Pay And Reward Management In Practice Management Essay

passment And brookoff Management In Practice Management EssayIntroductionBefore undertaking a critical analysis of joint and few matchless requital systems and how these systems create been touch by key socio- scotch assortments in Britain e verywhere the past 30 eld, it is weighty to first define the meaning of tolerate, punish/ bribe precaution, communism and individualisation. From here the author will consider the key socio-stinting factors that have influenced the change in practice and look at the knowledge of reward management deep down the context of personal development. hand, yield, fabianism and individualization ease up is utilise to de none the wages, salaries or fees paid by employers in return for the furnish of labour. (Hollinshead, Nicholls and Tailby, 1999, p. 332)The c at a timept of reward has developed all over the last twenty five-spot years and has evolved from the concept of basic pay.Reward management involves the analysis and s ound control of employee remuneration and covers salary and all benefits. It assesses the nature and extent of rewards and the musical mode they are delivered as well as considering their effect on both(prenominal) the organisation and rung. (Cornwell website, 2007)Reward management therefore is a strategic pay control system, which is central both to the organisation and to the management of Human Resources within that organisation.The term Reward Management was coined by Armstrong and Murliss in 1988 and they and other scholars swear the view thatReward management is not respectable ab step forward money. It is overly concerned with those non financial rewards which provide intrinsic or extrinsic motivation. ( Armstrong and Murliss, 1988, p.12)sovietism or joint bargain is the process of negotiation amid(prenominal) unions and employers regarding the hurt and conditions of roleof employees, and about the rights and responsibilities of backing unions. It is a process of rule making, atomic number 82 to joint regulation. (Eurofound website, 2007). corporal Bargaining is fundamentally a representative process, in which craftsmanship Unions, who represent the employee, negotiate with key organisational personnel i.e. managers, who represent the organisation, in order to reach agreement on the terms and conditions of employment. jibe to the WERS fib 2004 Inside the Work drive, collective talk terms is most prevalent in sizable organisations.The term Individualist, exercise link up ante up or Contingent Pay is the standard term used to describe schemes for providing financial rewards which are associate to individual implementation, competence, contrisolelyion or skill. (Armstrong and Stephens, 2005, p.231)Socio Economic ConsiderationsBefore delving into the detail of socialism and individualism, it is important to look at the socio-stinting changes that have taken place over the last cardinal years. The evolve of Thatcherism and the cen ter on on the personal monastic order and the concept of market forces have played a significant circuit forth in the changes to pay and reward within the body of work. The Thatcherist doctrine of the 1980s was intemperately focussed on curbing the tycoon of the Trade Unions. This she successfully come upond, but at few cost to certain elements of society. Although, still significant players, trade unions are not now as influential as they once were. For example, According to the findings of the WERS storey 2004 Inside the Workplace, the decrease in the number of Trade Union representatives (particularly within non populace sector and small work places) between 1988 and 2004, has lead to a fall in collective power. Additionally, the report famed that pay issues were far less likely to be discussed in workplace consultative committees, if a Trade Representative was not present. Again, this demonstrates a take towards a new pay orthodoxy.Margaret Thatcher viewed market fo rces as a bureau to promote healthy businesses and expose the weaker ones, seeking to create an entrepreneurial society, with a focus on individual success and accomplishment. This has been the prevalent idea since the mid 1980s and has influenced workers expectations of reward. (BCC website, 2004)The following extract from the protector, gives a helpful summary of the economic changes brought about under Thatcher-The Conservative economic revolution of the 1980s casts a long shadow. It broke the power of organised labour, deregulated the economy and opened it up to global market forces. Geoffrey Howes 1981 austerity budget of public spending cuts and measure increases pitched Britain into mass unemployment and helped destroy the last vestiges of the post war eudaimonia consensus. In 1978 there were 7.1 million diligent in manufacturing, by 2008 that had locomote to 3 million. There has been no significant confidential investment in the de-industrialised regions. They have s till not recovered their social fabric or productive economies and are now sustained by government spending. (The Guardian website, February 2010)There are four points to set off from this quotation-The deck up of individual entrepreneurialismThe reduction in the power of the UnionsThe break-up of large organisations, both manufacturing and other industries (coal.) In such organisations collective pay settlements were the norm, if those people are now employed at all now, it is likely they are in smaller businesses, which extend not have collective bargaining.The change from master(prenominal)ly an industrial, manufacturing economy to one where the service industry dominates.Over the last cardinal years, the standard of life sentence in this country has increased significantly for middle and on the job(p) human body workers but as a consequence, contemporary workers have far high expectations, with regards to pay and reward and want their efforts to be individually recognis ed.High transaction workers demand to be recognised and rewarded and thus both social and economic pressures currently exist to support individualist pay systems.The Development of Reward ManagementPay management systems in Britain have changed considerably over the last thirty years and much than of these changes have occurred as a result of important external and internal influences on organisations.The author has elect to focus on the work of Armstrong (1988) to carry out this analysis, as he is a renowned scholar in the field of pay and reward in the U.K.Old Pay SystemsThe Early 1980sAccording to Armstrong and Murliss (1998), these were-Pay based on the national going rate negotiated centrally with the main Trade UnionsWhite collar and managerial fine pay structures, created to abet promotion increases that did not fall within the norms of income policy, were often open to insult and resulted out of decaying job evaluation initiativesLimited cognitive operation Related Pa y or incentive schemes for shoes, technical, professional or managerial staffincremental increases on fixed service-related pay were the normSenior management Tax- impressive benefitsThe late Enterpreneurial 1980sAccording to Armstrong and Murliss (1998), the entrepreneurial 1980s witnessed dramatic changes to pay systems. During this period pays role changed from being viewed as a back office function to a key management mechanism for change during the brass of the Enterprise Culture. Pay systems became dominated by murder related pay and incentive schemes.Armstrong and Murliss (1998) argue that during this period reward managements philosophy developed important features which demonstrated many similarities to Human Resource Management philosophy, including-Treating employees as organisational assetsEarning the dedication of these employees to the organisations core values and objectivesAllowing staff members to achieve their full potential and to post fully to organisationa l goal achievementThe Post Entrepreneurial 1990s many an(prenominal) of the simplistic pay models implemented in the late 1980s failed to achieve their objectives (Armstrong and Murliss, 1998)New Pay SystemsThe 1990s saw the adoption of a more than strategically focused pay systems, which are still operational in contemporary private and public sector organisations.Armstrong and Murliss (1998) mention that the main developments to be incorporated into new pay systems in the 1990s included-People-based pay, with furiousness on role adaptability and a move towards generic roles and job families, which focus on continual development and competenceThe introduction of second/ third base generation performance- related pay, which focuses on improving performance rather than yet rating itDetermining the value of employee inputs and produces in Performance management i.e. development and motivationRecognising the employees as an organisational stakeholder, who is included in processe s which affect their parts of the employment congenericship for example payAccording to the findings CIPD Survey 2004 of Performance Management, (cited in Armstrong and Stephens, 2005), 56% of the 566 respondents had some type of Performance related Pay.Armstrong and Stephens (2005) argue that many people view Performance Related Pay as a key people motivator, however they argue that non financial rewards i.e. the work undertaken and the working environment form an important part of the whole reward package.However, harmonise to the findings of The e-research 2004 Survey of Performance Related Pay (cited in Armstrong and Stephens, 2005) the main factors for using Performance Related Pay are-To acknowledge and reward prime(prenominal) performanceTo appeal to and maintain excellent personnelTo enhance organisational performanceTo concentrate efforts on strategic values and resultsThe Decline of collectivismAccording to the WERS address 2004 and Edwards (2003) the declining influ ence of the trade unions led to the decline of collectivism, which the WERS Report 2004 noted occurred between 1988-2004, particularly in non public sector and private organisations.The WERS Report 2004 noted that By far the most common pay termination in 2004 was unilateral pay setting by management. (WERS Report, 2004, p.19) i.e.individualism.Collective Bargaining in the Public fieldAccording to the WERS Report 2004, despite the decline of collective bargaining, it is still used as a means to set pay in larger organisations for example, in public sector organisations, for example, in the public administration and Utilities Industries.Collective Bargaining in the Private SectorAccording to the WERS Report 2004, Collective Bargaining was virtually non- existent in private sector organisations, for example, the Hotel and Restaurant Industry. In addition, the report noted that collective bargaining has not been replaced by any other mavin pay determination method, however mixed me thods were less used and varying methods of single pay determination were used across the workplace. (WERS Report, 2004)Evidence of the Decline of Collectivism in the U.K.The decline in the use of Collective Bargaining in the U.K., as a pay determination method, over the last thirty years, is put one acrossly illustrated in Table 1, accompaniment 1.The Rise of individuation or Performance Related PaySome of the key reasons for the rise of individualism in pay systems in the U.K. can be summarised as follows-The hurt and conditions of staff are increasingly importantAspiration and expectation increasingly staff want to be rewarded for doing a good jobAs mentioned above the socio-economic factors decline of the trade unionsIncreased competitive pressuresIncreasingly market forces constraining employers discretionDriving change (in pay and reward) is the need to modulate the link to business performance , cost control, support for organisational change and enlisting and retentio n pressures ( Wright, 2007)As we have moved away from Collectivism, the last thirty years has been dominated by change and experimentation. Basic pay, which applies to the collective is supplemented and compound by pay systems that seek to differentiate between individuals in some way.Inconsistencies in Individualism/ Performance Related PayFrom the research undertaken, it is clear that contemporary pay systems, some of the features of which are noted in abbreviated on page 7, are determined through with(predicate) collective bargaining or Individualism/ Performance Related Pay, the latter of which has given rise to organisation- based pay setting, which has led to inequalities in pay in the U.K. since 1980. (Edwards, 2003)Individualism/ Performance Related Pay does not apply across the display panel to all categories of staff. Of particular note is the disparity in packages between managers and workers, for example, The WERS Report 2004 recorded that 45% of managers had party cars, while only 15% of workers had company cars and 38% of managers had private health care, while only 16% of workers had private health care.Performance related pay matrices, as illustrated in Appendix 2, are often used to determine pay increases in relation to performance and pay range position ( Armstrong and Stephens, 2005)Managers need to apply these systems both equally and fairly and therefore, there will need to be some form of mediation with all senior managers to ensure o harmonisation and the implementation of quotas, as not everybody can be rated, as excellent, as it would cost the organisation too much money.Decline in Popularity of Individualism/ Performance Related PayPerformance Related Pay became familiar in the late 1980s, as noted earlier on pages 5-7, however, many reasons have lead to a decline in its popularity , for example-Performance Related Pay has become surrounded by complaints about inconsistencies, as noted above, and (therefore) biasManagers who c arry out appraisals and administer related monitor processes often lack the necessary trainingPerformance Related Pay assumes that performance is totally in the hands of the individual, however performance is change by the organisation/ environment they work inThe qualifying criteria for Performance Related Pay demanding and difficult to achieve ( Armstrong and Stephens, 2005)Labour Research, September 2000, inform some significant failings of Performance Related Pay in the public sector, by citing IRS Pay and Benefits Bulletin Survey, which found for example, that 75% of public PRP schemes were too insignificant to motivate staff and that 29% of public sector organisations felt up up PRP was too costly.According to Wright (2007), the Approach has moved on from simply collectivism and individualism to refining thoughts about individualism, taking into account staff engagement, sureness and commitment. There is a need to develop management when looking at the design of reward sy stems. Wright (2007) cites Milsome (2005), who noted from the Reward Management Symposium (2005) that reward practices are rarely based on evidence of what produces good organisational outcomes and what does not. (Wright, 2007, p.159)Pay and Reward TodayAccording to the CIPD (2010) Today the notion of linking pay to a wider description of employee contribution is gaining ground. This emphasises not only performance in the sense of output (the end result that is achieved) but also the input (what the employee has contributed in a more holistic sense. (CIPD Website, 2010)It could be said that these developments demonstrate a more rounded and fairer approach to measuring individual performance.The CIPD (2010) refer to a members poll, carried out in March 2009 to gauge the effects of the economic crisis on performance management. It is significant to note 92% of the respondents believed there had been an increased level of performance management in general, 88% of the respondents felt that it was necessary to re-evaluate performance measures to reiterate the more demanding work environment. With reference to rewarding performance, 63% of respondents felt that it was harder to reward good performance in the current climate and 90% of respondents felt that reward performance should include the use of increased levels of non-financial incentives. (CIPD, 2010)The results from the CIPD members poll clear demonstrates the continued importance of performance management but it does also highlight that the current economic crisis has and is likely to continue to affect Performance Related Pay.ConclusionIt is true that collectivism has declined and individualism has increased but it is not as simple as one approach replacing the other. Collectivism really started to decline in the Thatcher years with the destruction of the trade unions power and the support for individual endeavour in an attempt to improve the UKs economic performance. Thatcher was a great believer in m eritocracy and open competition. This lead to the rise of the importance of the individual. Over the years we have seen this develop from being just about Pay to encompassing the wider concept of Reward (e.g. longer holidays, ductile hours, private health, etc).In the early Eighties this type of Reward was the hold on of Managers, but is now applied at many different levels. This has been modify in recent years as a result of deuce key factors (i) two recessions within the space of 20 years where companies have struggled to find ways to retain and reward skilled employees other than the traditional financial remuneration, (ii) the changing face of the UK industry from manufacturing to services.However, Collectivism still has its place in larger public organisations and some private ones, particularly where it is very difficult to differentiate between the performance of individuals doing exactly the same gently skilled jobs, and where the going rate for the job is still a valid concept.Although Individualism does dominate, it has itself developed again in the last 15 years where it has moved from pure Performance Related Pay to systems which are more objective in their assessment and also endeavoured to focus on staff improvement and development.Bibliography-Armstrong, M., and Murliss, H., (1998.4th ed.) Reward Management A Handbook of Remuneration dodge and Practice, Kogan Page, pp.1-57Armstrong, M., and Stephens, T., (2005) Individual contingent pay, in Employee Reward Management and Practice. London, Kogan Page, pp.231-254BBC News, Retrieved, 2nd January 2011 fromhttp//news.bbc.co.uk/1/hi/uk_politics/3681973.stm,Cornwell website, Retrieved 7th January 2011 fromhttp//www.cornwell.co.uk/people_management/reward_management.aspCIPD (2010) Performance Related Pay Factsheet, Retrieved 10th January 2011 from http//www.cipd.co.uk/shapingthefuture/_eccrsplrst.htm?IsSrchRes=1Eurofound website, Retrieved 6th January 2011 fromEdwards, P.,( 2003 ed.) Industrial Rel ations, Oxford BlackwellHollinshead, G., Nicholls, P., and Tailby, S., (1999), Pay, in Employee Relations, London Pitman Publishing, pp.332-377Kersley, B., Alpin, C., Forth, J., Bryson, A., Bewley, H., Dix,G., And Oxenbridge, S., (2004) Inside the Workplace, offset Findings from the 2004 Workplace Employment Relations Survey ( WERS 2004)Labour Research surgical incision (September 2000) Performance -related pay failing in the public sector, Publications Online for Amicus membersThe Guardian (2010), Retrieved on 2nd January 2010 from http//www.guardian.co.uk/commentisfree/2010/feb/28/economics-conservatives-legacy-housing-electionWright, A., (2007), Through a Glass Darkly problems and issues in reward, in Porter, C., Bingham, C., and Simmonds, D., (2008), Exploring Human Resource Management, McGraw Hill. London, pp.159-177Appendix 1The Decline of Collective Bargaining in the U.K.Membership % of Density % Covered by CollectiveBargaining1979 13 million 59 701997 7.8 30.2 33.32006 7.6 28.4 35.3Constructed from data provided through the Workplace Industrial Relations (andEmployee Relations) Survey series 1980-2004 and a software documentation Office report for2007