arp
have already been rewarded. Furthermore, employers who have operated a highly centralised method of pay determination may find a scheme that relies on openness and the judgement of line managers inappropriate.
Some trade unions and employee representatives remain hostile to ARP as they see it as an individualised method of payment running counter to the principles of collective bargaining. These objections will best be overcome if, through negotiation and/or consultation, they have an opportunity to influence and agree management’s proposals, develop confidence in the fairness of the scheme and the way it will operate, and if the potential benefits to their members are clearly demonstrated.
Preparing for the introduction of ARP
ARP should not be introduced retrospectively. Employees should be consulted at the earliest opportunity about any proposal to alter the established payment system in favour of ARP. Employers will need to explain the need for such an initiative as well as how both the organisation and individual employees might hope to benefit from its introduction. Necessary research will need to be conducted to select the most suitable and flexible scheme that can accommodate the immediate and continuing needs of the organisation. Extensive communications and training will need to take place as far in advance of the scheme’s implementation date as possible. Employees can only then know what is expected of them and in turn what to expect from the scheme. The next section gives more detailed guidance on these issues.
How to make appraisal related pay effective
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Key Points: –
Appraisal related pay:
There must be commitment to ARP from senior managers
The role of managers is critical
Adequate resources and suitable training should be provided
Employers should consult with managers, employees and their representatives before ARP is introduced
All employees involved must receive full and clear information about how the scheme will operate
ARP should be fair and open and based on a formal system of performance assessment
The scheme should be carefully designed, simple to operate and should encourage consistency and objectivity
There should be an appeals procedure and the scheme should be regularly evaluated
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There is no single model for an effective appraisal related pay scheme. Each organisation is unique and should tailor its approach to meet its needs. Nevertheless, observing the following principles of good practice may help to ensure the implementation of an effective scheme. An aide memoire of some questions to consider is provided in Appendix 1.
Commitment
An ARP scheme is likely to fail if there is a lack of commitment from senior managers. It is they who will need to manage the change to ARP. They must be convinced that such a move is both appropriate and an important mechanism for promoting efficiency by motivating employees to improve performance. Schemes imposed by parent organisations without the agreement of local managers may well fail. Managers will need to monitor and evaluate the scheme to ensure that its subsequent development is meeting objectives and expectations and that it is operating fairly. They should continue to review and implement other important personnel practices such as effective employee involvement, good [next page]