10 Apr Advantages and Disadvantages of PRP
Advantages of PRP from people’s point of view
First and foremost, PRP facilitates implementing the general strategy in the company because of its clear and understandable structure of goals and appreciated behavior occurring in the workplace.
Secondly, it may attract well skilled employees who expect that their qualifications and results of performance will be properly rewarded. It helps also in retaining the highly specialized employees simultaneously reducing poor performers in the company.
Thirdly, PRP system gives employers the flexibility and capability to reward high performers adequately to their outcomes, what in consequence motivates employees and hence improves the organizational performance. This flexibility facilities all changes occurring in the external, but mostly in the internal environment of the company, because it enables individualization of spurs encouraging people to maintain desired, form company’s point of view, behaviors and attitudes.
Finally, it also supports the culture of organization, existing values, and innovation and in some cases PRP can support the change of the organizational culture, if it is regarded necessary by senior manager.
Possible Disadvantages of PRP
Firstly, all targets and criteria of assessing must be agreed between all employees, starting with top managers, through line managers and finishing with their subordinates, what hence may be a time-consuming process, which must guarantee that designed goals are consistent with general strategy and probable to realize according to operational workers at the lowest level.
Next, employers must make an effort to create favorable circumstances under which employees are able to realize their own goals simultaneously with meeting the organization’s ones. This equilibrium, although hard to achieve, seems to be the key element in determining the success of the process. It involves necessity of having a wide plan based on general strategy and vision of direction toward which company will developing in the future.
Given that this process is effective, it must be well prepared beforehand, what involves a lot of time and money. The problem which may occur at this stage refers to the situation that, outcomes can be and mostly are postponed, what can result in reluctance of top management in investing in PRP.
Moreover, implementing PRP in the organization can be very inconvenient from employer’s point of view because it is laborious. It requires a wide knowledge about the company, great preparation and comprehension of both internal and external environment of the firm.
People responsible for PRP, before bringing it into effect, must know exactly what particular individuals do and what they should do to increase their performance.
Additionally, given that PRP leads to improving employee’s performance, they must express all those concepts as measurable indexes, communicate them to employees and further assess the performance on the basis of standard criteria required for the excellent performance.
It is significant because choosing the rewarded employees must be clear and understandable for everybody else and be based on known and objective criteria. Rewarding employees performing at the high standard has to be justified in order to avoiding biases. Nevertheless, as Torrington and Hall (2005) pointed out, the pursuit of fairness can lead to extensive difficulties for the employers. Admittedly, there will always be someone who feels they have been unfairly excluded from financial bonuses. It may result in de-motivation. Moreover, managers, who introduce PRP can be suspected of being partial and for that reason they must be able to defend their judgment if required.