1.0 Introduction
Performance-based reward systems are considered one of the practices in the human resource industry. Human resources being an essential function in the success of an organisation, it is imperative that it is conducted in a way that delivers value for firms. Various businesses face pressures from the need for quality, and competition has forced organisations to adopt an approach to recognise deserving employees for performance. It is an incentive for employees to work hard and deliver required levels of performance while motivating others in the organisation to emulate them. Several approaches have been used, among them being pay, bonuses, staff development, travelling, and promotions, among others. However, equity theory suggests that employees will be motivated to work in an environment where they feel their compensation is fair. Besides, different employees would have different needs, and as such, there is no single approach that can be used to achieve one goal. This research proposes to assess whether and how The Chesterfield Mayfair links pay to the performance of their employees.
1.1 Background and context of the research
Performance is key to realising the goals of an organisation, and pay is often seen as a means to that end. CIPD (2017) noted that while rewarding employees by their performance, based on pre-agreed objectives, is a common practice, there are still questions on whether it is effective. Certain conditions ought to be followed to ensure that it is implemented well and its objectives are realised. Some of these include being objective, ensuring consistency, and transparency when implementing it. Zenger and Marshall (2000) argued that the intensity varied in the sample that was used, based on the size of groups, when quality was not an issue, and management participated highly. Lavy (2007) observed that the implementation of performance-based pay should be limited to different contexts, implying that it should meet identified conditions.
Shields and Johns (2015) added that there are basic considerations that have traditionally been used to guide the practice, including need-filling, felt to be fair, legal, affordable, cost-effective, and strategically aligned. Reward systems are made to change the behaviour of employees in a manner that is aligned to achieve strategic objectives. Guest (2017) suggested an approach that promises to deliver mutual gains for employer and employee, implying that the procedure used needs to be considered on how these ends should be served.
Inthe the application of performance and rewards, Renwick et al. (2013) observed that organisations fail to perform optimally due to a lack of full implementation of best practices in human resources. According to Hofmans et al. (2013), even when they are implemented, individual differences due to unique personalities, such as personality 1 and 2, imply that there will be differences in how they will be motivated and, as a result, whether they will commit to an organisation or not. Commitment is linked to the performance of an organisation.
1.2 Justification
There is a single approach to the implementation of performance-based reward. Many variables have been identified, including context and the different personalities of employees. This means that employees of different personalities will need different rewards, not necessarily monetary, to motivate them. The model succeeds in some organisations and individuals, but not all of them. This researcher needs to assess whether performance-related pay is implemented in The Chesterfield Mayfair in London, and if so, to investigate the results. Doing this would provide insight into how hotels and general hospitality should implement this practice. Human resource management must deliver its objective of aiding in the performance of organisations. It is hoped that the research will provide impetus for the effective implementation of this important human resource function. As was noted above, one of the precepts of performance-based rewards is to develop an organisation as well as an individual. This research would emphasise this and identify others concerning this organisation and, to an extent, the general hospitality industry. The hospitality industry is people-dependent, meaning that the performance of employees is critical to the success of any service-based organisation where there is direct interaction of employees and customers.
1.3 Research question and research objectives
This research aims to investigate the link between performance and rewards using a representative organisation, The Chesterfield Mayfair in London. Specific objectives that would be pursued in this research include:
i. To explore whether performance-related rewards are implemented in The Chesterfield Mayfair
ii. To assess strategies adopted by The Chesterfield Mayfair in rewarding employees based on their performance
iii. To investigate the impact of using performance-based rewards at The Chesterfield Mayfair on the satisfaction and commitment of employees
2.0 Literature review
The section discusses various perspectives from different academicians about performance-related practices in organisations. The objectives focused on in this proposal include assessing how it is implemented and its effectiveness, especially in the hospitality sector. This would provide various perspectives on the issues outlined, including the gap in the literature on the subject.
Need for performance-related pay.
Performance-linked pay is one of the strategies that is used to attain a specified goal in an organisation. According to McDermott et al. (McDermott et al., 2013), leadership is needed to realise this need and align with the overall HR strategy for performance to be effective in an organisation. It means leadership is needed in the identification of the need to use this performance linked to rewards to achieve a given goal. Cherrington et al clarified that productivity is among the main reasons that employers use a performance-related pay approach. This means that employees are satisfied and transfer this to higher productivity. However, this was hardly the case, although satisfaction was found to be directly related to productivity. Eijkenaar (2013) also concluded that despite increasing use of pay to boost performance, there was inconclusive evidence on whether this happened in the case of the healthcare environment where this was examined. However, several recommendations, such as tailoring pay fora specified purpose, were made. Thus, there are other conditions that need to be made to ensure this works to achieve goals as required.
According to Garen (2013), pay does not necessarily lead to increased performance as was observed in the case of public schools, where the need for higher performance was long overdue. There are other conditions, such as supervision, that are needed to ensure quality education is attained. Different incentives yield different results, but this is also largely dependent on the environment. Ederer and Manso (2013) also supported this finding that for increased performance on innovation, employees need to be managed in a manner that accommodates mistakes in the early days of employment and rewards those who stick longer. However, other conditions also came to play as was observed when using this approach, and this included job security, which tended to boost morale and performance, besides other rewards that were given. Thus, while the importance of pay was not disputed in its role in boosting the performance of employees, the procedure and other variables that were used varied in different contexts.
Miller and Babiarz (2013) noted that in implementing performance, important questions that should be asked include who is to be rewarded, how, with what reward, and the expected consequences of that reward. These questions would then be used to guide in effective design and implementation of an award program to achieve the intended objectives. This also means that there are differences in how this is done, and no single size fits all situations. Jha (2013) observed that the basic assumption of performance pay is that too small incentives will fail to motivate employees and performance will decline as a result. However, this assumption has failed to work concerning quality and efficiency, despite the high incentives offered to employees. This could imply there are certain prerequisites that were needed but which failed. This was seen in the case of hospital care. The conclusion was the need for transparent system that was understood and need to assess metrics for performance needed to measure performance.
3.0 Research methodology
The chapter will explain the methods, tools, procedures, and their rationale in relation to the objectives of this study. These include assessing how pay for performance is practiced in the organisation, The Chesterfield Mayfair.
3.1 Research philosophy
This is the general belief about what research is understood to be in the process of developing knowledge. It includes several assumptions that will be considered while undertaking research. The choice of research will determine the nature and quality of results from the process. This research will adopt an epistemological approach, which is the study of knowledge. According to Collins (2010, p. 36), epistemology “is the study of knowledge and justified belief…concerned with nature and its limits”. This study will use epistemology to focus on finding new knowledge relating to the study of performance for pay in the specified context. Ontology, on the other hand, is concerned with the “philosophical study of the nature of being or its existence”. The concern for this research would not be on this nature of this human resource aspect, but to develop or confirm facts relating to it, hence aid in the development of knowledge.
The researcher will use a positivist research paradigm whose premise assumption is that the phenomenon in question is approachable and data can be explored from it for analysis. It also believes that there is a single reality about the subject being focused on. Both assumptions are opposed to the interpretivist paradigm that holds that there is no direct access to the subject being studied and that there is no single reality. The implication is that since it is based on ontology, the reality will not be analysed, but there will be many perceptions of the idea, hence no single reality. Based on a positivist approach, the role of research will also concentrate on description and explanation of the facts collected from the phenomena. Rather than using the interpretivist’s view of concentration and understanding, the researcher’s decision will be based on hard data collected on the ground. There will be no use of personal feelings in the analysis of data, which would make the findings highly subjective. The researcher will be detached from the research process with the intention of making it more objective. The findings will be generalised to find relevance to the general population, which is the service sector, but especially in the hospitality sector.
3.2 Research approach
A deductive approach will be employed in this research; the goal would be to develop hypotheses on known phenomena. Data is collected on the same to confirm the hypothesis. This will be done in this research, where data will be collected from The Chesterfield Mayfair on the issue of performance for pay and its effectiveness in the organisation. The aim would be to confirm or disprove the theory.
3.3 Research strategy
The researcher would use a case study as the strategy. The Chesterfield Mayfair would be used to represent other hotels and generally service-based organisations in the hospitality sector. In this case, the researcher would do intensive data collection and analysis in the institution on the subject to increase internal validity and ensure the findings apply to the general population as well. Although it has been criticised as lacking generalisability, the choice of subject can have an impact on the quality and validity of findings.
4.0 Data collection
Primary data would be used in this research, where the main reason is to find and use current data to base other conclusions on the topic. Random sampling would be used, where every member would have an equal chance to participate in the research. Quantitative data would be from respondents. These would be employees who will fill in a questionnaire that will be uploaded online. The reason for this is to ensure many respondents get a chance and possible restrictions to conduct research on employees during working hours. However, the interview would be done with human resource personnel to provide insight into the topic, the rationale, and its effectiveness. This means qualitative data would also be used to provide.
5.0 Data analysis
Being quantitative data, the main statistical tools that would be used would be means on several aspects drawn from the objectives of the researcher. Statistical packages such as SPSS would be used to aid in condensing collected data into meaningful information.
6.0 Ethics considerations
Ethical considerations for this research would include respect for privacy and confidentiality. The researcher would be unable to identify individual respondents, given that they will use an online platform to respond to the questionnaire.
7.0 Research validity and reliability
Validity would be ensured by using standard methods of designing a questionnaire and analysis. Validity in this research is the ability to measure and deliver results as was anticipated. Using standard tools such as SPSS to carry out calculations and various tests has been tested over time, a nd as they are based on certain mathematical formulas, it is likely to yield fairly accurate results. Besides, the researcher would use a wide range of respondents from the organisation to minimise possible errors from respondents. Reliability, on the other ha ndhe he ability of an instrument to provide the same results over time. Questionnaires randomly distributed in the organisation are likely to yield similar results. Results, especially from statistical analysis, would also be based on the usual understanding of their implication.
8.0 Resource requirements
The following resources would be needed to facilitate this research process.
i. Access to the internet enables a computer with MS Office and SPSS software packages
ii. Transport to The Chesterfield Mayfair
iii. Notebook to record interview with HR personnel
iv. Printing paper and printer
v. Resources to bind materials for presentation
9.0 References
CIPD, 2017. Performance-related pay.
Collins, H., 2010. Creative Research: The Theory and Practice of Research for the Creative. Casa Postale: AVA Publishing.
Ederer, F. & Manso, G., 2013. Is Pay for Performance Detrimental to Innovation?. Management Science, 59(7), pp. 1496 - 1513.
Eijkenaar, F., 2013. Key issues in the design of pay for performance programs. The European Journal of Health Economics, 14(2), pp. 117-131.
Garen, J. E., 2013. Analyzing Schools as Firms: What Do the Economics of Organizations and Principal-Agent Theory Say About School Governance and Teacher Pay?. SSRN.
Guest, D. E., 2017. Human resource management and employee well-being: towards a new analytic framework. Human Resource Management Journal, 27(1), p. 22–38.
Hofmans, J., Gieter, S. D. & Pepermans, R., 2013. Individual differences in the relationship between satisfaction with job rewards and job satisfaction. Journal of Vocational Behavior, 82(1), pp. 1-9.
Jha, A. K., 2013. Time to Get Serious About Pay for Performance. The Jama Network, 309(4), pp. 347-348.
Lavy, V., 2007. Using Performance-Based Pay to Improve the Quality of Teachers. The Future of Children, 17(1), pp. 87-109.
McDermott, A. M., Conway, E., Rousseau, D. M. & Flood, P. C., 2013. Promoting Effective Psychological Contracts Through Leadership: The Missing Link Between HR Strategy and Performance. Human Resource Management, 52(2), pp. 289-310.
Miller, G. & Babiarz, K. S., 2013. Pay-for-Performance Incentives in Low- and Middle-Income Country Health Programs. The National Bureau of Economic Research.
Renwick, D. W., Redman, T. & Maguire, S., 2013. Green Human Resource Management: A Review and Research Agenda. International Journal of Management Reviews, 15(1), p. 1–14.
Shields, J. & Johns, R., 2015. Management for engagement. In: M. B. S. K. C. D. A. N. John Shields, et al. eds. Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge: Cambridge University Press, pp. 17-25.
Zenger, T. R. & Marshall, C. R., 2000. Determinants of Incentive Intensity in Group-Based Rewards. Academy Management Journal, 43(2), pp. 149-163.
