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Performance Management Assignment: Managing Remuneration Strategies of ABC


Task: Performance Management Assignment Instructions: The spread of COVID-19, commonly referred to as the coronavirus, is an exceptional circumstance, with ongoing consequences for organizations, individuals and society at every level.

In particular, the temporary closures to limit prevent spread of the virus have had a widespread socioeconomic impact. All industries have been negatively impacted: quarantine and self-isolation policies have decreased the demand for and consumption of, products and services; there has been a decline in global stock markets; over 100 countries imposed nationwide closures of education facilities all levels of the education system from pre-school to tertiary education, impacting over 900 million learners; and conferences have been cancelled or postponed. As working from home generally is not possible for manufacturers, production has fallen. Much of the hospitality, tourism and aviation industries either have been temporarily closed or operations are very restricted (Nicola et al. 2020).

According to the International Monetary Fund (IMF), for the first time since the Great Depression for the 1930s, both advanced economies and emerging market and developing economies are in recession2 ( ) Consequently, there has been increasing discussion about the impact on employee and executive remuneration strategies.

During an economic recession, remuneration strategies are important. Many companies are likely to consider changing their current remuneration strategies. For example, in order to reduce remuneration expenditures, they may consider deferring merit pay increases; introducing temporary or even permanent decreases in base pay; make no incentive payment or defer incentive payments; and more.

The senior executive managers of Company ABC have asked the Human Resources Director (HRD) to advise them how to best manage employee remuneration over the next 12 to 18 months. As you are a remuneration expert, the HRD has requested that you prepare a position paper which explains some alternative options, the advantages and disadvantages of these, and which offers some recommendations.

The purpose of a position paper is to generate support on current remuneration issues. The goal of your position paper is to convince the audience of senior managers, that your opinion is valid and defensible. In the position paper you should:

  • Identify and explain the remuneration issues.
  • Examine the strengths and weaknesses of your position.
  • Identify and refute counterclaims.
  • Evaluate possible solution and recommend a course of action.
  • Validate your position with a minimum of 12-15 authoritative references


The present performance management assignment is focusing on remuneration strategies of a company which refer to the basis for addressing and planning compensation issues in the entire organization. During the Covid-19 crisis, advanced as well as developing economies have suffered an economic recession, and thus several companies are looking to consider changing the existing remuneration strategies to mitigate the effects of the economic recession.

The following report is a position paper prepared on the perception of a remuneration expert in terms of managing employee remuneration of Company ABC over the next 12 to 18 months. In addition to that, some alternative options of managing employee remuneration will also be mentioned along with the advantages and disadvantages of employee remuneration. Lastly, possible solutions and courses of action will be recommended to mitigate the identified remuneration issues that are acting as obstacles during the Covid-19 pandemic's economic recession.

Identification and explanation of remuneration and performance management issues
One of the major factors that have been witnessed in the recent economic recession is that organizations tend to pay high remuneration to their executives even when they are in a state of collapse. Company ABC is finding it difficult to maintain a balance between retaining and incentivizing the senior employees during this tough period of the Covid-19 pandemic. The link between performance and pay is a major issue as most of the time; it has been witnessed that average performances receive superior pay(de Oliveira and da Silveira, 2021). The Company ABC is experiencing the issue of bonus target being not relevant enough as bonuses have become a part of the company’s base salary.

For this position paper, a secondary research method has been used that involves using peer-reviewed journal articles for gaining a better understanding of managing employee remuneration. In addition to that, the various peer-reviewed journal articles have been chosen to give a detailed explanation of the remuneration and performance management challenges that the organizations are facing due to the outbreak of the Covid-19 pandemic. The research is based on qualitative analysis that has used several examples of business enterprises facing HRM (Human Resource Management) issues with the onslaught of the Covid-19 pandemic. The illustration of the research is based on the assumption of self-interest that does not necessarily reflect opportunism, and alternative strategies will be suggested based on the research.

Analysis and application of appropriate remuneration and performance management theories, principles, and practices

Remuneration Theories
Reinforcement theory: This theory suggests that behaviour that generates a rewarding experience tends to get repeated, and the implication of this theory is based on the high performance of employees that is followed by a will to make better future employee performance. Reinforcement theory is used by companies as a part of their remuneration management to enhance employee performance.

Expectancy theory: This is known as the link between behaviour and rewards, which is considered as a motivation for product valance, expectancy, and instrumentality (Cutler,et al., 2021). The remuneration system based on this theory differs according to the impact of instrumentality along with the alleged link between pay and behaviour. The results of [pay valance remain the same under various systems of pay, and thus the perceptions of expectancy often are more focused on job training and design than the system of pay.

Equity Theory: This theory emphasizes on the employee remuneration’s pay structure, and it indicates that the employee who perceives inequity in the rewards tends for equity restoration. Overall, when inequity is perceived by an employee, then it might result in higher absenteeism, turnover increase, and lower productivity. Therefore management of employee remuneration must thrive on meeting three types of equity that tend to directly impact performance, commitment, and motivation, which are external equity, internal equity, and individual equity.

Agency Theory: This theory focuses on the divergent goals and interests of an organization’s stakeholders along with the way of aligning employee remuneration usage based on the goals and interests. According to this theory, the two most important stakeholders are employee and employer, where the role of a principal is played by an employer and the role of an agent is played by an employee (de Oliveira and da Silveira, 2021). It is the natural tendency of agents to attain high agency costs as compared to principals who want to minimize it.

Performance management theories
Goal-setting theory: This theory was proposed in the year 1968 by Edwin Locke and suggested that the individual goals set up by employees play a vital role in terms of generating motivation for superior performance. Since the employees tend to follow their individual goals so this theory thrives on improving performance that results in the achievement of the aims of the performance management system.

The principles and practices of all the remuneration and performance management theories are based on enhancing organizational performance, so these theories are essential to be considered while managing employee remuneration (Walczak, 2020). The main principle of the remuneration system is to provide adequate remuneration to the employees by motivating the employees for better performance along with ensuring security, safety, and raising standards of living. Some of the components of employee remuneration are salaries or wages, fringe benefits, incentives, non-monetary benefits, and perquisites, which play a decisive role in terms of enhancing employee performance.

Therefore, the theories, principles, and practices of various remuneration and performance management strategies tend to get aligned with the business activities of an organization.

The strengths and weaknesses of the position
As a remuneration expert, there are several strengths and weaknesses of the position which are associated with managing employee remuneration. Some of the major strengths are possessing sound knowledge regarding the management of relevant remuneration packages in crisis situations along with proper understanding of the issues that might arise in regards to remuneration suggestion. However, the weaknesses are related to not having relevant information or knowledge about the exact financial situation of a company. In addition to that, being a remuneration expert it is impossible to predict the effectiveness of remuneration strategies on a particular organization as the future is always unpredictable.

Identification, interpretation, and explanation of alternative strategies for managing employee remuneration
During the Covid-19 pandemic, creativity is critical for giving the employees incentives that help in recognizing their excellence along with keeping the employees motivated and engaged. In addition to that, creativity can also help in balancing the budget despite the tendency during tough economic times having nothing to do with compensation (SobtafoNguefack, 2021). Therefore, there is a requirement to identify some alternative strategies of managing employee remuneration, and some of the effective alternative strategies are as follows:

Skills or knowledge-based pay: This system can potentially be effective for all level of employees that tends to reward skill enrichment. In addition to that, this alternative strategy of managing employee remuneration can be extremely cost-effective as not every employee will enjoy the same benefits, and it will also eliminate the possibility of bias feelings (Sva?ina, 2020). A knowledge-based pay system, on the other hand, will focus on adding ability or knowledge to the employees so that the management of employee remuneration can be made effectively. This remuneration strategy can be easily adopted in positions where there are various job roles such as management assistants, planners, engineers, HR staff, accountants, etc (Mutani et al, 2021).

Supplemental or temporary pay: This strategy can act as compensation and can reduce the burden of base pay effectively, especially during the tough situation of Covid-19 (Treviño-Reyna et al., 2021). The employees will have a higher scope of earning incentives through the level of their responsibility and scope through alternative remuneration strategy. However, the main disadvantage of this alternative remuneration strategy is based on the difficulty to justify and demarcate the extra requirements in a particular job role (Cahyanugroho, Hubeis and Wijayanto 2016). Since temporary or supplemental pay is not a focus of long-term association, so the competitors can use base pay as an effective form of attracting top talents.

Alternative pay for performance: Despite the trend of business enterprises leaving the aspect of pay for performance in favour of incentive pay plans, still the Covid-19 pandemic is forcing the companies to re-think the strategies associated with the management of employee remuneration. In the modern era, some managers are accustomed to holding the accountability that is associated with making decisions related to pay within the open ranges. This alternative remuneration strategy is a more systematic and objective method that awards companies with an increase of merit-based on continuous improvement (Rabasco, and Sheehan, 20121).

After analysing the various factors associated with employee remuneration management, it can be recommended that Company ABC needs to ensure fairness and consistency in terms of rewarding actions in the next 12 to 18 months by being fair and consistent from bottom to top (Semchechem et al., 2021).The key will be to restore stability in the area of employee remuneration programs by effectively and proactively engage with the employees, stakeholders, proxy advisors.

The company can look to implement and communicate metrics of human capital management into the incentive plans to gain a management and review oversight of the remuneration policies (Miao et al, 2021). Overall, the HRD and the board of Company ABC must look to acknowledge the aligning remuneration programs with the changing and new business strategy post-covid-19 crisis (Silveira et al., 2021). Therefore, it is important for the company’s management to maintain their oversight and strategy by working with the management teams so that ways can be developed to monitor the progress in the next 12 to 18 months.

In the end, it can be concluded that employee remuneration refers to the compensation or reward that is given to employees for their work performances, and it provides a basic attraction to employees for performing the job effectively and efficiently. This position paper analyses the impact of remuneration on the motivation of employees along with identifying and explaining the issues reacted to remuneration and performance management strategies. It has been observed that to achieve success, there is a need for skilled and qualified employees based on which organizations try to satisfy the employees by providing several facilities.

AldiCahyanugroho, Musa Hubeis&HariWijayanto 2016, ‘THE EFFECT OF REMUNERATION ON MOTIVATION THAT IMPLICATES EMPLOYEE’S PERFORMANCE IN XYZ COMPANY’, Indonesian Journal of Business and Entrepreneurship, vol. 2, no. 2.

Cintia Rodrigues de Oliveira and Rafael Alcadipani da Silveira 2021, ‘An Essay on Corporate Crimes in the Post-Colonial Perspective: Challenging Traditional Literature’, Revista de administraçãocontemporânea, vol. 25, no. 4, pp. 1–17A Cutler, D, Kwasnik, T, Balamurugan, S, Elgindy, T, Swaminathan, S, Maguire, J and Christensen, D 2021, ‘Co-simulation of transactive energy markets: A framework for market testing and evaluation’, International journal of electrical power & energy systems, vol. 128, p. 106664–

Krzysztof Walczak 2020, ‘The Legal Rules of Employees’ Remuneration and Their Implementation in Polish Enterprises’, ProblemyZarz?dzania, vol. 2019, no. 86, pp. 91–104.

Mutani, G, Santantonio, S, Brunetta, G, Caldarice, O and Demichela, M 2021, ‘An energy community for territorial resilience: Measurement of the risk of an energy supply blackout’, Energy and buildings, vol. 240, p. 110906–. Rabasco, A and Sheehan, K 2021, ‘The Use of Intensive Longitudinal Methods in Research on Suicidal Thoughts and Behaviors: A Systematic Review’, Archives of suicide research, pp. 1–15.

Silveira, SL, Cederberg, KLJ, Jeng, B, Sikes, EM, Sandroff, BM, Jones, CD &Motl, RW 2021, ‘Symptom clusters and quality of life in persons with multiple sclerosis across the lifespan’, Quality of life research, vol. 30, no. 4, pp. 1061–1071.

SobtafoNguefack, CR 2021, ‘Effectiveness of Official Development Assistance in the Health Sector in Africa: A Case Study of Uganda’, International quarterly of community health education, vol. 41, no. 3, pp. 231–240.

Sva?ina, P 2020, ‘Rewarding employee inventions in corporations: Designing a framework to evaluate adequacy of remuneration and offering an optimal remuneration system’, European journal of innovation management, vol. ahead-of-print, no. ahead-of-print.

Treviño-Reyna, G, Czabanowska, K, Haque, S, Plepys, CM, Magaña, L and Middleton, J 2021, ‘Employment outcomes and job satisfaction of international public health professionals: What lessons for public health and COVID-19 pandemic preparedness? Employment outcomes of public health graduates’, The International journal of health planning and management.


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