Name: Petrica Galan-Tarachiu

College Name and Number: Bedford College 550251

Word Count: 2022 – 7 pages

Organizational performance, reward and motivation

1. Introduction
2. Description of the purpose of performance management
3. Explanation of the key components of performance management
4. Explanation of how performance management processes affect staff motivation
5. Clarification of the purpose of reward within a performance management system
6. The key components of a reward system and how a total reward system links to
performance management
7. The factors that need to be considered when managing performance
8. Description of the various items of data that are needed within a performance
and reward management system
9. An examination of frequency , purpose and process of performance review
10. Appendix
11. Bibliography

1. Introduction

The following is a report for the board requested by the manager director of the
organization to the HR department.

The report outlines the links between organizational performance, reward and
motivation.

2. Description of the purpose of performance management

In order to ensure that the company will remain on the top of their competitive edge the
managers will use a method called performance management. In order to achieve this,
they will need a strategy, which includes each individual within the organization. The
employee has to understand his role and requirements. The aims of the strategy are:
- to drive performance and profits (to get the best results)
- to keep staff engaged and to encourage them to reach their maximum
potential
- to give everyone an opportunity to show the best they can be and to receive
feedback

Page | 1
The purpose of performance management is to ensure accomplishment of business
objectives and to increase the strength of employees in order to have a competent work
force. The business objectives have to be communicated by the management to the
employees which need to be measured and appraised. The manager needs to plan the
actions and monitor the employees in his reporting line.

3. Explanation of the key components of performance management

The components of performance management are:

 Appraisal:
o Provides the base for the discussion between manager and employee.
o Records feedback both ways
o Sets objectives and targets for the next meeting
 Personal development plan
o Offers the opportunity to develop to full potential according to skills and
competencies
 The setting of Objectives and constant review
o Keeps a record of past, future, achieved and due objectives
o Helps the manager to identify ways in which he could help the
employee achieve a given objective.
 Observation of employee’s performance indicators and documentation of all
meetings, plans and feedback sessions.

4. Explanation of how performance management processes affect staff

motivation

Motivation is the key to an individual’s degree of willingness to exert and maintain his
efforts towards the organizational goals. The level of motivation is likely to have an
effect on performance. If an individual has a high motivation it is likely that he will have
an increased performance. The other way around, if the performance results are at a
dissatisfying level, it may be that the employees don’t feel motivated enough.

Organizational factors which are influencing motivation are:

- Learning and development
- Employee relationships
- Reward
- Leadership style
- Organizational culture

Page | 2
Motivation is about factors, which link into how an organization uses performance
management to get better results from their staff by encouraging the performance within
the business. If employees are motivated they will perform better and they will
collaborate together to improve the standards which will lead to a sense of
achievement, creating this way a greater motivation.

Herzberg’s conclusion was that job satisfaction and job dissatisfaction are not
opposites. The opposite of Satisfaction is No Satisfaction. If one has an unfriendly work
environment, giving them a promotion will not make them satisfied. The factors that lead
to job satisfaction, according to Herzberg: “are separate and distinct from those that
lead to job dissatisfaction”. So, if you are set to eliminate dissatisfying job factors you
may create peace, but not necessarily enhance the performance. We can conclude that
some characteristics of a job are related to job dissatisfaction, while different factors are
associated with job satisfaction. These factors are:

- Achievement
- Recognition
- The work itself
- Responsibility
- Growth
- Company policies
- Supervision
- Relationship with supervisors
- Work conditions
- Salary
- Security

Factors for dissatisfaction are also called hygiene factors. An organization can influence
satisfiers through performance management using a tool like job description. The job
description offers enough information about a position which can help the employee to
decide if changing his role could bring him satisfaction. If you want to motivate people
you have to focus on factors like achievement, recognition and responsibility.

Maslow’s theory of motivation “The hierarchy of needs” considers five main needs:
 1. Physiological: to eat, to drink, to sleep and to reproduce. (all these are met
by providing the salary)
 2. Safety - the need to be secure. An organization should provide a stable
emotional and physical environment. Safe work conditions, fair work
practices, and benefits, like pension scheme, are also helpful.

Page | 3
  3. Belonging - the need to feel part of a group and to be accepted. At this
point the managers should encourage social interaction by creating a team
spirit, allowing participation and support during outside work activities.
 4. Esteem – the need to feel good about themselves, recognized for
achievements, status and reputations by delegating more responsibilities.
 5. Self–actualization - the need for personal fulfillment and the need to grow
and develop. Managers should provide training on a regular basis.

5. Clarification of the purpose of reward within a performance management

system

The Purpose of reward:

 Attracting and retaining good employees will bring benefits to the employer as
less time will be spent hiring and training new workers.
 Motivating employees to be flexible in carrying out tasks and to perform to the
fullest extent of their capabilities.
 Encouraging employees to go above and beyond in their roles. Reward only
motivates employees if it’s attractive to them and if they know that the level of
performance is achievable by them.
 Reinforcing performance standards - agreeing future standards.
 Supporting the overall business strategy.
 Supporting the organizational culture.
 Creating future opportunity for growth and developing.

6. The key components of a reward system and how a total reward system
links to performance management

The reward system is based on financial and non-financial attributes which are provided
to the employees in exchange for their time, talents and efforts.

Financial has a monetary value and is adding up to the remuneration.

Non-Financial is focused on psychological needs: appreciation, influence, personal
growth.

The key components of reward are:

 Recognition – making them feel appreciated and invested in. ex: employee of
the year, long service award, sick pay, pension, life insurance, childcare
vouchers and annual leave.
 Target setting – have the role of keeping the employee focused and can help
us measure his performance against a solid value.

Page | 4
  Job description – gives insight about a future possible change of role.
 Competencies – help identify which employee may perform better on certain
tasks compared to others.
 Policies and procedures – simple and clear procedures promote efficient and
rewarding work
 Reviews and feedback – the employee feels listened to and is given the
opportunity to speak out
 Development/ mentoring/ coaching – learning opportunities, training, and
attending courses help individuals to develop themselves and also have a
good impact on the organization which will benefit from having trained and
skilled employees.
 Planning – it is general good practice to have actions and decisions based on
clear plans.

7. The factors that need to be considered when managing performance

Managing performance should be a continuous process that aims to improve an

individual or organizational performance; a way of measuring what the employee
contributes to the goals of his team and the business as a whole.

The 5 factors considered for managing performance are:

 Knowing and understanding what is expected from them

 Having the skills and ability to deliver on these expectations
 Being supported by the organization to develop the capacity to meet
these expectations
 Being given feedback on performance
 To be given the opportunity to discuss and contribute to individual and
team based targets and objectives

The objectives are agreed at the start of the year and then reviewed at the end of the
year. There are two ways discussions between employer and employee. An effective
objective should be achievable but challenging, relevant to the department and
business, easy to measure. It should also have a timeframe of when it needs to be
achieved. Feedback is important because the employees need to understand their
progress and what should be improved. Feedback has to be clear and constructive so
that the employee can think about a solution. It is important to focus on the resources
that the employee uses within his role, because this could have an effect on his
performance. A manager should listen and address any issues that an employee may

Page | 5
have, but the manager needs to be sure that the addressed issues are genuine. The
employee can offer external sources before recognizing his faults.

When managing a poor performance a manager should identify the cause of the
underperformance in one to one meetings. They need to be trained in difficult
conversations, and need to feel confident in handling sensitive conversations. The
manager has to provide relevant support to help the employee understand the
opportunities for improving their performance and taking the necessary action. An
improvement plan has to be discussed and developed.

The improvement plan should be closely monitored and should set out the following
topics:
 Timescale for achieving improvement
 Review date
 Possible consequences if the performances are not met.
 Training to assist the employee

8. Description of the various items of data that are needed within a

performance and reward management system

Documentations help to structure a performance review and give the clear guidelines for
what needs to be covered during the meeting. The appraisal is part of an employee’s
performance review and influences the individual. It will also reflect his behavior, actions
and consequences on his performance.

We need to mention details like: targets, objectives, job description, KPI’s, figures,
results, competences, customer feedback, and CIPD HR map.
 Targets are needed to keep the employee focused and measure his
performance against them.
 Objectives help him gain a clear understanding of what exactly is
expected from him.
 The job description is setting out clear responsibilities.
 KPI’s are being used to measure key aspects of one’s performance.
 Figures and Results are part of the tangible proof of behavior.
 Customer feedback is an important outside and impartial view of one’s
performance.
 Competences need to be listed and compared to the requirements for
new tasks which an employee could start working on.

Page | 6
  The CIPD HR map helps us to identify strong points and weaknesses
and at which skill level an employee is present at a given time. The
map facilitates easy identification of areas which need improvement.

9. An examination of frequency , purpose and process of performance review

Most employees receive a formal appraisal annually. This should be a continuous

process and should be not limited to a formal review once a year. In an environment
which is less subject to change, annual appraisal may be sufficient, but more frequent
appraisals are needed for new employees, or for longer serving staff who have moved
to new jobs, or for employees below acceptable standards.

The frequency of formal appraisal depends on the nature of the organization and the
objectives of the system. For example in an organization where the objectives are
changing quickly, the appraisal might be needed to be carried out more than once a
year.

The appraisal is both a way in which the management can keep the employee
performance level under control and for the employee a way in which he can improve
his performance and keep track of old and new challenges.

10. Appendix

Components of a reward system

11. Bibliography

 Course notes
 Performance Management and Reward slides

Page | 7