In modern business world, any organization can strategically use; pay, compensation, benefits and other rewards as effective performance management instruments to increase operational efficiency and enhance performance. It is very important for the organization to attract, motivate and retain the best people who will be a key influence on its future success. So, successful pay, rewards, compensation and benefits strategies are the main components that can ensure people are paid equitably, recognize and reward excellent performance, and aid the attraction and retention of top-quality staff. For this strategy, an organization’s performance management system should be designed to link employee performance outcomes and expectations to its goals, improve productivity, emphasize the employee's role in the process, recognize employee development needs, require meaningful communication between a supervisor and employee and recognize accomplishments.
Defination of SHRM;
SHRM refers to the pattern of planned human resources activities intended to enable organizations achieve set goals and objectives (Wright & MacMahan, 1992). It is also described by Storey as a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an array of cultural, structural and personnel techniques. (Storey, 2001). Wheelen and Hunger (1995) define strategic management as ‘that set of managerial decisions and actions that determines the long-run performance of a corporation’. Hill and Jones (2001) take a similar view when they define strategy as ‘an action a company takes to attain superior performance’.
SHRM is known to be the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation, flexibility and competitive advantage. Thus, SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company's strategies through HR activities such as recruiting, selecting, training and rewarding personnel.
With reference to the above description of SHRM, it is clear that part of the fundamental aims of SHRM is the establishment of principles and the shaping of practices whereby the human resources within an organization is seen as a corporate whole required to carry out tasks that enable it to continue successfully into the long-term. It also provides a sense of direction, so that the business needs of the organization and the individual and collective needs of its employees are met by the implementation of coherent and practical HR policies, processes and programs (Armstrong, 2000).
These policies, processes and programs included in the organizations system through SHRM, give an opportunity for the assessment of expected outcomes but this cannot be done without reference to a set of objectives and criteria supplied by the other parts of the organization. Through this SHRM finds its self being judged on its contribution to wider organizational goals and faced with this scrutiny of developing procedures to report the success of the policies, processes and programs implemented, thus SHRM must also provide a framework for internal audit; which is the means by which it will deliver contributions to strategic goals with a view to continuously improving them. PMS is a means of addressing this requirement.
The PMS system:
PMS is a system composed of an orderly series of programs designed to define, measure, and improve organizational performance (Katz & Green, 1997). It is a system developed to ensure compliance with requirements, that is, that staff are in compliance with written standards. PMS uses the tools of statistical process control to form the basis for decisions about change. It incorporates the processes of performance awareness, performance measurement, and...
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