing PRP will have significant effect on budgeting techniques. Any increase in allocation of funds no matter whatever the purpose is, may hamper the overall budget of an organization (Rigby, 2005). Thus, the source of funding in this case needs to be considered in advance before implementing PRP.
Advantages of individual performance related pay in hotel sector
There are many advantages of IPRP in hotel sector. Some of them are like:
- It ensures right pay to right people.
- It is a progress check which helps in weeding out the lazy workforce.
- It states the objectives that business has and ensures what is more important.
- It helps in retaining skilled and qualified people through distribution of incentives.
- It results in improving the team work as well as individual performance.
- It helps in focusing on areas where company requires attention.
- It also increases the efficiency of employees through better performance.
- It also provides a clear indication to all employees regarding the work criteria that they are required to maintain. If employees stand up to that criterion then they are rewarded.
Disadvantages of individual performance related pay in hotel sector
Some of the disadvantages of IPRP are as follows:
- It may result in conflicts that may occur between employees on a personal level.
- Managers and supervisors are burdened with various other problems.
- Implementing this pay system may involve high cost.
- Regardless of the efforts a person may use, he will not be rewarded if there are no results.
- Control over workers is established by the way of rewards.
- Employees need to be highly committed towards work.
- In case of recession, it is possible that people who fly high in the organization are not rewarded as per their capability which may encourage them to leave the firm.
- Employees need to accept this system in order to grow.
- By this system, appraisals are converted into pay. Many people may not like the idea as they would prefer an appraisal in the form of job post.
- Managers may be biased. It gives them the role of judges. This approach may be too subjective.
- It is not possible to measure the level of performance always.
- Teamwork is replaced by individual performance. Thus, the concept of teamwork is often hampered.
- Many times, PRP is used by the organizations where it is difficult to improve the performance.
Alternative reward strategies to complement or replace IPRP
Reward is the largest expense that company has to incur. Correct reward strategy by Cavendish Hall Hotel may help in attracting, retaining and motivating people (Tangen, 2005). Reward can be in the form of increase in pay levels, incentives, cash bonuses, non-cash bonus like recognition, mentoring others, etc. Other reward strategies that can be used by Cavendish Hall Hotel are:
Total reward approach: This framework is a strategic planning approach with the help of which Cavendish Hall Hotel can measure what it is trying to achieve, what it's people want, what all things can be implemented and what it can afford. It helps in retaining and attracting right people at the right cost (Chaddha, 2005). As per this approach, if an employee engages himself, he can earn even more than what he had expected.
Competence Related Pay: This is given to an employee only when he/she has acquired some critical skills or knowledge regardless of the job position that he holds. It also depends upon the way in which an employee behaves in case of general attributes. Example, multitasking ability (John and James, 2000). This will help Cavendish Hall Hotel in assigning the value to each of its employee.
Skill Based Pay: This is a compensation system under which an employee is rewarded with an additional pay along with various formal certifications and courses that are sponsored by company. This depends upon the skills, mastery and knowledge of particular individual who is working in the firm (Sumlin, 2010). Skill refers to an expertise in any field.
Team Pay: This is a kind of approach used by certain organizations where the bonus of each individual is related to the team with which he is working. This helps an individual in maintaining the teamwork and emphasizing on team work rather than personal growth because team's progress will decide his bonus and incentives.
Broad banding: This is applicable on only those individuals who are in extremely huge salary bands (John and James, 2000). The increase in this situation is nearly 100% more than as compared to the traditional or typical salary band.
Most effective reward strategy
The strategy used by Cavendish Hall Hotel is an appropriate one. It just needs to implement it thoroughly and classically. Changes that it can undergo are like it can combine its existing policy with the skill based pay and team pay. This will motivate the employees to work harder and strive for betterment. This will not only ensure individual's appraisal but will also motivate them to work in groups which will fulfil the aim of Cavendish Hall Hotel and will resolve all the existing disputes as well (Purcell, Hutchinson. 2007). Customer satisfaction is the top most priority in any hotel industry. If employees will be happy, they will work differently which will finally increase the customer base and improve reputation. These strategies in combination may work appropriately because skill based incentives and PRP will improve the individual's performance and team pay will encourage them to help other weak employees as well as to work in harmony(Classic Tools, 2015).
From the above study, the way in which an individual can achieve the performance related rewards by linking performance and rewards has been discussed and various Challenges of Development Manager. Along with that, it is clear in the report that how hotel can motivate individual and group activities which include initiatives like giving rewards which affects the individual behaviour to a high extent. In addition to this, the reason because of which performance appraisal plans fail has been explained as well as it has been assessed that employees can be motivated to perform better in order to earn incentives. Objectives of performance management and various factors that affect the working of hotel have been discussed in the report as well. Also, the way in which hotel can improve its management issues with the help of management tools have been evaluated.
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