To prepare for this essay please read the required articles that is attached then answer the
following questions:
Which features of the system implemented at Network Solutions correspond to what were described in
the selected weekly reading as ideal characteristics?
Identify characteristics that are missing from the system at Network Solutions.
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5) Turnitin.com copy percentage must be 10% or less.
Introduction
The choice of the methods to be adopted in performance measures that would be used to evaluate
the performance of employees is critical to the management as it affects the attitude of the
employee when perceiving issues of fairness, job satisfaction and also organizational
commitment. Nonfinancial rewards systems have over the years resulted in more
positive response from employees. These include improved attitude, job satisfaction
and increased productivity.
- Ten are present while four are not.
- a) Inclusiveness – Employees participate in the process of creating the system by
providing input on how performance should be measured.
Employees should be allowed to have an alternative on the performance rating that
should be allowed to apply in their evaluation processes. Some systems maybe
perceived to be biased and may result in reduced staff morale and high staff turnover.
The major purpose of performance evaluation is to increase individual employee
production and create an environment for optimal performance.
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Lack of participation in the process of creating a performance system may result in staff
apathy for the system as what the management may take as motivation may be
considered by the employees as beyond their reach and the management is set out to
get rid of them. The expectancy theory clarifies that motivation is mostly affected by
three factors. The first factor is the perception that the management efforts are directly
correlated with performance. The other is instrumentality which is concern with
employee expectation that all the rewards are also connected with performance. The
third factor is called valence and it involves how much the employees value the rewards
offered. The only way that the management can give the highest reward according to
employees is if they are consulted during the formation stages so that their views are
also included in the reward system for the performance based system (Sloof and Praag,
2005). Hence imperfect performance measurement remains one of the greatest reasons
that result in disenchantments of employees.
b) Correctability – There is an appeals process, through which employees can
challenge unjust or incorrect decisions.
The appeal process creates an environment of fairness among the employees. Those
who have been evaluated and failed in performance measurements should be allowed
to appeal in the processes that they may feel was unfair and unjust. Employees should
be allowed to appeal for their cases to be reviewed again.
- Strategic Congruence – Individual goals are aligned with unit and organizational
goals. When individual employee goals are aligned with individual goals it results in high
performance. Most individual goals target financial rewards while most companies
target performance and production rates. When the company decided to align individual
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employee goals with their own then it must have also considered that majority of
employee goals is also to achieve financial satisfaction while also attaining the requisite
training and vertical growth in the company’s organization structure. According to
Kaplan and Norton (2004) the most effective linkage in high level strategy in
performance management in individual reward programs especially where the Balanced
Scorecard is involved. The major goal of this linkage is that it focuses the attention of
the employee to the organization’s strategic priorities hence providing extrinsic
motivation when rewarding employees after the organization has achieved its target.
The company gains when employees have been rewarded hence it provides motivation
on both sides.
- Strategic Congruence – Individual goals are aligned with unit and organizational
goals. Majority of employee goals is also to achieve financial satisfaction through
attainment of requisite training and consequently achieve vertical growth in the
company’s organization structure. Network Inc is silently on the exact rewards of the
employees and the process of rewarding the best performancers. Lately, there has
been an increased emphasis on the application of non-financial performance measures
in accounting for rewards due to the inadequacies of the financial measuring systems
(Ittner and Larcker, 2001). Most financial performance measures that are applied in
accounting are considered as late or take time to be made, are too aggregated, back-
ward looking, inadequate and incomplete (Mia and Alam, 2001).
Due to these shortcomings and deficiencies in financial performance measurement
most companies have shifted focus to non-financial measures that are literally broader,
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reflect on different aspects of long-term perspectives that also reflect on different
dimensions of the performance by management. Hence the use of incentives systems
that has nonfinancial rewards result in more positive response and behavior from
employees. These processes are perceived as fair and they offer better terms that
increase job satisfaction and organizational commitment.
The company needs to understand how the various aspects of reward systems affect its
employees. The reactions generated by the employees on nonfinancial measures
should be weighed against those that are generated from financial rewards and the
appropriate system adopted.
To conclude, each company is unique and the performance measures that work
successfully I one company may achieve different results when implemented in another
company. Each company should adopt a system that works best for each individual
case.
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References
Hoque, Z., Mia, L., Alam, M. (2001), “Market competition, computer-aided manufacturing and
use of multiple performance measures: An empirical study”, British Accounting Review,
33(1):pp. 23-45.
Ittner, C.D. and Larcker, D.F. (2001), “Assessing empirical research in managerial accounting. A
value-based management perspective”, Journal of Accounting and Economics, 32(1-
3):pp. 349-410
Kaplan, R. S. and Norton, D. P. (2001) “Transforming the Balanced Scorecard from
Performance Measurement to Strategic Management: Part I”, American Accounting
Association, Vol. 15, No. 1, pp. 87-104
Sloof, R. and Praag, M. V. (2005) “Performance Measurement, Expectancy and Agency
Theory”, Tinbergen Institute, Discussion Paper, No.026/1.
