arp
good communications and training for the job. Improved financial incentives by themselves may not lead to greater employee commitment.
Management role
The role of managers and supervisors is critical to the effective implementation of any ARP scheme. It is they, in consultation with employee representatives where appropriate, who must define the required standards of performance and behaviour. They must make clear to employees the aim of the scheme and the standards of performance required to attract an ARP award. They must ultimately take responsibility for the decisions about performance. Managers will have to explain performance assessments to employees and may need to defend their judgements if asked. In schemes where pay determination is decentralised they must also decide how to award payment to employees under their control.
It would be sensible if a senior manager responsible for personnel is given the responsibility for coordinating the scheme to ensure that it is consistently and fairly applied and that the administration is handled correctly, for example that deadlines are met and paperwork properly completed.
Allocation of resources
Initially ARP schemes can be costly both in time and money, particularly where an appraisal scheme has to be introduced first. Adequate resources should be available to conduct any necessary research to select a scheme and to fund the consultation, negotiation and communication which will be required. In addition, the administrative and training costs may be considerable. In order to maintain employees’ commitment to the scheme and to meet their expectations of it, employers are advised to ensure that:
• sufficient resources remain available so that performance payments are attainable by most employees
• the payment is sufficient to motivate all employees to try to achieve the criteria for receiving the award
• those responsible for selecting, introducing and running the scheme are given enough time to approach their task with care
• enough time is given to training and to consulting and communicating with those employees who are to be affected by the scheme.
As with any other incentive payment system, employers will need to consider carefully the funding of ARP. For example, by linking the source of funds to organisational performance such as sales, it is likely that in a poor sales year extra employee effort may go unrewarded. Similarly, linking available funds to productivity may increase pay costs without necessarily increasing sales and thereby affect profits.
Link with appraisal (1)
A systematic, fair and effective appraisal scheme is the backbone to the introduction of ARP. Appraisals in themselves can motivate and help to improve performance and the benefits of an appraisal scheme such as identifying strengths and weaknesses, highlighting training needs and assessing promotion potential should not be overlooked. There are, therefore, circumstances where it is fully appropriate to introduce an appraisal system for its own sake. This will allow teething problems to be overcome and a proper assessment of the effectiveness of the appraisal scheme to be made, should it subsequently be decided to use it as a basis for assessing ARP awards.
While there is clearly a link between appraisal [next page]