Banfield and Kay: Introduction to Human Resource Management, Chapter 12
End of Chapter Review Questions – Indicative Answers
1. Why do organizations use job evaluation as the basis for their pay structures? What
are the advantages and disadvantages of paying people according to the job they
do?
Job Evaluation, as a means of establishing the relative value and worth of different
jobs is heavily used in the public sector and in larger rather than smaller
organisations. The advantages associated with its use are about consistency,
objectivity and procedural regularity – its supporters claim that it removes bias and
unfairness in locating people within a pay structure because different way rates are
closely aligned with job responsibilities. Disadvantages, however, can be
significant, amongst which are the loss of judgement and ability to offer rates
outside of the established pay scales, an overly bureaucratic approach to
determining pay and management problems associated with the rules of
progression within and between pay grades. The impact of anti discrimination
legislation regarding equal pay issues has given a boost to job evaluation as it
represents a possible defence against claims for pay equality.
2. What is performance-related pay, and what are the pros and cons of implementing
a performance-related pay system?
Performance related pay is a generic term that describes pay practices where pay,
or rewards generally, vary in accordance with some measure of output, productivity,
performance or effort, and these measures relate usually to the work of individuals
and groups. At the organisation level, such schemes are more usually described as
profit sharing or gain sharing. The use of PRP reflects fundamental beliefs about
human nature and the use of wage incentives as well as hard evidence on the
impact of such schemes on worker behaviour and performance, and views on the
efficacy of such schemes vary widely. Writers such as Herzberg and Kohn are
fundamentally to PRP schemes, citing major problems with their design,
implementation and underlying assumptions; other writers adopt a more favourable
position citing evidence that in certain circumstances such schemes can generate
positive motivational effects and if designed and managed properly can produce
short to medium term improvements in performance.
3. How do intrinsic and extrinsic rewards differ, and why is this distinction important?
The terms Intrinsic and extrinsic rewards are used to identify different sets of
rewards that are believed to influence individual behaviour and motivation; the
distinction implying that certain kinds of rewards connect to needs and drives which
are internal to the person and generally relate to most people, although not
necessarily in the same degree, and those that somehow lie outside the person and
can be manipulated by for example managers. However the distinction is not as
straightforward as it might seem although it is extensively used in the literature.
Again, Herzberg offers an interesting way of making sense of worker motivation and
the various rewards that can satisfy these needs. He distinguishes rewards that
OXFORD Higher Education
© Oxford University Press, 2008. All rights reserved.
, Banfield and Kay: Introduction to Human Resource Management, Chapter 12
connect to fundamental aspects of human nature, (intrinsic needs), which when met
have a strong motivational effect, from those which rewards which lie in the working
environment, such as pay and working conditions which help stop the worker from
becoming dissatisfied but do not motivate them. The debate about motivation and
rewards can become simplistic and misleading and whilst the distinction between
different kinds of rewards can be useful, it is important to really try to understand the
meaning behind the distinctions.
4. Why have organizations moved away from the piece rate pay systems that were so
popular in the 1970s?
The move away from piece rate pay systems< (this is a form of PRP) reflects a
number of factors, perhaps the most significant being the decline of industries, such
as textiles, engineering and manufacturing where literally workers were paid on the
basis of their physical production – the number of pieces or units they produced. It
is much more difficult to measure production and output in this way in service sector
industries, although in those such as financial services pay, (monthly and annual
bonuses), is strongly associated with performance measured by sales value,
profitability and other financial measures. Another factor relates to different
assumptions about human behaviour and what can influence this in performance
terms. New thinking and assumptions linked to such concepts as positive
psychology have moved the debate beyond pay and how it is paid to a wider range
of issues and performance enhancing strategies.
5. What reward strategies are contemporary organizations using and what are the
objectives to which these strategies relate?
The subject of reward strategies is an important and challenging one and you
should read around the concept and application of ‘total rewards’ to help you
understand the choices that are available. Some organisations are developing
strategies at the individual level and designing individually tailored packages; others,
particularly in the public sector, retain a more collectivist approach where rewards
are far less differentiated. Such differences reflect the different size of
organisations, different levels of unionisation and management vales and beliefs.
Other strategies relate to flexibility in rewards, for example allowing employees’
choice in the benefits they can expect to receive and the opportunity to buy and sell
benefits within defined limits. Other strategies focus on the rewards in the form of
personal and professional development and career enhancement, whilst others
reflect the contemporary emphasis given to flexible working practices.
OXFORD Higher Education
© Oxford University Press, 2008. All rights reserved.
, Banfield and Kay: Introduction to Human Resource Management, Chapter 11
End of Chapter Review Questions – Indicative Answers
1. What are the key features of the working environment that have an impact on an
employee’s level of performance?
Some of the most significant features for employee performance are –
The lay out and configuration of the working environment and
production/work processes. This has an impact on levels of efficiency
that is the time taken to complete designated work.
The skill level of employees. This factor affects levels of individual
productivity.
The social relationships at work. This has an impact on the support from
peers and colleagues and can be particularly important when dealing
with unexpected situations and emergencies.
The psychological environment is particularly important because this
relates to how people perceive their work and how they feel about being
at work. The most highly skilled is unlikely to be a high performer if
he/she is not psychologically connected to their work.
The system of incentives and rewards available to employees.
2. How does ‘performance’ differ from ‘productivity’ and what is the relationship
between the two?
Whilst both concepts are importance, productivity is the critical factor in any
organisation’s operations. This is because productivity relates to the relationship
between inputs, transformation and use of resources and outputs. Most private
sector organisations remain competitive by, amongst other things, increasing their
productivity levels. Performance, at the individual level is often expressed and
understood in a way that raises more questions that it answers. Performance is
often linked to hitting targets or meeting objectives, but if these are not appropriate
or fail to stretch employees then simply performing well – expressed in relation to
these targets and objectives – is unlikely to have much of an impact. Performance
improvements can, however, be a source of improved productivity because
employees are actually giving more/producing more as a result of being stretched or
motivated to perform at higher levels.
3. What kind of appraiser biases might be found in the performance appraisal process
and how might these be managed?
Appraiser bias in the context of Performance Appraisal are well documented but not
easily removed; the process of judging people will always involve some degree of
subjectivity and in fact it would be naïve to think otherwise or search for the perfectly
objective system! Frequent biases are –
Gender, race and age bias. Although are not supposed to occur, they
may do so at the unconscious level.
OXFORD Higher Education
© Oxford University Press, 2008. All rights reserved.
End of Chapter Review Questions – Indicative Answers
1. Why do organizations use job evaluation as the basis for their pay structures? What
are the advantages and disadvantages of paying people according to the job they
do?
Job Evaluation, as a means of establishing the relative value and worth of different
jobs is heavily used in the public sector and in larger rather than smaller
organisations. The advantages associated with its use are about consistency,
objectivity and procedural regularity – its supporters claim that it removes bias and
unfairness in locating people within a pay structure because different way rates are
closely aligned with job responsibilities. Disadvantages, however, can be
significant, amongst which are the loss of judgement and ability to offer rates
outside of the established pay scales, an overly bureaucratic approach to
determining pay and management problems associated with the rules of
progression within and between pay grades. The impact of anti discrimination
legislation regarding equal pay issues has given a boost to job evaluation as it
represents a possible defence against claims for pay equality.
2. What is performance-related pay, and what are the pros and cons of implementing
a performance-related pay system?
Performance related pay is a generic term that describes pay practices where pay,
or rewards generally, vary in accordance with some measure of output, productivity,
performance or effort, and these measures relate usually to the work of individuals
and groups. At the organisation level, such schemes are more usually described as
profit sharing or gain sharing. The use of PRP reflects fundamental beliefs about
human nature and the use of wage incentives as well as hard evidence on the
impact of such schemes on worker behaviour and performance, and views on the
efficacy of such schemes vary widely. Writers such as Herzberg and Kohn are
fundamentally to PRP schemes, citing major problems with their design,
implementation and underlying assumptions; other writers adopt a more favourable
position citing evidence that in certain circumstances such schemes can generate
positive motivational effects and if designed and managed properly can produce
short to medium term improvements in performance.
3. How do intrinsic and extrinsic rewards differ, and why is this distinction important?
The terms Intrinsic and extrinsic rewards are used to identify different sets of
rewards that are believed to influence individual behaviour and motivation; the
distinction implying that certain kinds of rewards connect to needs and drives which
are internal to the person and generally relate to most people, although not
necessarily in the same degree, and those that somehow lie outside the person and
can be manipulated by for example managers. However the distinction is not as
straightforward as it might seem although it is extensively used in the literature.
Again, Herzberg offers an interesting way of making sense of worker motivation and
the various rewards that can satisfy these needs. He distinguishes rewards that
OXFORD Higher Education
© Oxford University Press, 2008. All rights reserved.
, Banfield and Kay: Introduction to Human Resource Management, Chapter 12
connect to fundamental aspects of human nature, (intrinsic needs), which when met
have a strong motivational effect, from those which rewards which lie in the working
environment, such as pay and working conditions which help stop the worker from
becoming dissatisfied but do not motivate them. The debate about motivation and
rewards can become simplistic and misleading and whilst the distinction between
different kinds of rewards can be useful, it is important to really try to understand the
meaning behind the distinctions.
4. Why have organizations moved away from the piece rate pay systems that were so
popular in the 1970s?
The move away from piece rate pay systems< (this is a form of PRP) reflects a
number of factors, perhaps the most significant being the decline of industries, such
as textiles, engineering and manufacturing where literally workers were paid on the
basis of their physical production – the number of pieces or units they produced. It
is much more difficult to measure production and output in this way in service sector
industries, although in those such as financial services pay, (monthly and annual
bonuses), is strongly associated with performance measured by sales value,
profitability and other financial measures. Another factor relates to different
assumptions about human behaviour and what can influence this in performance
terms. New thinking and assumptions linked to such concepts as positive
psychology have moved the debate beyond pay and how it is paid to a wider range
of issues and performance enhancing strategies.
5. What reward strategies are contemporary organizations using and what are the
objectives to which these strategies relate?
The subject of reward strategies is an important and challenging one and you
should read around the concept and application of ‘total rewards’ to help you
understand the choices that are available. Some organisations are developing
strategies at the individual level and designing individually tailored packages; others,
particularly in the public sector, retain a more collectivist approach where rewards
are far less differentiated. Such differences reflect the different size of
organisations, different levels of unionisation and management vales and beliefs.
Other strategies relate to flexibility in rewards, for example allowing employees’
choice in the benefits they can expect to receive and the opportunity to buy and sell
benefits within defined limits. Other strategies focus on the rewards in the form of
personal and professional development and career enhancement, whilst others
reflect the contemporary emphasis given to flexible working practices.
OXFORD Higher Education
© Oxford University Press, 2008. All rights reserved.
, Banfield and Kay: Introduction to Human Resource Management, Chapter 11
End of Chapter Review Questions – Indicative Answers
1. What are the key features of the working environment that have an impact on an
employee’s level of performance?
Some of the most significant features for employee performance are –
The lay out and configuration of the working environment and
production/work processes. This has an impact on levels of efficiency
that is the time taken to complete designated work.
The skill level of employees. This factor affects levels of individual
productivity.
The social relationships at work. This has an impact on the support from
peers and colleagues and can be particularly important when dealing
with unexpected situations and emergencies.
The psychological environment is particularly important because this
relates to how people perceive their work and how they feel about being
at work. The most highly skilled is unlikely to be a high performer if
he/she is not psychologically connected to their work.
The system of incentives and rewards available to employees.
2. How does ‘performance’ differ from ‘productivity’ and what is the relationship
between the two?
Whilst both concepts are importance, productivity is the critical factor in any
organisation’s operations. This is because productivity relates to the relationship
between inputs, transformation and use of resources and outputs. Most private
sector organisations remain competitive by, amongst other things, increasing their
productivity levels. Performance, at the individual level is often expressed and
understood in a way that raises more questions that it answers. Performance is
often linked to hitting targets or meeting objectives, but if these are not appropriate
or fail to stretch employees then simply performing well – expressed in relation to
these targets and objectives – is unlikely to have much of an impact. Performance
improvements can, however, be a source of improved productivity because
employees are actually giving more/producing more as a result of being stretched or
motivated to perform at higher levels.
3. What kind of appraiser biases might be found in the performance appraisal process
and how might these be managed?
Appraiser bias in the context of Performance Appraisal are well documented but not
easily removed; the process of judging people will always involve some degree of
subjectivity and in fact it would be naïve to think otherwise or search for the perfectly
objective system! Frequent biases are –
Gender, race and age bias. Although are not supposed to occur, they
may do so at the unconscious level.
OXFORD Higher Education
© Oxford University Press, 2008. All rights reserved.
