02 perfomance managememt

QUESTIONS and ANSWERS RELATED PERFORMANCE
MANAGEMENT SYSTEM – PMS

Question 1: Strengths and weaknesses of individual related pay?
Individual related pay (IRP) is a type of reward which is used to encourage people
to work better by based on their working performance. According to The Institute
of Employment Studies (2003), in the 1980s and 1990s, individual performancerelated pay was used with the hope to improve productivity and change in culture
in the company.
Normally individual related pay works well based on the targets which can be
measurable and have been agreed between employees and employers.
With IRP, the employees can see it as a goal for themselves, giving them the
satisfaction and even a way to recognize their contribution and status.
Another point is with some companies, especially for the ones in private sector,
IRP plays a very important role to retain key staff, and they do not care if it
motivates or not. In the same way, IRP is also a way to deal with poor
performance from the employees.
ON THE OTHER HAND, IRP may damage the job interests within the staff.
Based on Kahn’s argument, IRP works temporarily only, not in the long run in
terms of sustaining improvements. Sometimes the people work because of the
promise of IRP rather than working with focus on the needs of the job.
According to Barry Leskin, who used to be consultant for Ernst and Young,
observed that PRP schemes were “zero sum games: my gain is your loss”.
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Based on the research of David Guest for CIPD, half of total responses agreed that
money motivated them at work while the others said it made no difference.
The group against money fear “favouritism and ignorance” as well as the skills of
managers regarding judgment “in a fair and consistent manner”

EXAMPLES: Students research and illustrate

Question 2: Discuss the main mechanism used in PMS (performance
management system)
1. Objective setting
 Introduce selected new courses and models allocated to teams and
individuals respectively to build on key capability and professional
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development
Set objectives based on developing skills in the use of learning technology
Develop personal skill in the design and delivery of web-based material
Develop skills in writing distance learning materials
Develop coaching skills to support leaner in using independent teaching with

the ‘lecture’ – based system
2. Ongoing review of objective
 Review progress, and course and module projects against project plans
 Review extended of personal experimentation in trying out new tutoring
system and skills
 Review of personal skills development in web-based teaching
3. The developmental of personal improvement plans linked to
training and development
Personal development plan
 To reflex the practice and research into the model of tutoring
 Establish network of people inside and outside the organization to exchange
ideas on distance and web-based tutorials

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 In-house review of tutoring and teaching system to adapt to new teaching
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and learning system
Training plan
Web design training
Review professional updating to support new careers
Support career change as detailed below
Career plan
Review priority of teaching, research, consultancy and management of

programs within individual’s future workload
4. Pay review
5. A competence-based organization capability review
6. Formal appraisal with feedback
 Evaluation of core skills in teaching, facilitating learning consultancy and
research
 Review balance of skills based upon existing and planned future profile of
course and organizational activities
 Review size, to develop existing staff or buy in from the outside labor

market
 Feedback capability profile into the decision about scope and pace of service
profile by each faculty in term ability to adjust
EXAMPLES

Question 3: Discuss about the organization’s difficulties in
increasing the level of pay to improve the reward packages of
employee
The Company may face difficulty in deciding whether to centralize or decentralize
level of salary increment.
 Centralized reward
This allow the company to keep a tight control of rewards decision whereby all
salaries rise by the same amount so that control can be exercised in circumstances
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where cost minimization strategies are predominant. Moreover, this creates a
strong corporate culture where equity is emphasized.
 Take example: P&G in Vietnam market (2009) => used centralized rewards
to cut cost
In case of company that has a number of products or services division that are
performing different trading conditions, Discretion over the movement of pay for
staff or division is required to prevent inequity among divisions. However,
centralized reward may prevent employee’ innovative and flexible contribution in
the company. For example: P&G again as illustration for such limitation in
innovation and flexibility of employee
 Decentralized reward
Motivate employee to take initiative and thus, provide a more responsive business

focus and the market. Moreover, this allows company to retain talented and skilled
employee by recognizing the scope to reward their creative behavior. Example:
Microsoft and its generous decentralized reward system.
The problem for this was the cost incurred. Therefore, it depends on the context of
the environment (in recession period, etc.) and company financial strength when
choosing a centralized or decentralized reward.
 Degree of pay hierarchy
Many organizations who are keeping the hierarchical power relationship will have
distinctive salary structure for each job category. For instance:
 Management: a minimum-maximum scale, with progression based on
individual performance
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 Skilled or professionally qualified staff: a minimum-maximum scale, with
progression based upon organization results and individual performance
 Administrative: job rates, with progression based upon company
performance.
Therefore, the problem emerged when, for instance, the skilled or professionally
qualified staff reached his maximum pay rate yet is still contributing significantly
to the company success. This qualified staff might not receive another pay increase
because of the hierarchical power. If this qualified staff is to be rewarded by
another increase in pay, he would properly be promoted to the management level
first.
 Graded salary structures
The company may face difficulties when implementing a graded salary structures
as follows:
 Often seen as inflexible to individual contribution. Emphasizes job versus

person
 Considered by some to be unreceptive to market pressure for certain jobs,
e.g. IT, accountancy and R&D specialization
 Emphasizes collective approach to staff in grades rather than the
individualism of employee relations
 Barrier in salary structure and organization structure are often linked to non
SHRM themes of flexibility and getting staff to break down barrier which
impede growth orientation
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Old and new paradigms

Old paradigm
 Cost control
 Job centered view
 Collective orientation
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New paradigm
 Development/innovation
 Decision centered view
 Individual orientation
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 Clear

boundaries

of

decision

making
 Clear pay activity
 Standardized/transparent system
 Culture of standard and system

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Flexible of boundaries
Dynamic, changing relativities
Fluid/less transparent system
Culture of ‘going beyond
contract’

The two paradigms offer certain benefit that will fit in certain situation depended
on the environment
 Involvement in pay decision making
In some cases when company decided to involve employee in pay decision
making, the company may find it difficult to increase level of pay because of:
 The negotiation of pay from trade union.
This makes it difficult for company to keep a centralized pay increase when needed
 Consulted on job evaluation issues arising from job description
The deviation of job evaluation caused from the consultancy may as well lead to
the deviation of pay and pay increase level.
 Mutuality in determining performance objective

 Agreed training and development objective leading to enhanced skill based
pay
This bias the skill based pay and pay increase from the others. In some situation,
the company may need to change into other base of reward. The three bases of
rewards are:
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
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The job a person does
The personal contribution they make within a job
The level of skill and knowledge that people have within the job
Influence over the achievement of performance levels
Choice on pay and benefits

In case of the need for cost minimization, a centralized salary increase is vital.
However, this might not be done because of the choice employee have over pay
and benefits (make it difficult to determine what level of pay certain employee are
at and how much increase in pay is reasonably needed)

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