Reward management plays a major
part in performance management. In
practice, much of the emphasis in terms of reward has been on linking pay with
performance. The growth of performance-related pay (PRP), including various
types of bonuses, has been an important management trend. There is a danger
that reward systems can be distorted, with unintended, damaging consequences,
if only performance measurement is considered. As a result, when considering
how pay and other rewards can be linked to performance, it is important to
realise that other factors will need to be borne in mind and that there may
need to be a trade-off between different needs and purposes.
Central to models of performance management is the idea that
performance can be continuously improved, or at least maintained, if the right
actions are taken following performance review. Essentially, this can be
done in one of three ways:
1. by
rewarding individuals appropriately in the hope that this will motivate them to
work harder
2. by
developing individuals so that they are better able to carry out the
responsibilities and tasks they take on.
3. by
taking corrective action.
The performance review may point
to the need for change at individual or other organisational level. It may be
necessary to modify goals and plans in the light of what has been learned, or
even sanction individuals if their behaviour falls below the required
standards. The review may also point up wider organisational problems that are
preventing individuals achieving good performance, and as a result changes may
be needed to organisational structures, systems or procedures.
Organisations are able to offer a
range of rewards, from things that are intrinsic to jobs, such as interesting
and varied work, to extrinsic material rewards such as pay, bonuses and other
perks.
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