Several factors can be witnessed which act a decisive role in employee behaviour at work. In competitive business environment, modern organizations attain an understanding that intellectual economy is highly crucial for business to achieve success and further sustain with its typical demand for development. Employee conduct or behaviour is broadly influenced by the degree of perspectives born of value which are attached to the outcomes generated of work (Armstrong & Taylor, 2014). It has been observed that individuals tend to adjust to the working environment or teams for justifiable reasons in order to return as much importance as they obtain. Thus unconstructive rewards or recognition exhibits a tendency to be signified by negative behaviours along with high deficit of dedication and commitment towards work among the employees (Cummings & Worley, 2014). While highly well rewarded staffs reveal equivalent efficacy, productivity, ingenuity and commitment towards organizations(Glaister et al., 2018). As in every business enterprises, employee base act as a determining factor of its survival, a proper alignment between reward strategies and performance appraisal system is highly indispensible. Employees thus develop as the eventual asset to ascertain that the organizations’ reward systems and strategies are well planned and executed (Epstein, 2018).
However the relation between organization’s appraisal system and its appraisal strategy is implemented as a strategic mechanism in order to successfully attain mission and vision of the organization. These aspects act as essential dynamics in the process of communicating values, standards, acknowledging flexibility and further elevating individual ability and contributions towards the organization (Vaiman & Collings, 2015). At typical situations organizational scenarios, employees exhibit high degree of discontentment with the performance of the appraisal activities that will consequentially create a huge impact on the organization’s reputation. Thus, performance appraisal activities in 21st century business domain have developed as one of the most vital functions in the field of Human Resource Management (Armstrong & Taylor, 2014). The following essay highlights the issues modern organizations encounter while aligning their reward strategies with employee performance appraisal system by shedding light on the way these organizations undergo certain challenging situations in making distinctive connections between reward strategy and their performance appraisal systems (Glaister et al., 2018).
Performance appraisal system persists to be one of the most significant functions of Human Resource Management (HRM) in the 21st century business domain. This has been pertinent performance of employees or staffs is immensely significant for organizations in order to generate elevated level of efficacy and competitiveness than other organizations. As the world be likely to be small and nations tend to be associated to each other due to increasing level of advancement in the domain of ICT, significant discourse on performance appraisal activities and employees are typically are executed in apparent manner (Aslam et al., 2015). The contemporary approach of employee performance appraisal system has been observed to be associated with employees as individuals. However in such an approach performance appraisal system is implemented as a fundamental provider to factors of employee motivation, development as well as human resource planning (Cummings & Worley, 2014). Furthermore, in the existing HRM approach, the aim of performance appraisal systems tends to address to the comprehensive capacity and potentials of employees which can be substantially evaluated and expanded (Vaiman & Collings, 2015). Employees with immense dedicated competencies and proficiency can be employed at a constructive level to the company in order to sustain the quality of service as well as product of the organization (Chuang, Jackson & Jiang, 2016). Thus, with the role and accountabilities of employee base to exhibit their performance at the peak stage of their work competencies, system of performance appraisal have a propensity to be more beneficial and equivalent to the work progress of the employees. With such an approach employees can efficiently work in partnership with the organization that is based on attainable situation concept (Schmidt et al., 2018).
21st century business domain has witnessed the value of procurement, consumption, development as well as retention of employees which have never attained such substantial level of prominence in most of the organizations across the world (Ramdhani, Ramdhani & Ainissyifa, 2017). Modern business enterprises are obstinately seeking for approaches to successfully retain their highly valuable employees. Thus the role of rewards and appraisal systems has been at play. Implementation of merit pay or performance-oriented remuneration system along with employee stock option plans (ESOP) as well as profits and revenue sharing strategies have been identified as typical practices that are used to persuade valuable staffs in contemporary times. However, the critical shift from ‘compliance’ to ‘dedication’ has persuaded managers to persistently seek for improved ways of contributing enthusiastic inputs in order to underline self-regulated conduct among employees within the organization (Vaiman & Collings, 2015). Furthermore, rewards as well as reimbursement or payment strategies have been considered to be vital determinants of HR strategies. In a nation like Australia, such strategies are regarded to be core foundation of HR strategy. Australia with an aggregate wage bill of over 250 large organizations having revenue of over $500 billion in 2008-2012 has undergone a rise of over 13.1% from $850 billion in 2012-2013 to $1040 billion in 2017 (Schmidt et al., 2018). Furthermore, organizations such as Telstra, Westpac Banking Group, ANZ and Wesfarmers among others have been incapable to consider this elevation in their remuneration expenditure. Thus comprehending the relation between employee performance appraisal systems, induction, and knowledge development strategy as well development planning is considered to be immensely essential to attract, inspire, encourage as well as retaining core staffs (Ramdhani, Ramdhani & Ainissyifa, 2017). Sandrin, Trentin & Forza, (2014)are of the perspective that HR managers fundamentally aim to align organizational compensation strategy with organization’s essential strategic course to competitive benefits. These paths can be identified as operational distinction, product leadership as well as customer understanding (Vaiman & Collings, 2015).
An operational excellence strategy implemented by modern organizations is recognized as a low price contributor which aims to establish efficient operational systems which insistently condense cost by proficiently providing supreme quality product that adds higher significance to the customer base in comparison to the products offered by the competitors (Aslam et al., 2015). Secondly organizations employing product leadership approaches tend to position dominance on ingenuity and innovation that constitutes long-term emphasis and is persuaded by knowledge development and comprises high tolerance towards ambiguity (Terera & Ngirande, 2014). These factors aim to provide greater level of risk-taking approach to its employees and further promote greater degree of ingenuity conduct and entrepreneurial outlook. Organizations such as Woolworths, Telstra, and Wesfarmers are considered to be true product leaders in this regard (Kim & Holzer, 2016). While Common Wealth Bank, ANZ and National Australia Bank have adopted consumer-centric strategy emphasis on providing exceptional customer resolutions and consider it as the foundation of their competitive benefits (Ramdhani, Ramdhani & Ainissyifa, 2017). However, in these business enterprises, reward systems tend to play a significant role and further emphasize more on primary contact of employees with consumer base in order to strengthen process of employee association, communication as well as establishment of associations with customers to efficiently improve the level of customization (Luftman, Lyytinen & ben Zvi, 2017).
The relationship between the strategic preferences and remuneration as well as compensation strategy of an organization is considered to extensively fundamental. Sandrin, Trentin & Forza, (2014)are of the perspective that regardless to the role of HR in efficiently executing organization’s business strategy, the responsibility of sustaining cultural alteration by shaping the outlook and conduct influencing organizations’ operational as well as financial outcomes is highly fundamental for HR managers (Buckingham & Goodall, 2015). Thus the reward or compensation strategy employed by modern organizations to strengthen the appropriate form of outlook and conduct among employee is identified as a lethal weapon in the hands of HR managers. Furthermore, for successfully retaining core employees, the decision making purposed for compensation strategies have emerged as a highly strategic determinant in contemporary HRM process (Dusterhoff, Cunningham & MacGregor, 2014). However, it has been witnessed that the adoption of remuneration and reward strategy have emerged certain essential questions which are assumed to be explained prior to the execution process (Luftman, Lyytinen & ben Zvi, 2017). It is important to note that the customary job assessment process eventually becoming inappropriate and this has made majority of organizations to proficiently adopt skills or talent based remuneration strategies in recent times. These organizations are significantly distinguishing compensable abilities and proficiency limitations and further implementing tools and approaches in order to verify these areas of limitations and further interpret them into remuneration packages.
In the establishment of reward systems as an essential challenge, modern organizations is to determine what vital factors to base the reward strategy on and the way to evaluate these dynamics. Studies reveal that diverse business enterprises depending on specific industrial sector with strategic emphasis and attributes, organizations require implementing various ratios and metrics (Cummings & Worley, 2014). Thus every business enterprises must efficiently intend to successfully distinguish the specific metrics as well as ratios which have the propensity to reveal the core factors for the organization’s achievements that is universally being recognized as Key Performance Indicators (KPIs). It has been noted by that if the cultural aspect of an organization tends to promote efficient outcomes, then metrics as well as ratios will serve a fundamental role in relation to rewards systems. Furthermore, the ratios and metrics should be identified as a significant mechanism for regulating, learning, organizing or rewarding a business organization, team as well as individual (Luftman, Lyytinen & ben Zvi, 2017). Further it is fundamental that the tools implemented are limited in numbers highly explicable and possible to evaluate. Metrics being identified as considerable part tends to offer leadership with a control panel for stimulating business progress (Buckingham & Goodall, 2015). Rewards on the other hand essentially determine the determine employee conduct and are further purposed to successfully align performance of individual employee with organizational objectives. Galbraith’s Star Model has been regarded as a universally implemented model because of its proficiency in identifying behavioural outlook on organizational design (Paillé et al., 2014).
Galbraith’s Star Model signifies that when metrics and rewards strategies are not effectively supported by organizational structures, values, roles as well as business processes, several unanticipated outcomes tend to develop (Kim & Holzer, 2016). Instances of significant restructuring of large industrial products and services purposed to stimulate growth in four important vertical sectors (Ramdhani, Ramdhani & Ainissyifa, 2017). Furthermore, the design development has shifted several modern organizations from as essentially local model with nation-based profit and loss performance units to four sector-aligned units (Stone, D. L., & Deadrick, 2015). However, regardless to an objective to reconfigure executive objectives as well as compensation as a vital part of the initiative, certain legacy programs have been customary because deficit of organizational flexibility on the part of corporate compensation programs (Sandrin, Trentin & Forza, 2014). Furthermore when metrics and reward compensation systems are not efficiently being re-aligned with structural developments and changes in business processes, organizations face certain predictable challenges whereby individual employee activities focus tend to compete with agendas of the strategy. Secondly, roles and responsibilities are typically being misinterpreted or persist to be effectively aligned by customary organization design (Guerci et al., 2015). Furthermore, individual employees initiate to raise queries regarding impact of the organizational appraisal design on the basis of individualistic economic welfare, also diverting them from achieving in new and advanced formation (Buckingham & Goodall, 2015). It has been observed that reward systems are typically been overlooked or disregarded in an inclusive perspective of organization performance appraisal design because of compartmentalized outlook from HR managers whereby organization design experts tend to segregate compensation strategies or further incorporate competitive employees at the later phase of the process (Inkinen, 2016). Furthermore, remuneration policy at certain phases may encounter extensive regulation by pay experts who shed light on developing reliability instead of acting responsive towards diverse needs and demands of organizations. However, it has been identified that many business organizations exhibit significant incompetence in designing reward metrics and compensation or remuneration systems (Young et al., 2015).
Modern business organizations essentially seek to distinguish the organization by developing exceptional, inflexible in replication competencies which typically generate enduring as well as sustainable competitive benefits. On the contrary, many compensation strategists aim to justify industry patterns in order to efficiently guarantee appropriate alignment of organizational policies with competitors, market rivalries or market certainties (Miterev, Turner & Mancini, 2017). At this juncture, dependency of corporate governance for executive remuneration through the strategies board compensation teams on survey as well as proxy data along with emphasizing on associate company evaluations to provide determination that remuneration awards and recognition are aligned within attainable ranges in relation to the aggregate compensation value as well as deliverance of mechanisms based on payment, incentives, equity and other compensative awards (Weingarden, 2016). Proficient HR executives as being identified by Miterev, Turner & Mancini, (2017)of leading organizations have been emphasizing on compensation dynamic whereby Directors who come from both industry and other sectors has been emphasizing on conformity, expenditures, administration and governance. The compensation consultants aim to be highly decisive role in HRM process. Furthermore, compensation specialists recently have been purposing to employ their own consultants to justify perceived negotiations and challenges developed by remuneration analysts which are recruited by HR team. These corporate remuneration experts typically take the last decision on successfully interpreting both the industry statistics as well as identifying the position of the management compensation experts.
Thus it has been immensely fundamental for employers and appraisal experts to develop a common ground and further establish frameworks in order to work in amalgamation within the organization. Analysts emphasize on reward systems which must engage vital components related to strategic motivators such as inputs to design implementation, rewards and recognition relied on essential design decision making along with reimbursement or costs delivery mechanisms that focus on the way core policy will be executed (Miterev, Turner & Mancini, 2017) (Miterev, Turner & Mancini, 2017). Factors related to compensation-delivery mechanisms primarily incorporate factors such as base salary administration, job assessment, and market pricing along with vital performance management as well as delivery of variable payment programs. However these mechanisms typically tend to act as adaptable within regulations appropriate to the operating governance model of the organization and further been aligned to the demands of significant business entities. Variable compensation pay incorporate both short-term and long-term incentives like choices and equity areas for employees that are further aligned to the attainment of decisively comprehended performance metrics. On the contrary while execution of these reward programs is universal in several integrated business organizations, the governance of these appraisal strategies can be modified in order to align a business model or approach to employ the strategy (Weingarden, 2016). The leading business units of Australia such as Common Wealth Bank, National Australia Bank realigns itself from regional gains and loss entities to overseas markets must be adequately competent to support the performance metrics for recently developed performance demands and expectations (Weingarden, 2016). These organizations further regulate influence in the bonus strategy within boundaries in order to stimulate recently developed global behaviour.
Authors have defined an organization appraisal design processes based on certain key milestones. The milestones process for reward system typically signifies range of framework decisions which are created in a logical sequence (Miterev, Turner & Mancini, 2017). This framework decision further develops queries related to performance metrics and tools along with rewards at each milestone. The initial stage of milestone model focuses on business context to create distinctive case for organizational transformation either to align recent business strategies or to mitigate a performance gap. Stone, D. L., & Deadrick, (2015) state that globalized employers exhibit tendencies to align score-cards of regional managers with the metrics of international organizations and functional leaders. Secondly, strategic alignment, the second stage of milestone model fundamentally aims at addressing the basic structure of the organization. It observes the value and importance of performance metrics in facilitating leadership alignments to choose the most effective key grouping logic that focus on organizational functioning, product delivery and customer base (Inkinen, 2016). However it has been argued by Guerci et al., (2015) the power of performance metrics as a vital force for strategy reward alignment as well as renewal. Thus organizations reveal criterions for rewards which are dependent on group level performance in order to deliver employees compensation and incentives in order to perform as a team and further improve process of knowledge distribution and condense level of competition within the employee base (Stone, D. L., & Deadrick, 2015). Furthermore, collective employee recognition does not necessarily act as a sound compensation system unless the sense of value is developed within individual members of the group. However, in larger groups, managers may be expected to develop the sense as though they can impact on the organizational outcome (Young et al., 2015). However, a segment of researchers have significantly addressed the gains of implementing collective rewards instead of emphasizing on individual recognition. Terera & Ngirande, (2014) noted that specific organizational objectives often fail to be accomplished exclusively dependent on individualistic success but is identified as an outcome of all organizational members and high level of cooperation among the employee base (Paillé et al., 2014).
The importance of efficiently aligning management compensative with anticipated organizational competencies must not be disregarded or overlooked. Furthermore, one of the vital contemplation of organizations is the relative weighting of economic objectives as well as other organizational functional objectives with other significant precedence (Miterev, Turner & Mancini, 2017). Thus proper assimilation at the enterprise level has been resistant by a particular balanced score-card strategy which further signifies wide ranging categories of employee performance evaluation which are further flexible to divisional demands and expectations (Stone, D. L., & Deadrick, 2015). Another fundamental challenge encountered by organizations while aligning reward system with performance appraisal system is the essential need to stabilize establishing distinct perspective between the variable compensation rate of the ones in managerial positions and further promoting enhanced level of collaboration to employees based on unit as well as organization outcomes along with compensation (Dusterhoff, Cunningham & MacGregor, 2014).
Woolworths, Telstra, Wesfarmers are recognized for organizations goal implementation inflexibility through fundamental business procedures which share organizational objectives across the business. Recently developed business teams along with other innovative start-ups such as Atlassian, Software Development Company have deliberately been performing to successfully establish relation among targets of the ones who exhibit substantial level of dependency on each other in recently formed structures to attain significant business outcomes. Furthermore, creative designers at Woolworths, Telstra are recognized to have been receiving remuneration based on market pricing of jobs (Ramdhani, Ramdhani & Ainissyifa, 2017). Furthermore, bankers at Australian financial sector are being paid at level which is essential to compete with other companies in similar talent market. To conclude, it can be stated that from the compensation strategy outlook, organization advantages signify a considerable level of cost of aggregated compensation and thus must be recognized as an essential strategic cost for organizations. Modern organizations have been observed to have been consequent if cases of employee conduct change from appraisal system occur. However, benefit systems can be identified as vital factor in efficiently attracting as well as retaining core talent and the appraisal system can facilitate or create limitations to the level of portability of skills across lines of business.
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