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The one other one tries it important of HRM a strategy only for the organization is to develop and there is an instrument called the card of score of HR is used for it to be made. The card of score of HR is is made up of several not who help the department HRM in collected a proper strategy for the company and that returns the efficient strategy in the best interest of organization. It really provides measure and helps cribs to carry out fair strategy according to their plans.
The way of strategy of human resources that a significant mailman with an effect on Firm Performance by which it can accept the supreme production of other mailmen contributes so also as characteristics which install in Competitive Advantage in markets. The possession of a long-term home is and of other party of strategy of administration of human resources .Plans which implicate the upper executives and - or the directorate of the society which gives the track to other people to act the strategy of human resources is part there. A general frame which provides a perspective to choose specific policies and procedures according to which the company can put its purposes and targets is the main party of the strategy of human resources.
A balanced card of score is a frame which concentrates on the possessor of part, the customer, internal requirement and appurtenant of business create in order to a system of linking up which collectively represented the strategy of an organization and how it strategy can be fulfilled. A card of score of scales provides a frame to reorientate the system of administration in the long view keeping the strategy of the central organization in the process of catch of decision. The balanced card of score is not confined any more in just used today collaborate use. he must be transcend to support function as HR maximize in order to the there strategically contribution in the biggest unit and by the way to optimize their allocation of means by linking up decision directly to collaborate and purposes of unit of business.
The following diagram explains cycle and mechanism of card of score HR:
Therefore the aforesaid diagram represents four things that is to say. The systems of HR, competences, practices and deliverables, where Hr systems mean to make internal alignment and marriage in strategy in the culture of organization. The practices of Hr are fundamental jobs as selection, training and communication in the organization, although competences HR are the different piece because it is in charge of the operational effectiveness of organization and the relations of employee with the administration.
There are undoubtedly strategies which are used by HR to ameliorate the economic activities of organization which will be explained under the review of literature and then we shall see that that strategies and how are they used by different companies in actual age.
Ex 1: This is an example of Arran Ltd. which is multi-divisional retail financial services firm based in UK. The Balanced Scorecard concept was introduced to Arran Ltd. The performance measurement system was built in part around custom designed performance management software system. Successful application of Balanced Scorecard within the Retail Division prompted Arran Ltd. to consider wider use of this approach. After a time, a Corporate Balanced Scorecard and several other Divisional Balanced Scorecards were developed using the Retail Division design and systems as their basis. In the case of Arran Ltd, Balanced Scorecard was chosen as the preferred performance management tool because it was recognised that the Retail Division of Arran Ltd. needed 'better sources of management and performance information' and 'better ways of rewarding management performance'. It was felt that the Balanced Scorecard approach offered a more clearly organised methodology to presenting an array of performance measures including the traditional financial elements of control.
Ex.2: Truro is a multi-divisional oil firm based in Middle East. Truro implemented balanced scorecard with the help assistance of an external consulting firm, a series of Balanced Scorecard designs for their Corporate and Organisational unit levels were then designed. Subsequently a total of seven Balanced Scorecards were developed commencing with the Corporate Balanced Scorecard and then cascading to sub-units: Lubricants, Retail, Commercial, Distribution, Terminal Operations and Group Business Services (GBS). Truro wanted its Balanced Scorecards performance management system to improve corporate management's strategic control over the business. Balanced Scorecard proved popular with managers within the organisation.
Ex.3: Crosshouse is a multi-divisional, multi-national FMCG Company based in Europe Crosshouse began to develop a Balanced Scorecard based strategic management system and took the decision to implement it across the whole organisation. Crosshouse chose to develop in-house a performance measurement software solution, primarily for cost reasons. The use of a standard approach facilitated the auditing of Balanced Scorecard design work. The is helped promote internal discussions regarding approach, and also made it easier for managers transferring between units to learn about their new unit's strategy and performance. Overall the new Balanced Scorecard based management system, and associated changes to internal processes, were strongly favoured by the unit management teams, as they perceived it as giving them a stronger mandate for local action without 'interference'. The central strategy team also liked the approach, as they believed it provided increased the visibility of unit performance against the strategic contract at Board level, while simultaneously reducing the level of monitoring activity required.
Ex.4: Medium sized public sector enterprise (name kept confidential) the Defence Storage and Distribution Agency (DSDA), is a semiautonomous central government agency working in the UK's defence sector.
The focus was on the design and implementation of "2nd Generation" Balanced Scorecard designs, and accordingly the team constructed and executed a project plan to create a Balanced Scorecard of this type. 2nd Generation Balanced Scorecard designs focus on the development of a number of linked 'strategic objectives' that in turn become the basis for the selection of appropriate performance measures and targets that are used to inform Balanced Scorecard reports made to managers.
The original DSDA scorecard
Ex.5: IIC, is a small UK subsidiary of a large Japanese insurance company
Advanced approaches to Performance Management such as the 3rd Generation Balanced Scorecard (Lawrie and Cobbold, 2004) look at how things are communicated about key goals and expectations one way, and concerning performance against critical activities and outcomes the other. The firm implemented this scorecard. The use of the Performance Management System was to improve the awareness of managers as they execute the existing appraisal / goal setting system. Reduce the detrimental effects of incentive related pay by linking it to a few high-level goals, and simply use the Performance Management system as a tool to help management teams achieve these high level goals .Thus helping the management team to assess the performance through scorecards.
Ex.6: United Nations (UN) Agency in their New York City HQ to work in its normal participative manner to facilitate the designing of an Executive Committee level Balanced Scorecard. Initially the plan was to pilot the Balanced Scorecard at two levels: Executive Committee and Country Offices, prior to full implementation. The Balanced Scorecard has brought transparency of performance and is strengthening accountability for performance at the top levels of the Agency. It has promoted open discussion and consensus building across the Executive Committee and has started to erode "silo-working".
HR can play very important role for any organisation by the effective use of HR scorecard making right strategies and give them right support and implementations, but for that mangers should be able to understand that what is the size, strength and culture of organisation.
Moreover Brian E. Becker, Mark A. Huselid, David Ulrich added in their book 'The HR scorecard' that scorecard system encourage to take active part in strategy implantation rather than simply observe the financial results.
When the mangers create the Hr scorecard for the company then they come to know every weaknesses or strength and the faults they really have to go to deep which really enhance their performances Susan Bowick, vice president and director of Human Resources, Hewlett-Packard says, 'The HR Scorecard provides a language for HR professionals and line mangers working together to really nail the connection between HR interventions and the firm's success'. Richard K. Thomas, Louis G. Pol, William F. Sehnert described four perspective and targets of Hr scorecard:
Financial perspective: In this perspective objective is to maximize share holder value and to maximize human capital performance.
Ex.7: The Government believes that it is on track to ensure that all NHS staff will have access to a Childcare Co-ordinator who can help them meet family needs. The ambitious £70 million childcare strategy has led to 124 co-ordinators in place across the country so far with another 50 currently being appointed
They have launched this strategy to minimize the turnover ratio and to help the employees to work with a relax mind because of that a new central database at www.doh.gov.uk/iwl has been launched, allowing NHS staff to easily be able to find details of their local Childcare Co-ordinator. NHS Childcare Co-ordinators are developing local childcare schemes which provide good quality, affordable and accessible care to meet the needs of staff; as well as provide advice and support to parents working in the NHS. . This will create stability for their children and overcome problems. This strategy is viewed because most of the workers are leaving NHS because they are having problem with their children's. Over 250,000 NHS staff have children under 14 and it is believed that more nurses and doctors would return to the NHS if they could get childcare help.
Ex.9: Futtaim is a major Operating automotive, electronics, retail, financial services and real estate brands, the Al Futtaim trading group offers some of most sought-after jobs in the booming Middle East market, receiving more than 200,000 job applications yearly. The group has rolled out SAP E-Recruiting to power its strategic initiative to fill the 500 job vacancies at its 40 holdings each year while reducing HR costs through fully paperless processes. Recruiters at each of the group's companies can now access a central global talent pool and easily create shortlists of the best-qualified candidates. This will help the organization to reduce the cost of their hiring people and saving of time
Ex:12: As the largest specialist outsourced pensions administrator in the UK, Capita Hartshead administers the pensions of over 3.2 million people and handles more than £2 billion in pension plan contributions every year. Capita Hartshead strives to maintain high standards of customer service in an extremely competitive industry. The company developed an integrated suite of tailored applications based on Progress Open Edge to automate pension management, provide superior customer service, and improve productivity.
Ex:13: 4S Information Systems introduced a Dawn Performance Manager 1.0A (Windows) which Detect trends and changes quickly in your data. Correlate actions with their effects. Suitable for tracking and graphing Balanced Scorecard measures or KPIs. Spot real changes in your data and make it easy to identify delayed effects of actions. Cuscus and tender averages. Suitable for technical, supervisory, and managerial staff. Example applications areas - production, safety, energy use, financial, stores, maintenance, medical, environmental and sales data.
Ex: 14:The presenter of this webcast explains why there is no single component of the Performance Management suite that drives improvement, but rather the synergy from their integration. The attendee will learn how strategy maps and their companion, balanced scorecards, communicate strategic objectives with target-setting to help cross-functional employee teams align their behaviour to the strategy and better collaborate and why analytics, with emphasis on predictive analytics and pro-active decision making, is becoming a competitive advantage differentiator and an enabler for trade-off analysis.(Source SAS)
Customer: This perspective comprises objectives such as 'provide responsive quality service to employees'.
Internal processes: This contains objectives like such as 'ensure a strategy-focused workforce'.
Learning and Growth: This perspective deal with reason like 'build strategic competencies'.
But in today's highly competitive market the most important thing for the mangers is to find out the way to convert the HR strategies to Competitive one's in order to get the organisation competitive edge over it's rivals, so what HR can do is to perform it's duties using specific strategies to enhance organisation's performance e.g. to make strategy to improve the productivity of employees and by hiring people from different parts of world who are able to perform multi tasks for the administration against low volume of salaries and job designing is done with proper thinking it could enhance organisation's productivity let's see them in following:
This is used to enhance the productivity of labour so make them work faster and more efficiently resulting an increase in the size and quality of the output with the same number of employees, different methods used by HR to motivate employees and Herzberg. F 1959 really described it well in his two factor theory in which he highlighted the factors like increase in pay, job enrichment, promotion, rewards, recognition, working conditions and so on.
Fact to rent endows primary duties in personnel of HR so at present when the world was so globalised, by hired employees various culturellement can accept advantage in any Organization because in the actual market where the customers are culturellement miscellaneouses and of business are developed on different parts of world, the work force culturellement various is apparently an advantage as they can speak different languages, they can give of different ideas and of thoughts in cribs on the basis of their rears lands, furthermore they can be more efficient in problems becoming identified and conclusion of their resolutions are comparable in even personal cultural said by wartson, kumar and michealson in 1993 but they must be definitely aimed and his responsibility HR to aim them and keep the fair scales between them.
The comprehension of job can be used as a strategy to accept the best of the employees and draw the best party of their personal addresses. It is very obvious that your rivals also have good employees, but one end of day the win of organization competition who use the addresses of his employees better and draw the best party and the design of job really plays it the role importing its Strategy HR so once again to return more creative jobs and clever and allow them to go out of their personal addresses.
A something else which are productive more important HR is links between strategy HR and competitive strategy of business of organization which means that HR really play the role to support the fundamental strategy of organization to earn more benefit and competitive advantage, there are some models in this context which can be considered but one of the renowned is the model given by Randall S. Schuler, Susan E. Jackson in 1987 in whom they represented links between strategies HR and strategies of Michael's competitive Market E. Holder 1985:-
The strategy of innovation makes allusion to the big degree of creativity and high the quantity of risk, in this organization of strategy are never sure of result and it needs the high quality of marketing to attract it the customers and make them think of check and feel confident of the product.
If the organization goes for the strategy of innovation that strategy HR should be according to it as the personnel should be chosen on the basis of their creative addresses, the personnel should be given complete trust and to be sure that the organization has people who are very clever in the field of marketing and the design of job should help employees to develop new addresses in the best interest of organization.
QUALITY ENHANCEMENT STRATEGY:
To this strategy the organization services go for the increase of its products to acquire the trust of the customers and to keep them tied with the product, by providing the best quality and. This strategy returns risk low, but not to augment very in sales high.
For this strategy the practices of means of human being should have to provide jobs fixed to the employees and make them realize the quality importance of the product and of customer's best services, to give them some private incomes of security try to draw their complete participation on working editions
Valuable direction must almost sell products on the more cheap rates being comparable in others, but to earn good benefit the quantity of production should be higher and from the work force used should also be cheap and commercialisants expenses should undoubtedly be lower in another way it would be difficult for the organization to lower the price of product and attract the customers towards it.
HR STRATEGY : (for cost leadership)
If the organization uses the strategy of valuable direction that HR has the very important role to play and their strategy should be to avoid costly job and marketers high artful which load comparatively the quantity of wage and dear advertising high and a something else is put the small targets for the employees make them work so much quicker augment in order to quantity and greatness of quantity.
Miles, Raymond E. and Snow, Charles C. (1978) presented four approaches to competitive strategies:
The Directorate Award means that companies deliver the same stuff, but in a lower price.Â The method for price advantages also differ with respect to the structure of an industry.Â If an industry reaches an overall price advantage, so that industry does a aforesaid estimate performance on other industries and the industry may direct prices on others.Â These prices are controlled by the price leaders.Â At this time suggestion, they can not ignore the concept of differentiation.Â If a product is not acceptable to the people then the leaders will abolish their prize money to accomplish a certain increase in sales.Â But this way they can not achieve their expected increase they need.Â (The wearer 1998, 1980)
Ex.15::ASDA, TESCO and Sainsbury's. Among these supermarket competitors ASDA, by selling good quality goods at cheaper price, enjoys the advantage of cost leadership over TESCO and Sainsbury's.
Ex. 16:- Considering the case of Dell computers their main objective is to become the low-cost producer in the industry with little differential with other products on the market, here there is a broad scope business activities with low degree of product differential.
Ex. 17: - Sainsbury's, has similar products with wide range of cost. They have their own label on the lower label one in order to lower prices. This is done to satisfy the sufficient consumers, here there is a narrow scope of business activities with low degree of product differential ( Smith 2003)
Ex. 18: - Harnischfeger is an industry to launch tough cranes in 1979. They started with a market share of 15%. On that time, they were not able to attain the advantages over others. To achieve the advantage, they redesigned the cranes by using good components, changes the configuration and reduced the materials. They slightly changes there process of the industry and save the cost as better as possible. These all leads them to good quality products with a discount of 15% than others. From that strategy they increased their market shares from 15% to 25%. (Porter, 1980a)
Ex. 19 - Walkabout, a known Australian bar in London and some other cities around Europe and Australia. Every Monday, during week time, the do a promotion where every drink customers have: beer, spirits, wine and even cocktails, are for just £1 pound. Though this is a week day, most of the young people go to Walkabout to enjoy a very low price drink. (Sofia's personal experience).
Ex. 20:- Other industries like Brigg`s & Stratton's in gasoline engine, Lincoln electric's in arc welding, Emerson electric etc achieve advantages over others through cost leadership strategy. (Porter, 1985)
The possessors are these companies which produce very restricted products and continue ameliorating the existent products rather than going for innovation or throwing more products. These kinds of companies carry out the strategy of valuable direction normally to accept competitive advantage.
These companies have the rather big range of products and they really go for innovation, as them they sell varieties of products therefore these types of companies have normally strategy of différentiation.
These companies are in active service in at least two types of market of product therefore they act as the possessor for a product as the application of low valuable strategy and act as canvassers for of other one as try to create new things in the other market of product and differentiate it.
These companies refers instability in structure and cultural environment providing top level mangers keep changing the company's structure to put up with external pressures.
EX.22: Mobilink is the number one telecom company of Pakistan which has got 53% of market shares that clear shows its strength although it has many rivals like telenor, warid, u-fone and many other but even than it has been able to get competitive edge. Among several reasons of it's success one and most important part is HR practices that really makes it look different from its rivals. Hr strategies and practices are actually very all focused to keep giving training to the staff and that's what the real reason behind its success because in the market of telecom innovation arises every day, new technology new methods appear every day so in order to cope up with that mobilink keep giving training to the staff and keep brining the changes in technologies, maintain them up to date, moreover if one employee has got some skills and creativity than to enhance his skills according to current need of market, he is sent by the company for higher studies and different workshops, so mobilink don't lose the skill full and creative employees and don't give its rivals any chance to get the advantage by hiring their skill full x-employees. Mobilink always have very low staff retention because of its good reward and compensation polices that keeps the employees happy and satisfied and help them to remain motivated as it has separate department which only deals with rewards and compensations.
Business Strategy and HR Strategy
EX.24: NUCORT American steel manufacturer, Nucor, is an excellent example of a company that has integrated its human resource strategy tightly with other functional strategies to create inimitable capabilities and drive competitive advantage. Nucor's competitive advantage is based on cost leadership. It achieves this through all the four building blocks - Inefficiency, Quality, Innovation and Responsiveness. At the base is a well-matched human resource strategy. Nucor hires goal-oriented, self -reliant people who are motivated by striving for continuous improvement that yields them increasing monetary compensation. Since the production of quality steel depends on teamwork, workers within the plant are eligible for substantial incentives based on the output of their group. But, plant managers' compensation depends not only on the performance of the plant they are managing, but of the company as a whole - this is to provide an incentive to transfer best practices and innovations to other parts of the organisation. To keep costs down, it has very few layers, all managers travel by economy class, and even frequent flier miles are used by the company. Nucor builds small plants, close to locations where there is demand for its products - this is to reduce transportation costs, but also to be more responsive to its customers. Every time it has to build a new plant it assembles an in-house group to build it so that it can take advantage of its learning from earlier projects as well as prevent diffusion of its innovations to others. Nucor undertakes little research and development on its own, but maintain close links with technology suppliers the world over and keeps a close watch on developments that could affect its competitiveness. It is willing to experiment with new technologies that have been proven at the pilot plant level by using its plant design skills to scale these technologies up to a commercial scale.
EX.25 Lincoln Electric Company: Another legendary company that has matched its business strategy to its human resource strategy is the Lincoln Electric Company. A producer of electrodes and welding machinery, Lincoln is also a cost leader. Lincoln's cofounder James F. Lincoln believed that everyone could develop to his or her full potential through a system of incentives designed to encourage both competition and teamwork.6 This system has four components: wages for most factory jobs based on piecework output; a year-end bonus that could equal or exceed an individual's regular pay; guaranteed employment and limited benefits. Like Nucor, Lincoln focuses on hiring individually motivated, high performers. These individuals have their compensation tightly linked to their output with laid-down minimum quality levels. A substantial portion of the company's profits is also distributed to employees at the end of the year based on an individual merit rating that is computed from output, ideas and cooperation, dependability and quality. Lincoln's innovative HR strategy enabled it to gain, by 1995, a market share of 36% in th otherwise fragmented US market for welding equipment and supplies. Interestingly
An effective HR Scorecard serves two purposes as an management tool:
â€¢ It gives you the information you need to adjust HR's actions and behaviours to achieve better results.
â€¢ It validates HR's contribution to the company's success in financial terms.
To get rid of impurities your HR Scorecard, consider these criteria:
â€¢ Focus the Scorecard on the most important goals in terms of the firm's strategy.
â€¢ Be aware that some HR goals have multiple dimensions, such as high-quality staffing and maintaining full staffing levels.
â€¢ Determine how the elements of HR's own system reinforce (or contradict) one another. For instance, if you are always at full conscription levels, but the quality of the staff is inadequate, then HR is not meeting the firm's needs or supporting a strategy that requires a high quality staff.
â€¢ The things you decide to measure on the HR Scorecard will attract attention, thuthey are the elements that will get managed. Select them carefully.
â€¢ Showcase the relationship between the cost and benefits of HR deliverables. For
Example , it may cost more per hire to attract, recruit and retain high-quality staff, but the benefits may outweigh the additional cost.
â€¢ Help upper management understand how HR can create value, so executives see that it may be financially wiser to invest in HR than to cut its expenses.
â€¢ Differentiate between HR doubles (what HR does) and HR deliverables (something that creates desired employee behaviours that drive the company's overall strategy).
â€¢ When evaluating measurements and results, recognize the difference between foremost indicators and filling indicators.
â€¢ If the company's strategy changes or the performance drivers affecting that strategy Change, HR's strategy must also change and you must update the Scorecard.
â€¢ Conduct a Return on Outlay (ROI) analysis to determine the best way for HR to Produce results that abet the company's strategic plan.
PAY FOR PERFORMANCE
WHAT IS PAY FOR PERFORMANCE
REASONS FOR PAY FOR PERFORMANCE
PROBLEMS OF PFP
REASONS FOR PFP
TYPES OF PFP
STRATEGIES UNDERTAKEN BY ORGANIZATION AND THE PRATICALITY OF SUCH PRACTICE
Pay for performance can be widely explained as tying workers pay to their performance. with the emphasis on competiveness, productivity, and delivering measurable bottom line results,the trend for virtually all employers is to tie at least some portion of their workers pay to the workers and the company's performance. In other words performance related pay can be used as a generic term to describe a variety of payments system that in some way link an employees pay to either a measurement of their work group, department or organisation .Milkovich and Newman (1987)suggest that it is a term that can be broadly applied to any form variable pay scheme which rewards employees on the basis of performance.
In other words the manager devising an incentive plan should first remember that different people react to different incentives in different ways. to choose just one example one study focused on high and low positive affective individuals. high PA's are energetic, active and alert. Low PA's are more lethargic, listless and apathetic. in this this study the low PA's actually responded much more favourably to merit raises than did the high PA's perhaps because the raise gave the relatively unhappy low PA's relatively more to be happy about. a non in centive recognition rewards such as (gift certificates) further illustrates how differences affect incentive choice.
There are various types of performance related pay the most commonly applied performance related pay schemes are briefly described below. They are not regarded as particularly effective as individual motivators because the link between effort and reward is not sufficiently visible or direct(ARMSTRONG 2002).
INDIVIDUAL PERFORMANCE -RELATED PAY
Traditionally, individual performance related pay (IPRP) as the outcome of payments -by-results schemes or piece work for hourly paid employees where an individual's earnings are totally or partially based on individuals earnings are totally or partially based on individuals performance in terms of out put set against targets. ln recent years the the emphasis has been on individual performance related pay predominantly for salaried employees. In IPRP schemes the assessment of individual performance may be linked to a level of unconsolidated bonus or performance review process conducted through a formal appraisal system, in contrast to traditional discretionary merit payments which frequently had no links to a formalised review process.
TEAM BASED PERFORMANCE-RELATED PAY
Recognising the significance of a good team work as a key factor in organisational success shifts the focus from IPRP to pay for teamwork which is rewarded according to measures of team/group performance.
An alternative to performance pay based on measured outputs has been competence and skills -related pay which ARMSTRONG(2002) defines as a method of rewarding people wholly or partly by reference to the level of competence or skills they demonstrated in carrying out their roles. lmplied in the concept of competence is the development of individual capability to meet both present and future.(Boyatzis 1982).taking this interpretation, it is frequently regarded as a more appropriate way of assessing performance than achieved, outputs as it encourages a focus on the continuous development needed to grow human resourcing capability in organisations experiencing rapid change.
A SHIFT TO CONTRIBUTION-RELATED PAY
Recognising the limitations of performance schemes dominated by rewarding achieved outputs or demonstrated levels of by rewarding achieved outputs or demonstrated levels of competence, a mixed model has emerged .this is described as con tribution-related by Brown and Armstrong(1999) who initially identified the concept.lt is a mixture of those PRP schemes that reward individuals on the basis of achieved objectives and those that reward individuals on the basis of achieved objectives and those that reward individuals on the basis of those PRP schemes that reward individuals on the basis of achieved objectives and those that reward the competencies needed to achieve them.eg. of organisations that have adopted the mixture model of contribution are the American express UK, HSBC bank, Xerox UK and little woods Retail(Suff 2001).
One most successful company ,Home Depot Incorporated new it needed a way to get its employees more involved in helping in helping the company cut costs and complete with companies like lowe's. also like many companies, Home Depot already had a bonus programme in place for its managers and executives .the question facing Home Depot 's management was whether to institute such a bonus programme for workers in all its stores and if so how to do so.
Eastman Kodak has since 1995,used employee opinion survey to decide executive bonuses.
United airlines, which is employee-owned, is moving to a system where executive bonuses will depend to some extends on employee satisfaction surveys.(wall street journal April 6th 2000)
HR director of Home serve Ltd ,a major supplier of major electrical house hold appliances that offers a comprehensive installations and maintenance service to both its new and existing customers .traditionally, the engineers have worked Monday-Friday, with Saturday and Sunday work paid for at premium over time rates.
PROBLEMS WITH PFP
Relating pay to competence presents difficulties in measuring levels of competence with any real accuracy .it requires an individual need to demonstrate to achieve what is organisationally required of them, which makes a clarity and a shared understanding about what is expected on essential requirements of such system.
There is less transparency in how pay progression is arrived at and this may hide discrimination and inconsistencies in decision making.
It breeds inflexibility and can be detrimental to teamwork as individual focus on those personal goals most likely to deliver financial reward.
Individuals are motivated differently and what may motivate some may de motivate others, particularly if they are not the best performers and see little value in expending effort for unlikely returns.