Human Resource Managemnt

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and manage strategy; using the balance scorecard methodology translating the output from the principle in to strategic objective and measures that are actionable by employees. (4) Improve performance; focusing on improving customer and competitor intelligence, and business improvement processes. (5) Manage and leverage knowledge; focuses on capturing and reusing enterprise-wide intellectual property to leverage the organisation’s best minds, best practices and innovations.

Edwin, A, & Gary, P (2013, pp 3-29) believes that goal setting theory is a theory of motivation that causes some people to be more effective in their work related matters compared to their other team members. The process of establishing goals, including stretch goals has also been indicted for failing to recognise how independent most employees are upon one another and denying meaningful influence in to the process by peers and subordinates these problems do exist, but are not inherent in the process. As an example if the sales department in the organisation informs the management that they anticipate an increase in sales then the manufacturing division needs to reconfigure the requirement of the raw material and order them in advance so that they could meet the demand of the anticipated increase in sales. However, for some reason if the anticipated sale doesn’t materialize then the question arises as to who would bear the added manufacturing cost? Does this mean that these costs would be transferred to sales? Now the question is whether the stretch goals set by the sales office was realistic? As is often the case, these types of problems do appear when setting goals, but if the organisations do not take these risks then they also run the risk of not doing so. Most of the organizations do not have readily available alternatives that promote risk taking, catalyse innovation, and stimulate people to come up with startlingly different ways to get things done.

‘Performance measurement and management can resolve certain problems but also can create new problems. Having a range of new management practices in place with inadequate or even counterproductive performance measurement and management systems may be worse than having had no reform at all. Implementing an inadequate system of performance management can provide a false sense of security and accomplishment and in the process will misdirect resources and activities. Paradoxically, therefore, inadequate performance management can become the Achilles’ heel of the modernization process itself’ (Bouckaert, G & Peters, B. 2002, Vol. 25 Issue 4, p359).

On average the single largest operating cost for any organisation is the employee compensation such as the wages and the other entitlements. As such organisations strive hard to the maximum from this investment. Thus one could argue that Pay for Performance (PFP) is directly linked to each other. Thus there are 03 general issues related to the PFP mechanism. (1) Conceptual mechanisms by which PFP influences performance? (2) What programs do organizations use to implement PFP and what is the empirical evidence on their effectiveness? (3) What perils and pitfalls arise on the way from PFP theory to its execution in organizations? In the conceptual mechanism it is said that psychologists and economists has offered variety of theories to explain the impact of the pay in the organisations. They theories have mentioned that pay operates on motivation and performance via two different mechanisms which is incentive effects and sorting. Basically with respect to the incentive effect it shows how the pay affects the individual’s intensity while the sorting effect also produce a higher performance via different types of pay systems may cause different types of people to apply to and stay with an organization. With respect to point number (2), organisations need to be clear as to how the PFP program is been designed so that it could clearly measure the performance. In some cases the organisations would either use behaviour-based (subjective) versus results-based (objective) measures to measure the performance. With respect to point number (3), while the potential pitfalls of individually-based PFP are important, it is quite clear that group-based plans also have their own potential drawbacks. One is that most employees prefer that their pay be based on individual rather than group performance while another would prefer the section on sorting, suggesting that group-based PFP might, on average, be prone to unfavourable sorting effects. In summary many organisations would wish to have their own PFP plans that combine different type of performance measures in the hope of positively motivate the employees. However, too much complexity in a PFP plan could also bring negative results to the organisation (Gerhart, B, Rynes, S, Fulmer, I, 2009, Vol. 3 Issue 1, p251-259)

Having a good reward system based on performance also motivates employees to be efficient. To get the best out of the employees the reward system should be linked to the performance and employees should be aware that poor performance has their consequences. Appraisals without consequences are not effective since a poor performer is not penalized for his/hers actions or inactions. The organisations should also take in to account that the rewards should be equal to the employees who carries out the same work and have received the same score so that none of them would be demoralised due to unfair rewards system.

Discussion and analysis

In a competitive global environment organizations in order to survive and succeed need optimise the usage of their available resources. This means that the organisations need to align their finance, marketing and operations etc. (functional activities) towards the achievement of its strategic objectives. To achieve this, the HR manager initially should be able to provide input into the firm’s strategy in order to ensure that the firm has the human resource capabilities to implement it and secondly it needs to ensure that HR programs and practices are in place to effectively implement the strategy.

An increasing number of studies have attempted to assess the linkage of HR and strategy processes. One of the duties that HR department have is to provide input to the strategic decision makers regarding the strengths, weaknesses, opportunities, and threats (SWOT) pertaining to the firm’s human resources, and the strategic decision-making team uses this information in formulating the strategy. Once the strategy is been formulated, then the HR Manager would align the HR policies, programs and practices in a way that it would implement and support the strategy. In most of the organisations the HR manager is part of the decision making team