Performance Management Linking Rewards To Performance

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Performance Management: Linking Rewards to Performance

The goal of this project is to provide Human Resource Professionals with useful guidelines for

developing and implementing performance management through rewards. Performance

Management are the strategies and techniques that emphasizes on performance of employees as a

way of achieving managerial goals and objectives (Murlis p.78). Performance management also

refers to perfecting, harmonizing and promoting quality of employee work to ensure customers

satisfaction thus leading to high return to stockholders. Performance management foster

clarification of task and expectations, improvement of individual and organizational productivity

and provides a basis for making employee-related decisions (Shippmann p.605). In conclusion

Performance Management uses Human Resource strategies such as reward systems and

performance Appraisal to motivate employees towards performance. Performance management

can be viewed as a tool to improve on employee motivation for high performance (Cokins, p.58)

With the view of finding out the impact of rewards I conducted an interview with the

Human Resource Manager, Mr Brandon Jefferson of Coca Cola Kenya branch. Mr. Jefferson

said that Coca Cola performance largely depends on employee inputs and outputs. He said that

their employees are rewarded annually through intrinsic and extrinsic rewards. He noted that at

the beginning of the year the company records its highest profit margin of more than 12%. This

is because this period follows the annual motivation at end of the year. He also says that, as per

the records, when employees were poorly motivated in 2004, the company recorded a profit

decline of 5%. Generally, he concludes that Coco Cola’s fame, high profit gains, quality products

cannot be achieved with a low motivated employee, therefore the need for rewarding. ‘All

human resource managers should link performance to rewarding, one is a means to an end of the

other, rewarding is a stepping stone for a company’s performance’ Jefferson advised.

Performance appraisals foster employee development through training and mentoring.

Appraisal is concerned with evaluation of the employee’s performance in order to gauge their

competence levels (Murlis, p.113). Appraisal is necessary in giving employee’s feedback,

inspiring and rewarding them. It also upholds fair relationships in the organization and assigns

resources to employees. It also helps to identifying each employee’s abilities, interests, and

motivation so as to treat them according to their preference and needs. Different techniques are

applied in conducting employee performance appraisal they include; All-round Appraisal which

includes the reception of feedback from managers and other direct reports. The aim of these

techniques is to collect and assess employee’s profiles. Administration by objective is another

technique which is the most current form of appraisal. It is based on the employees and managers

setting goals for a short period; Emotional Appraisal, this technique is aimed at gagging the

employee’s emotional permanence, abilities and rational capability (Back, p.56). It influences the

placing of workers in different job ranks; Conduct checklist it is aimed at appraising the

employee’s behavior according to the effort they put. It eliminates comparison with other

employees at the same job level thus being the most ideal technique. This is done by Human

resource personnel who is responsible for employee’s affairs such as, determination of wage

rates, determination of method of wage payment, incentive payment plans, bonuses, work

estimation, incomes and salary assessment and employee recruitment.

A reward is a gift given to someone in recognition of their good deeds. Rewards should

be given based on standards which are measurable and easily observed. This means that rewards

are offered in terms of employee input, skills, competence, and their market value. Rewards

motivate Individual performance which leads to company performance. The employees rewards

include financial rewards inform of variable and fixed pay. The system also includes non-

financial remunerations such as funding of employees and personal appraisal recognition and

praise on achievement, (Armstrong, p.4). Some other forms of rewards include fostering good

working relationships with the supervisors, improved working conditions and decent company

policies. Most people argue that non-financial rewards such as praise and recognition are better

than financial rewards such as money. The later is extrinsic while the prior intrinsic. Intrinsic

rewards motivate self-expectancy level fostering creativity, competence and innovation. Rewards

are essential because they give emphasis on service rather than self-interests. Reward system

influences the likelihood of employees remaining in the organization and encourages others to

join. They also shape the degree to which effort is directed in the achievement of organizational

goals leading to high quality output. Rewarding employees promotes organization profitability

through increased output of employees. Rewarding employees recognizes them influencing them

to’ go an extra mile’, heighten level of commitment and take pride in their work. Rewards ensure

job satisfaction in terms of acknowledgment, rewarding and management (Back, p.101). Job

gratification is established when there is equity, need self-actualization and value generation.

Rewards are essential because they give emphasis on service rather than self-interests. Reward

system influences the likelihood of employees remaining in the organization and encourages

others to join.

The connection is an interdependent one. This means the presence of one signifies the

presence of the other. Rewards lead to motivation of employees. Company’s enhance employee’s

performance through sufficiently motivating them. Motivated employees tend to be more

creative and productive towards achievement of organizational goals. Organizational success and

survival depends more on commitment of employee’s involvement as well as motivation to

work. (Sims, p.4). Job recognition and compensation rewards motivate completion among

employees. Motivation is determined by the organizational culture and leadership style and

resources. When people are motivated supervision is easier. Motivation is an interior condition

that prompts one’s involvement in a certain behavior. Motivation turns average workers to

innovative outstanding workers. This is because motivation encourages competence and

progress. Motivation helps to build relationships both internally and externally in the

organizations between its stakeholders mostly employees, managers and consumers. A low

motivated employee is linked to low performance because of their focus on personal interests as

opposed to organizational interests. For organizations to meet customer needs and gain profit

benefits employee performance should not be ignored.

The reason why some employees perform their jobs better than others can be explained

by the motivation Theories. These theories include Need theory, Reinforcement theory,

Expectancy Theory, Self-Efficacy Theory, Equity Theory, Goal-setting Theory, Action Theory

(Beck, p.234). Needs theory is supported by Maslow that physical and psychological human

needs should be meet in a hierarchy. This hierarchy outlines needs from the lowest as follows;

basic needs, safety needs, social needs, self-esteem needs, and the topmost is self- actualization

needs. Reinforcement theory argues that the profitability of a certain behavior increases when it

is followed by a reward. This theory can help managers reinforce desired behavior and abate

undesired behavior by designing work environments that reinforce good morals. Expectancy

theory centers on internal perception to explain how rewards lead to motivation. It is based on

rational procedures that influence conduct. Self- Efficacy theory state that motivation and

performance is influenced by how effective people think they can be. It is based on the power of

one’s ability and effectiveness. The theory emphasis on the different capabilities in humans those

involve self-reflection (Bandura pg. 21). Individuals search their self-beliefs and interior

perception then engage in internal monologue thus adopting behaviors based on their

effectiveness. Equity theory says that people will equate how much they receive from the job

(outcomes) to their contributions (inputs).As a manager one should learn that employees value

equality. In respect to this, Managers should also be aware that employees will seek for activities

and options that bring them the greatest benefit. This is supported by the Social Exchange

Theory that one can predict people’s behavior based on the rewards and costs they are subjected

to (Humans, p.34). Finally, Goal-Setting Theory says that people’s performance is influenced by

their internal purposes, aims and intentions. Setting objectives aids accumulation of effort and

increase in persistence of the employees. Particular goals govern an employee’s focus,

persistence or determination. Action Theory states that motivation is motivated by goal-oriented

actions.

The contribution of these theories to performance management is helping managers to

utilize predictable human behavior to ensure motivation. These theories explain that behavior is

purposive rather than random this means that certain behaviors are done for a reason. The

theories help to predict behavior thus determining the level of motivation in employees. A

motivated employee focuses on the desired end result and also they are persistent to exhibit full

effort on a task. The theories also suggest that rewards should be matched with the employees

needs to ensure full satisfaction. Unsatisfied needs lead to tension in the organization causing

conflict and low performance. Theories of motivation encourage monitoring of employee

motivation through interviews and anonymous questionnaires to comply with the Expectancy

theory. Motivation Theories also encourages accommodation of individual differences by

building flexibility into motivation programs. Motivation advances immediate feedback and

preoccupation with task leading to high productivity. Employees can provide economic benefit

through offering ideas and satisfaction of customers if they are well motivated. Motivation is a

key in organizational performance. Individual motivation varies depending on behavioral

responses explained by the theories of motivation.

In conclusion, every organization’s aim is performance. Performance is directly related to

employee motivation. A low motivated employee is linked to low performance because of their

focus on personal interests as opposed to organizational interests. For organizations to meet

customer needs and gain profit benefits employee performance should not be ignored. This is the

reason why we can link rewarding to employee performance. Employee motivation through

rewards and appraisals equals organizational performance. Managers, who use the rewarding

approach, stand a better chance to see performance in customer satisfaction and employee

performance and productivity. Scholars argue that employee motivation of employees should be

foremost concern of the Human Resource Department to facilitate organizational performance

(Stredwick, p.102). Others argue further that an organization lacking in employee reward system

suffers from the blindness of full employee potential performance (Armstrong, p.68). In

summary employee rewarding, motivation and appraisal are essential requirements towards any

organization performance.

Works Cited

Armstrong, Michael. A handbook of Employee Reward Management and Practice, 2

Ed,

Philadelphia: Kogan Page, 2007

Back, Robert. Motivation: theories and principles, United Kingdom, Pearson, 1978.

Cokins, Gary. Performance Management: Integrating Strategy Execution, Methodology, Risk,

and Analytical, John Wiley & Sons, Inc. 2009

Murlis, Armstrong. Reward Management: A Handbook of Remuneration Strategies and

Practices, 5

Ed, London: Kogan Page, 2004

Shippmann, J.S. Strategic Job Modeling: Working at the Core of Integrated Human Resource

System, Mahwah, Lawrence Erlbaum Associates, Inc. 1999

Sims, Ronald. Human Resource Management: Contemporary Issues, Challenges, and

Opportunities. International Age Publishing, Inc. 2007

Stredwick, John. Introduction to Human Resources Management, 1

Ed, Oxford, United

Kingdom: Elsevier Butterworth- Heinemann, 2005

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Performance Management Linking Rewards to Performance

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