In a contemporary business environment, organizations require informational, human, and physical resources; properly managed organizations have adequate personnel, in number, experience, and expertise. The human resources department in conjunction with top and line management is mandated with the task of ensuring that the right number of people is available when required; the noble role is attained through the implementation of an effective framework of human resources management (Renckly and Renckly, 2003). With the above understanding, City Bank made adjustments to its human resources management culture by changing its rewards system. The new reward system will peg employees’ salaries to their performance; key performance indicators and a scientific system of determining the level of their attainment were developed (Armstrong, 2008). This paper discusses the merits and demerits of the new reward system.
Globalization has brought intense competition in different business entities; in this era, organizations’ competitiveness is pegged on the quality of service their customers get from staff. The role played by the human resources department involves those that look into the interests of employees, employers, and third parties like the government, labor unions, and employees’ relatives (Lester and Kickul, 2001). Having an effective and responsive reward system is paramount for motivated and dedicated human capital. The challenge that human resources managers have had is to determine the best strategy to peg their rewards and compensation policy. The city has taken the option of using a reward system that pegs one’s salary to the level of performance. The policy has identified some pillars of quality performance which emphasized customer service and the importance of measuring and rewarding staff according to their performance. The system is likely to have positive and adverse effects on the company (Anthony, Kalmar, and Perrewé, 2002).
Advantages of City Banks new reward system
Human resources management should ensure that policies are adopted to assist the employees to be motivated and result-oriented; the new reward system has an emphasis on service and performance thus by its very nature it is going to motivate employees to put much of their interpersonal skills to perform. When employees play their roles effectively then an organization can be assured of a motivated workforce that yields high returns. Highly motivated employees are a benefit to their organization and also have a chance for career development (Deetz and Jessica, 2003)
The method of reward has some scientific elements in it, the basic wage of an employee has been reflected to be a factor of his performance as evaluated by customers of the bank. Periodically, it has been indicated that there will be some questionnaires to customers to evaluate the service of the staff. This is a method that can assist in noting the weak areas of the bank; when the areas have been noted, then the management can take appropriate remedy decisions. The reward system has some clarity on the pillars that the management will be using to gauge the performance of employees; such pillars are useful to the employees as they will know what they need to do if they need to be branded as working effectively and gaining high results (Ardichvili and Khalil, 2005).
The method is likely to focus employees on key performance indicators; when employees focus on the areas addressed, then the general operation of the company will be enhanced with high customer service quality being the center stage of the exercise. The level of competition in the banking sector has called for an emphasis on high-quality services and the development of programs that facilitate the provision of the services. With this understanding, employees will be motivated to add work harder for their wages and eventually improve the business of the company (Andrew and Dirk, 2004).
Although the structure of the organization reward system works for the good of the company, its main focus is on improving the general performance of the organization. The method seems to have forgotten the role that the organization needs to play to enhance high productivity. To enable employees to perform their duties effectively, a continuous training system and employee appraisal are important, this is a fact that City Bank seems to have ignored altogether. The art of offering quality services to customers should be taught, trained, and emphasized; some organizations have employees training as a continuous process to ensure that employees are up-to-date with the changes in the industry (Swamson, 2009).
Although the method targets improving the performance of employees, the method fails to understand that some customers may be biased towards certain employees thus evaluation will not be genuine. Other than being biased, there might be some preference of a certain staff by customers; this further makes the entire process complicated (Conway and Briner, 2005).
Best performance/reward system: Using Balanced Scorecard
City Bank should develop a balanced scorecard performance management policy, then peg the outcome to staff salaries. A balanced scorecard assists human resources to look into the qualitative and qualitative performance of an employee; It does not concentrate on one area of the human capital but goes into other specific areas that need to be appraised for an effective operation of the business. The system emphasizes the need to train, appraise, reward, and promote staff on basis of their overall performance; when developing standards, the human resources department looks into two main aspects: qualitative and quantitative. Quantitative standards are the deliverables that an employee is expected to produce when offered maximum support and mentorship from the management and the organization as a whole (Bruce and Fottler, 2005). The tangible outcome or targets that can be attributed to a certain employee when supported by other members of the team should be the focal point in quantitative performance standard setting. When setting the expected level of quantitative output, the company should ensure that the potential of a certain country has been gauged. It may be tricky to have similar expectations across the board but the expectation should reflect the potential that a certain country has.
There are different ways of coming up with the target that every individual is likely to get; the most common method is a top-down approach where the top managers define the corporate goals and general target, then divide it among the departments that produce quantitative results. The system of operation calls upon the management and the staff to be motivated and work together for the general good of the organization. Top management is mandated with the role of enacting frameworks of performance other than focusing on rewards as the only method to motivate employees. When evaluating the level of performance, the management should ensure that it looks into personnel issues; they should ensure that they evaluate the level at which their company can adapt to change and how prepared its human resources are (Bandt and Haines, 2002).
The human resources department has the mandate of ensuring that adequate employees are available at all times; City bank management’s new reward system is likely to motivate employees to the worker for the benefit of the bank. However, the method has more focus on the bank’s performance and fails to address human resources developmental/empowerment factors. A balanced scorecard reward system is a better rewarding system as its emphasis on personnel planning, deploying, employing, training, retaining, and dismissal of employees.
Armstrong, M.,2008. A Handbook of Human Resource Management Practice. London: Kogan Page.
Andrew, C. and Dirk, M.,2004. Business Ethics. Oxford: Oxford university PRESS.
Anthony, W. P., Kalmar, K. M. and Perrewé, P. L. ,2002. Human Resource Management, A Strategic Approach. South-Western: Thomson Learning.
Ardichvili, A. and Khalil, D., 2005. Human capital practices of Russian enterprises. Human Resource Development International, 8(4), 403-418.
Bandt, A. and Haines, S.,2002. Successful Strategic Human Resource Planning. San-Diego: Systems Thinking Press.
Bruce, F. and Fottler, M.,2005. Human Resources in Health Care, Managing for Success. Michigan: Health Administration Press.
Conway, N. and Briner, B.,2005. Understanding Psychological Contracts at Work: A Critical Evaluation of Theory and Research. Oxford, UK: Oxford University Press.
Deetz, S. and Jessica, M.,2003. Managing Ethics in Business Organizations: Social Scientific Perspectives.” Administrative Science Quarterly, 48(3), 522-524.
Lester, W. and Kickul, J.,2001. Psychological contracts in the 21st century: What employees’ value most and how well organizations are responding to these expectations. Human Resource Planning, 24(1): 10-45
Renckly, B. and Renckly, G. R. ,2003. Human Resources. New York: Barron’s Educational Series.
Swamson, R. (2009). Foundations of Human Resource Development: Easy read Large Edition. San Francisco: ReadHowYouWant.com.