Human Resources as an illustration of Management


Human resource management (HRM) is the strategic illustrate near to the management of an organizations most appreciated possessions - the group performing there who alone and jointly add to the accomplishment of the objectives of the business. "Human resource management" and "human resources" (HR) have mainly changed the term "personnel management" as a statement of the processes fixed up in managing people in organizations. In easy sense, HRM means employing people, growing their capacities, make use of, maintain and pay off their services in alter with the job and organizational necessity.

Its features includes of:

Organizational management,

Human resources administration,

Manpower management,

Business management,

Human Resource Management(HRM) is always taken by managers as an original view of place of work management than the usual approach. Its techniques force the managers of a venture to state their goals with specificity so that they can be understood and undertaken by the employees and to provide the capital needed for them to profitably achieve their assignments. As such, HRM techniques, when correctly practiced, are meaningful of the goals and working practices of the enterprise overall. HRM is also seen by many to have a key role in threat decrease within organizations.

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Payments and Rewards:.

Employee reward is about how people are pleased in accordance with their worth to an organization. It is troubled with both financial and non-financial rewards and embraces the philosophies, strategies, policies, techniques and processes used by organizations to enlarge and keep up reward systems.

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Employee benefits and profits in kind are various non-wage compensations accepted to employees in accumulation to their normal earnings or salaries. It is a system where an employee exchanges (cash) income for some other form of gain. This is commonly referred to as a 'salaries give up' deal. In the majority countries, most kinds of employee benefits are taxable to at least some level.

Some of these benefits are: housing, group insurance (health, dental, life etc.), disability income security, retirement benefits, daycare, tuition recompense, sick leave, vacation (paid and non-paid), social security, profit sharing, financial support of education, and other expert benefits.

The purpose of the benefits is to add to the financial security of employees.

(Armstrong. Employee reward Management and Practise, 2nd Edition).


There two types of rewards; Financial (extrinsic) and Non-Financial (intrinsic).

Porter and Lawler recommends both are essential for generating job fulfillment

related to presentation.

(John Leopold, Human resources in organization)

-Financial rewards:

Basic Pay is a definite payment linked with a job, usually given on a time basis (hourly, weekly, monthly or yearly).

Variable Pay is needy on performance of an individual, team or an organization and will not be a part of the basic pay.

Employee Benefits comprises of options like profit sharing, insurance, stock options, company cars, pension-schemes and holidays.

-Non Financial Rewards:

One of the most essential aspects of central rewards is Job satisfaction. If a person is not pleased from what he does, his performance gets artificial thus affecting the performance of whole team and in turn, the organization. Feedback, appreciation, praise and recognition given to an employee for any good work is seen positively and for a few employees, survival of responsibility and independence in their jobs is a type of intrinsic reward. Development, both at personal and career level are

important forms of intrinsic rewards.

Types of schemes:

* Employee Stock Ownership Plan - ESOP

Employee stock ownership plans can be used to keep plan members focused on company's presentation and share price admiration. By giving plans, an interest in seeing that the company's stock performs well, these plans are supposed to encourage members to do what's best for shareholders, since the members themselves are shareholders.

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➢ They are general and they are well understood by management and shareholders alike

➢ In some tax systems ( including UK) they have enjoyed considerable tax advantages


➢ They are often inappropriate for well recognized companies

➢ They are likely to use up shares more quickly than other types of scheme, hence creating intensive difficulties for a company with a less significant capital support Cash-Based



National Express Travel Company uses the ESOP schemes for its employees for well company's performance.

2. AXA is an insurance company with group headquarters in France. As being a multinational insurance company it implements the employee stock ownership plan for its employees.

* Profit-Sharing Plan

A plan that gives a share benefit in the profits of the firm to the employees. Each employee receives a fraction of those profits based on the company's income. It is also known as "deferred profit-sharing plan" or "DPSP".

This is an enormous way to give employees a sense of rights in the company. The company decides what segment of the profit will be mutually shared. And there are typically limitations as to when and how you can pull out these funds without any charges or penalties.


➢ Increases recognition within the company

➢ recognizes that each individual contributes to creating profit


➢ Does not provide an individual benefits or incentive

➢ Amounts circulated can be taken for granted

(Armstrong, Brown (2006) Strategic Reward), (Torrington, Hall, Taylor (2008) Human

Resource Management)


1. In a research reported by Chicago Business in April 1994, 110 plant

managers in Michigan, Ohio, Indiana, Illinois, Wisconsin, and Minnesota were

inspected about their profit sharing programs. Forty managers reported

production gains of 18-26 percent annually, 10 reported gains of less than

nine percent, 17 reported decreased results and discontinued the plan

2. Valassis Communications, Inc is a public company categorized under Distribution Services and located in Livonia, MI. Current estimates show this company has an annual revenue of $2,381,907,000 and employs a staff of approximately 7,200. Being such a vast organization it implements the profit-sharing plans for their employees.

* Scanlon Plan

The Scanlon Plans are a classified form of gain sharing. Shared reward programs formulated under the fundamental supposition that performance or production can increase if employees work together effectively and are encouraged to share their thoughts for improving productivity. Scanlon programs usually have a number of common elements that include:

-Persuasive Vision Shared by all Employees: Scanlon programs are classically applied to a business unit (e.g., team, department, or an organization) that can clearly categorize consumers and can make obvious measures of the unit's overall achievement. Employees understand how they can contribute to the accomplishment or performance of the unit.

-Participation: Scanlon Plan is based on the foundation that most productivity improvements or benefits come from "working smarter, not harder." Accordingly, to increase productivity, employees must have the chance to provide input and manipulate decisions. In most plans, a dignified suggestion process is used to give employees a right to be heard. Suggestions are rapidly and properly evaluated, and their accomplishment monitored, and outcomes shared with employees.

Other techniques for involving employees include project task forces, team structures, and repute committees. Because all employees share in the gains that result from recommended improvements, each individual has an interest in making sure good ideas presented are clearly expressed and quickly implemented. Unlike customary suggestion programs, there is no individual financial motivation for just making a suggestion, only for reducing costs or increasing profits depending on how the shared gain principle is defined.


1. Reliance Globalcom Recognized as Top-Tier Global Ethernet Provider, applies Scanlon plan for its employees for obtaining better management performances.

* Annual Bonus Plan: An annual bonus plan is most likely the very effective incentive tool available to companies for motivating management activities and behavior to deliver short-term business goals. As the eventual payout is based on performance over one year or less, a properly intended plan will make sure executives are rewarded for achieving objectives on which they have most in need of attention impact.

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1. BLUE DART EXPRESS Ltd. a multinational courier company gives its shareholders annual bonuses on their share purchased.

2. HONEYWELL AUTOMATION INDIA Ltd. also gives a high percentage of annual bonuses to its shareholders.

3. Also NESTLE INDIA Ltd. is a globalised dairy products company which gives the same benefits.

* Gain Sharing

Profit sharing, when used as a specific term, refers to various incentive plans introduced by businesses that provide direct or indirect expenses to employees that depend on company's prosperity in addition to capital salary and bonuses to employees given by the company.

Industry leaders are using Gain sharing performance based pay systems to give their employees Gain sharing bonuses for boosting their performance up and costs down.


1. Detroit Diesel is an engine making company which uses gain sharing techniques for its employees.

2. ESCO, the U.K fuel Co. implements the gain sharing technique for its employees on the basis of their past performances.

3. Goodyear Tire & Rubber also implements the similar kinds of gain sharing techniques.

4. Lipton Company and Marriott Hotels also uses and pursue the gain sharing techniques.

* Merit Plans

One of the most commonly used methods of rewarding employees involves reimbursement based upon performance. Merit plan is pay based on performance, but is renowned from other forms of incentive pay in four different ways:

1) Characteristically it is to be paid on the basis of past performance rather than future performance,

2) It is based on the individual ratings of employee performance rather than purposeful measures, 3) It is also based on individual performance rather than group performance, and

4) It is based on an evaluation of long-term performance in that the increase in pay and appraisals becomes permanent.

Merit bonus plans are a split of merit pay plans and share all of the factors and features enumerated, except the last one; merit bonuses are just those bonuses so they are a one-time adjustment to pay and must be earned again during each assessment period. Merit-based bonus plans have been proposed as one means to deal with some of the challenging issues surrounding merit pay. One of the benefits of using bonuses under a performance-contingent pay plan is that bonuses can better be a sign of current performance while at the same time administration costs for the organization. It appears that businesses have been attempting to take advantage of these advantageous characteristics, as merit-based bonus plans are ever-increasing and sometimes replacing conventional merit plans. Yet there has been no similar increase, connected with these plans. Relatively in recent times, noted the lack of evaluative research on merit bonuses and pointed out the need for more investigation in this area. As verification, Pay Satisfaction Questionnaire did not include a lump-sum or big bonus satisfaction component and only recently has that measurement been proposed as an addition to that balance. The purpose of this study was to provide some confirmation of the effectiveness of merit bonus plans by assessing the implementation of a merit bonus pay program.


1. Tesco, the most reliable brand of super markets implements the merit plans annually for its employees including the bonuses given to them on the basis of their performances.

2. In recent times, a Tower's Perrin survey investigated that of 770 North American organizations; more than two-thirds had variable pay plans (Anonymous, 2000). While many of the unpredictable pay plans reward performance at the organizational level, it appears that for exempt, the most recurrently used method of pay for performance is merit pay plan.


According to my examine, it has been concluded that employees can be rewarded in many diverse ways but personally, I believe Team Rewards which are much under-emphasized or unseen in the organizations these days should be given more preference but it should be decided after careful contemplation of what job entitles as different reward schemes work better in different circumstances.

Problems with Performance Related Pay:

➢ The extent to which PRP motivates is open to discussion.

➢ The necessities for success are complex to achieve

➢ Money by itself does not result in inspiration

➢ It cannot be understood that money motivate everyone equally

➢ Financial rewards may motivate them who receive it but it may also de-motivate those who haven't got any rewards.

➢ Individual PRP can create more disappointment than satisfaction if they are perceived to be unfair.

➢ Schemes depend on the continuation of an accurate and reliable methods of measuring performance.

➢ Employees can be distrustful of schemes because they might fear that performance standards will be raised constantly.

➢ Individual PRP decisions depend on the conclusion of the managers or executives, which in the nonexistence of dependable criteria could be unfair.

➢ Individual PRP is based on the supposition that performance is completely under the control of individuals when, in fact, it is exaggerated by the system in which they work.

➢ Individual PRP has proved complex to manage.

(Armstrong .M, Employee Reward Management and practise, 2007)

Basics of an Effective Reward System:

- Attracting employees: The reward package on offer must be adequately attractive from that of its labor market competitors.

- Retaining employees: Retaining successful performers should be the central aim of a reward approach.

- Driving change: Pay can be used particularly as one of the tools supporting change management process.

- Corporate status: Establish a positive corporate reputation

- Affordability: How limited resources should be used in order to capitalize on the positive force of reward management.

- Purchasing Power: The complete level of weekly or monthly earnings determines the standard of living of the beneficiary, and will therefore be the most important concern for employees.

- Composition: How is the package made up? The growing difficulty and complexity of payment arrangements raise all sorts of questions about paying incomes.

(Torrington, Hall, Taylor, Human Resource Management 2008