A Reward - Recognition - and Appraisal System For Future Competitiveness

Research Paper: RP—ECBPM/0033
A Reward, Recognition, and Appraisal System for Future Competitiveness:

A UK Survey of Best Practices
Research Paper: RP-ECBPM/0033
By
Professor M. Zairi, Dr. Yasar F. Jarrar & Elaine Aspinwall
Copyright © 2010 www.ecbpm.com
Copyright © 2010 www.ecbpm.com Page 1

A Reward, Recognition, and Appraisal System for Future Competitiveness: A UK Survey of
Best Practices
Yasar F. Jarrar 1, Elaine Aspinwall 2, Mohamed Zairi 3
1 Dr. Yasar F. Jarrar

European Centre for Total Quality Management
University of Bradford, Emm Lane, Bradford, BD9 4JL
E-mail – y.a.s.a.r.jarrar@bradford.ac.uk
2 Mrs. Elaine Aspinwall

University of Birmingham, Edgbaston, Birmingham B15 2TT
E-mail – e.aspinwall@bham.ac.uk
3 Professor Mohamed Zairi

European Centre for Total Quality Management
University of Bradford, Emm Lane, Bradford, BD9 4JL
E-mail – mzairi@bradford.ac.uk
Keywords
Human resource management, survey, best practices, rewards, recognition, appraisal
Abstract
Managing business productivity has essentially become synonymous with managing change effectively. To
manage change, companies must not only determine what to do and how to do it, they also need to be
concerned with how employees will react to it (Cooper and Markus 1995)(Reger et al., 1994). It is becoming
increasingly clear that the engine for organisational development is not analysts, but managers and people
who do the work. Without altering human knowledge, skills, and behaviour, change in technology,
processes, and structures is unlikely to yield long-term benefits.
In this respect, the role of Human Resource Management (HRM) is moving from the traditional ‘control and
command’ approach to a more strategic one (Oram and Wellins 1995)(Cane 1996). Various studies have
highlighted “reward and recognition” systems as one of its major critical success elements (Agarwal et al.,
1998).

This paper is based on outcomes from a study which was aimed at identifying best practices in reward,
recognition and appraisal systems by analysing the experiences of pioneering organisations and validating
the findings through a survey of leading UK organisations.
1. Introduction
Managing business productivity has essentially become synonymous with managing change effectively. To
manage change, companies must not only determine what to do and how to do it, they need to also be
concerned with how employees will react to it. Organisations are bound to continue having trouble
implementing change until they learn that people resist not change per se, but the way they are treated in the
change process and the roles they play in the effort (Cooper and Markus, 1995)(Reger,1994). When
companies make changes, employees experience transitions during which they adapt. While changes can be
implemented relatively quickly, transitions often require a longer time frame (Decker and Belohlav, 1998).
It is becoming increasingly clear that the engine for organisational development is not analysts, but
managers and people who do the work. Without altering human knowledge, skill, and behaviour, change in
technology, processes, and structures is unlikely to yield long-term benefits. In fact, ‘human development’ is
a viable alternative to ‘traditional’ organisational development as a strategy for bringing about dramatic
performance improvements. ‘The key to our long sustainable success was, and is, people. Rained, equipped,
properly rewarded and recognised’ TNT Director, 1999.
The new world of work is introducing flexible working hours, knowledge workers, working from home, etc.
So while these patterns emerge, organisations must change the way they deal with their people to achieve
maximum benefit. It is firmly believed that the success of an organisation lies more in its intellectual and
systems capabilities than in physical assets. Without altering human knowledge, skill, and behaviour, change
in technology, processes, and structures is unlikely to yield long-term benefits. The “process” and “IT”
aspects of any organisation are continuously changing, subject to daily improvements, and easily replicated
by competitors. It is estimated (Slater, 1995) that competitors secure detailed information on 70% of new
products within one year of introduction, and that 60 to 70 % of all ‘process learning’ is eventually acquired
by competitors. In fact, ‘human development’ is a viable alternative to ‘traditional’ organisational

development as a strategy for bringing about dramatic performance improvements. Thus, the model suggests
that the only source of competitive advantage is the organisation’s people (committed, educated, and
flexible).
The capacity to manage human intellect - and to convert it into useful products and services - is fast
becoming the executive skill of the age. The main theory being proposed here is that an organisation’s only
path to ‘sustainable’ performance excellence is by maximising its people’s potential. New processes, IT,
strategies, products and services will come and go as we have learnt over the years. Only creative,
innovative, change oriented people can carry the organisation to a leadership position, and keep it there.
2. Study Objectives and Methodology
The study presented in this paper is part of a larger research project aimed at identifying best practice of
people and knowledge management for future competitiveness. The part being discussed in this paper had
the main objective of identifying the best practices for rewarding and appraising the organisation’s people.
To achieve these objectives, the study identified what was presented by the literature and published case
studies as reward and appraisal best practices (Quinn, 1996)(Lee, 1996)(Littlefield1996)(Imberman,
1996)(Van de Vliet, 1997)(Brown, 1997)(Agarwal, at al., 1998)(Kerr, 1998)(Hale, 1998). These have then
been reproduced in a generic format and structured in a questionnaires to assess the applicability and the
view points of experienced practitioners toward them.
The survey focused on targeting leading organisations and practitioners who are well known for the
performance, to see how many ‘subscribed’ to the ideas proposed, thus providing further proof whether
these ideas were the right approach to achieving performance excellence in the future. The questionnaire
was designed and piloted to assess: time required to complete the questionnaire, simplicity, clear language
(no business jargon or academic purism), clarity of instructions, comprehensiveness, and item sequence. The
pilot sample included KPMG, University of Birmingham, Rover Group, Grimley, Andersen Consulting, and
United Industries Limited. Once the final questionnaire version was available, the survey sample was
selected. For the purpose of the study, the only criteria for sample selection was that organisations taking
part had to be leaders in their field (the assumption was that leading organisations would provide the best

insights into best practices). The sources used to select the sample were case studies analysed in the
literature, market knowledge, and quality award winners (e.g. EQA, MBNQA). A further selection process
involved the individuals to be contacted. Where possible, the contact was the most senior manager in the
organisation. The sample size was based on the participants of the study, i.e. an available resource rather
than ensuring a sufficient size to emulate the population (this was not an objective). Like most decisions
relating to research design, there is rarely a definitive sample size for any given study (Wunsch,
1986)(Fowler, 1993). A decision was taken to send out 300 questionnaires for the UK/USA study (hoping
for a response rate of at least 20%. In total 75 companies took part from both the UK/USA with a response
rate of 25%. Organisations that responded included Ove Arup Partnership, Cap Gemini, BT PLC, Oracle
Corporation UK Ltd, 3COM (UK) Limited, Nortel Ltd, Kodak Ltd, DHL International (UK) Ltd, IBM UK
Ltd., Royal Mail, Skandia Life, Xerox (UK) Ltd., Dana Commercial Credit Corporation, Trident Precision
Manufacturing Inc., Globe Metallurgical Inc., Rolls Royce Aero Engines Ltd., Honda Motor Europe Ltd.,
among others. The organisations that responded came from the manufacturing (44.3%) and services (55.7%)
sectors. The manufacturing sector included industrial and consumer goods manufacturers like automotive,
auto parts, medical products, and office equipment. The service sector included business consulting, banking
and financial services, food retail, advertising, IT consulting, courier, insurance, and education. All the
respondents were experienced practitioners at senior levels in their organisation. Figures 1 shows a
breakdown of the respondents by job function.
Senior Management (CEO, MD, GM)
Human Resource Management Head
Quality Head
Process / Operations
0 10 20 30 40 50 60
Figure 1 - Breakdown of respondents by job functions
3. Study Findings
Initially, the study participants were presented with several statement to assess the perceived importance of
people and people management for organisational competitiveness. Participants were requested to show

how strongly they agreed with these statements on a 5-point Likert scale. In focusing on reward, recognition
and appraisal systems, the participants were presented with several proposed best practices and were asked
to assess their applicability and criticality for a successful people management system.
3.1 The Future of People Management (PM)
A PM strategy for the future must start by answering the question ‘what sort of people will the organisation
need?’ Once answered, the strategy to meet these needs can be established. The study results (Table 1)
reveal the people attributes that organisations seek for future success.
The results clearly indicate the importance of customer orientation and team skills, which have both become
almost ‘standard’ requirements this decade. However, the survey does reveal that participants view attributes
like being creative, flexible, and ambitious as far more important than being loyal to the company or
compliant with policies. Similar results were revealed in a study performed by Harvard Business Review
(Carnall, 1997), which compared required attributes from organisational employees (managers and others) in
1980’s and 1990’s. Figure 2 shows a summary of this study’s results.
Attribute % of study participants who strongly agree / agree

Customer oriented 97
Co-operative (Team players) 85.6
Flexible 70.4
Creative 67.2
Multiskilled 60.6
Ambitious (Stretch goals) 50.8
Self disciplined 37.7
Loyal 13.1
Compliant with policies 13.1
Table 1 - Employee attributes required for future performance excellence – study results
All of these findings suggest that, although the statement so often articulated ‘the most important resource of
this business is its people’ is increasingly meaningful, not merely as rhetoric but also in practice, the type of
people that today’s organisations require, and are dealing with, today and tomorrow, are different from a
decade ago. Thus, if organisations depend more and more on fewer people and if the loyalty of those people
can no longer be assumed but rather must be earned and retained, then clearly they need to be concerned
about how they utilise them, develop them and resource them and about the opportunities for rewards,
promotion and success which they provide (Carnall, 1997). This is a shift of focus that evolved in the 90’s. It
occurred because within today’s turbulent market place, the people (employees) themselves, their

expectations, and the organisation’s expectations of them have all changed. As a consequence, the old
‘traditional’, personnel and HRM tools and methods also need rejuvenating and are not capable of achieving
the required future success.
70
60
Well educated Creative
50
40
30
20
10
Ambitious Loyalty
0
1 2
Figure 2 - Changes in required attributes in employees (1980-1990) (Carnall, 1997).
In the following sections, best practices for PM are proposed, assessed, and tested. However, it must be
stressed that these proposals form a guiding framework only, as there is no single right way to solve human
resource issues. What works in one organisation may be quite inappropriate for another. The complexity of
managing people matches the complexity of human nature.
3.2 Reward, recognition, and Appraisal Best Practices
For the purpose of the study, the practices proposed were considered validated as ‘best practices’ if 75% of
the respondents either agreed or strongly agreed with the statement and none ‘strongly disagreed’. The
reasoning behind this choice of 75% point was that the concepts being proposed by the framework were
exploratory in nature. They were practices suggested for future success, and have only been applied by
pioneers (best performers in their fields), or suggested in the literature to date. Thus they would be new to
most organisations questioned, and would present a change from the norm. If 75% agreed that they are ‘best
practices’ and none disagreed, then it could be concluded that most of the remaining respondents do not hold
any strong opinions (for or against) probably due of lack of experience with the idea. This would be
sufficient grounds upon which to conclude that such a practice would have positive outcomes when properly
applied in an organisation (i.e. best practice). A literature review on related studies (Loomba and
Jonanessen, 1997) (APQC, 1999)(APQC, 1996)(APQC, 1997)(DTI, 1995)(Ashton, 1998) has revealed
similar approaches, and demonstrated that there is no clear cut-off point. In determining the best practices in

their studies, The Industrial Society (1996), and the American Productivity and Quality Centre APQC,
1999)(APQC, 1996)(DTI, 1995)APQC, 1997) defined them as practices that received the highest approval
from study participants.
4. Reward and recognition
A reward system can be described as ‘any conscious intervention or series of interventions within an
organisation aimed at encouraging or reinforcing required behaviours, or which compensate people for
taking particular actions.’ (Oram and Wellins, 1995). Reward strategies are not only about money, they are
about both tangible and intangible forms of reward. Financial rewards include short term incentives made up
from salary and bonuses while long term incentives include profit sharing, share ownership and stock
options. These rewards are not commonly regarded as motivational in the long term but when they are not
perceived to be ‘fair’, they can become demotivating agents (Cane, 1996). Employee benefits include
insurance cover, pension schemes and sick pay, while fringe benefits include cars, holidays, and company
discounts. Non-financial benefits are more complex and include motivational aspects that are largely
intrinsic (derived from the job itself) and are mainly self generated in that people seek the type of work that
satisfies them, and can be enhanced by management through giving greater responsibility, development, job
design, policies and practices (Cane, 1996). Reward used to be generally about paying people the least that
an organisation could get away with. Now that organisations are looking for employees to be involved and
to continue innovating, reward systems need rejuvenating (Littlefield, 1996). In such a competitive
knowledge based environment, the organisation’s best chances for attracting and retaining the best people lie
in its ability to deliver the best ‘value’ compensation package to them. Compensation packages must be
tailored to individual needs and cater for all intrinsic and extrinsic rewards. In an effort to propose the best
practices for a reward and recognition system, the first aspect of designing such a system is to involve the
employees that it affects in its design.

Proposed best practice - Employees must participate in designing the reward system
Strongly disagree
Disagree
Neither agree of disagree
Strongly agree / agree
0 20 40 60 80
Figure 3 - Employee participation in reward system design – study results
A 77.4% approval amongst study participants rates this as a best practice. Thus, each organisation should
consider its culture carefully and consult staff before embarking on a new reward strategy. However, the
method of participation though is very crucial and not enough work as been done to tackle this issue.
Clearly, it varies form one organisation to the other, and is very organisational culture dependent. Cases
revealed that some organisations form committees of employees who design the whole system subject to
management negotiation and approval. Others design the system and solicit employee feedback.
Proposed best practice – Pay-out plans should be subject to improvement as market and product strategies
change
Strongly disagree
Disagree
0 20 40 60 80 100
Figure 4 - Market based reward strategies – study results
The agreement shown in Figure 4 confirmed this as a best practice, and a crucial one. Reward systems
should be subject to monitoring and improvement with changing market conditions, for better or worse. This
is the only way that both employees and management would view it as ‘fair’. Saturn Corporation (Cane,
1996) devised a Risk and Reward programme made up of base pay, risk pay, and reward pay. Base pay is
lower than market rate, that is the risk part, but team members can, with reward pay, earn considerably more
than market rate. Because employees are prepared to take the risk in return for a genuine share of the
profitability of the organisation, both sides feel it is fair. The secret of success in such an adaptive system is

true and open communication. Galaxo-Wellcome (Littlefield, 1996) is moving towards a reward system that,
while taking market rates into account, pays people according to their level of competence. The firm is
aiming to introduce a system where about 85% of pay is fixed, leaving 15% for a bonus based on output.
Experts (Willetts, 1999) predict that compensation, in the future, will be comprised of variable parts, for
example team bonuses, that may total 40% of income.
As for the detailed design of the reward system, there are several successful approaches being used by
today’s successful organisations (Oram and Wellins, 1995), and the model suggested a combination as
follows:
1. Pay for performance
50.4% of the study participants agreed with this concept (Figure 5), which is a good sign that awareness of
this theory is spreading. Druker (1992) and Kanter (1989) argued that the nature of new management
practices and the role of knowledge workers means managers and knowledge workers may insist on a
growing share of corporate profits.
Statement - Managers and knowledge workers in the future will insist on a growing share of corporate
profits
Strongly disagree
Disagree
0 10 20 30 40 50 60
Figure 5 Employee demands on corporate gain – study results
With the overall trends of increase in knowledge workers (Chase, 1997), it is believed that the above
statement is an inevitable result. Employees rationalise that if a company cannot afford to treat them as
family anymore, then at least it ought to treat them as business partners.

Proposed best practice - Organisational profit must be shared between the company and employees.
Strongly disagree
Disagree
0 20 40 60 80 100
Figure 6 Sharing organisational profit with employees – study results
80.5% of the study participants agreed thus validating this best practice. The idea of sharing corporate profit
is the characterisation of the new employee-organisation relationship discussed earlier. Dana Mead
Corporation (Quinn, 1996) believe that what motivates today is more shares in corporate gains. Such
programmes are on the rise and are sound business investments and are self funding. However, there are
many levels to this profit sharing and each organisation must tailor the system to its culture and
environment. Some organisations have seasonal variations and to this date, many employees agree to share
profits but are reluctant to share losses. A massive cultural change is required. Rank Xerox (Oram and
Wellins, 1995) have a system of rewards linked to business performance, with a growing proportion of
variable pay. Pay is increasingly linked to achievement of corporate priorities, with a significant bonus for
customer satisfaction paid to all staff, managers were rewarded on return on assets, and employee
satisfaction results also contributed.
The most successful form of pay for performance is gainsharing (Imberman, 1996). This is a group bonus
plan aimed at modifying employee behaviour. The entire organisation work force-as a unit- is involved in an
effort to exceed past performance. If successful, the gain is translated into cash and shared between the
company and the employees. Normally, the work force receives 50 percent of the gain in bonuses, and the
company receives an equal share in cost savings. This is gainsharing in its simplest form. Research
(Imberman, 1996) revealed that this idea gave better results than employee involvement, quality circles,
quality of work life, suggestion boxes or suggestion systems, profit sharing, labour management committees,
Employees Share Ownership Plans (ESOP), job enrichment, information sharing, or TQM. In 1994, Crain’s

Chicago Business (Imberman, 1996) published a chart summarising the experience of 110 plant managers
with their gainsharing programmes. 93% reported highly favourable results in productivity improvement.
A milder form of gainsharing is ESOP, which are explicitly backed by the new Labour Government in the
UK (Van de Vliet, 1996) and are expected to grow in acceptance especially as they are backed by tax
provisions from the government. ESOP is essentially a trust that acquires shares in a company for the benefit
of its employees. However, for employee share ownership to make a difference to company performance, it
must combined with open-book, participatory management. This needs a shift to empowered teams and
intensive communication. Still the whole process has to be thought through very carefully. Companies need
to consider just how much of the equity employees should hold directly, and they constantly need to create
new ways of making it attractive for them to hold on to these shares, otherwise employees might find the
temptation to sell out irresistible (Van de Vliet, 1996).
2. Skill based pay
Proposed best practice - Part of the reward should be payment for the number, type, or depth of the skills
that people developed
Strongly disagree
Disagree
0 20 40 60 80 100
Figure 7 Skill based pay – study results
Another practice that is confirmed as best (78.8% approval). This system is known under various names like
knowledge pay, skill-based pay and multi-skill based system, where pay increases are in line with the
number skills acquired or developed. In practice the pay is determined by the variety of skills acquired or by
the number of jobs that an employee is able to master with the underlying intent to encourage employees to
acquire new skills, new knowledge, and increased versatility. More than 50% of Fortune 500 companies use
skill based pay for at least some employees (Stivers and Joyce, 1997). This is indicative that companies
believe there is a linkage between employee knowledge and competitive position. There are three forms of

skill development: vertical (upstream or downstream knowledge like acquiring more technical skills in a
function or even acquiring management skills), horizontal (most frequently used and aim to offer the
employees the possibility of acquiring a multitude of very diverse skills that are relatively alike in terms of
degree of difficulty), and specialised (enable employees to acquire knowledge in a more narrow field of
activities e.g. engineering). The skill based pay system increases functional flexibility enabling the company
to counteract the effects of absenteeism, personnel turnover and capacity management. Moreover it is one of
the most appropriate means of blending pay and total quality (Stivers and Joyce, 1997). Finally, the system
offers employees more opportunities for growth and personal development and can reinforce the feelings of
personal advancement and self-worth. However, it is dependent upon high access to training opportunities
and the organisation needs to consider how to manage redundant skills. Moreover, it is generally not suitable
for knowledge related jobs such as those in management. Toshiba (Kelada, 1997) applied skill based pay
structure for its manufacturing and support operatives, e.g. those in the factory, in the stores, and in the
offices. Management and professional employees were dealt with more along the lines of broadbanding.
3. Broad banding
Proposed best practice - Seniority and length of service should not be the basis for promotion
Strongly disagree
Disagree
0 20 40 60 80 100
Figure 8 Traditional promotion merits – study results
78% agreed with this statement thus confirming the broadbanding system as a best practice. The traditional
ladder of seniority is no longer relevant to re-engineered organisations with multi-skilled, cross-functional
teams. Supervisors and managers are not necessarily worth more to the company than specialists and
professionals, and broadbanding can redress these inequalities (Brown, 1997).

Proposed best practice - Promotion must be based on role specifications or competency levels
Strongly disagree
Disagree
0 20 40 60 80 100
Figure 9 Competency based promotion – study results
Again, 76.8% agreed with this practice and confirmed it as best. This emphasised the need for a
broadbanding system, especially for knowledge workers. At Volkswagen UK (Crainer, 1997), the principle
is that ‘people are paid for what they can influence’, at Glaxo-Wellcome (Brown, 1997), ‘progress will be
based on the demonstration of competencies rather than as a result of time in the grade. Competencies are
about what the people do and how they behave, and the only behaviour that counts is that which delivers
results. Competency is ultimately about performance’.
In general, broadbanding (Brown, 1997) collapses a large number of hierarchical tiers and grades into a few
bands often with very wide salary ranges, but it is not just about salary levels, it encompasses job evaluation,
training and development, and almost always involves radical rethinking of how roles are described and
what an individual employee can potentially offer the organisation. The aim is to encourage team-working
and lateral career development over formal job grading. An essential feature is that pay rises are not
dependent on promotion to a higher band, individuals can progress within their band, with pay rises for
expanded roles or for new competencies (not to be confused with qualifications). In practice this means
devolving responsibility for pay decisions to line managers who are supposedly better placed to monitor and
evaluate their people than the HR department, which requires massive training for these managers.
Broadbanding also makes more use of market data to track rates of pay outside the organisation and then
uses this information to position individuals within bands. There are no hard and fast rules to broadbanding,
it is a concept rather than a rubric and can be applied as management sees fit. Citibank (Brown, 1997) has
introduced it for everyone except senior managers, while BP uses it only for its top 100 managers. The key

to its effective installation is proper communication which means comprehensive consultation with
employees, and making the mechanics of the system very clear. Having broad bands in the same level will
give employees unrealistic expectations which must be managed to avoid disappointment. The broad bands
can be specified in terms of role specifications or levels of competency instead of traditional grades derived
from qualifications, experience, length of service, and degree of responsibility (Brown, 1997).
One of the great risks of broadbanding is that it appears to restrict the career opportunities for many
employees, as there are many people whose scope for advancement is limited. There is always a need for
people to do basic jobs which will render them always at the bottom of the pay band which is neither good
nor morale. For this reason many organisations do not apply this broadbanding system to low-level manual
or clerical jobs.
5. Appraisal and feedback
Proposed best practice - Appraisal should focus on individual development and performance assessment
Strongly disagree
Disagree
0 20 40 60 80 100
Figure 10 Appraisal aims – study results
This proposed practice deals with the aims of appraisal and suggests realigning ‘traditional’ appraisal from
pure performance assessment (to determine pay), to personnel development. 88.5% of the study participants
agreed with this proposed shift and confirmed this concept as a best practice. Thus, there is a need for a new
form of appraisal that takes the developmental approach. The first point to consider is the complete removal
of the element of financial reward from the process. The principles of a developmental attitude include
(Cane, 1996):
1. Develop human factors not financial targets to remove the competitive aspect from within the
organisation and replace it with co-operation which will eliminate fear.
2. Link to business needs.

3. Run by team leaders or line managers who are in daily contact and observe the work of the employee.
The personnel department can not be responsible for giving constructive feedback to a member of the
staff from other people’s written comments
4. Open and participative
5. Single status - the appraisal process should include all staff (including management).
6. On-going and informal.
The whole appraisal system should be embraced as part of a wider system of performance management.
This means that it must embrace issues such as personal development and career planning. From the
organisation’s point of view, the programme gives it the opportunity to liberate the potential of its
employees, while the employees gain insights into what they can and can not do, where their career can go
and how they can direct it (Crainer, 1997).
Proposed best practice - The appraisal process should involve the employee, external customer, peers, and
the team leader
Disagree
0 20 40 60 80 100
Figure 11 360 degrees appraisal – study results
76.8% agreed with this best practice and thus the annual appraisal should be re-invented to take the views of
equals, subordinates, and customers as well as those of the direct supervisor. The traditional form of
appraisal (one hour with the manager per year) was bureaucratic and did not actually improve performance
(Crainer, 1997). The people that should be involved in the appraisal are the employees, peers, and the team
leader, this is sometimes referred to as the 360 degree approach. All the people involved are asked to
complete appraisal forms and send them to the PM function. The appraisal, to motivate and develop, will use
two basic indicators: achievement against objectives, and achievement in skill and competency acquisition.
Everyone receives the results in writing with statistics on their performance, strengths, areas for
improvement, and some comments. Crucially, the process is anonymous (Crainer, 1997).

Traditionally, appraisals fell within the HR domain. Now, the PM function will be active in designing the
appraisal process, take responsibility for training appraisers, the kind of questions asked, how people are
measured and what the processes are seeking to achieve. It will act in a supporting role but the emphasis will
be on working in partnership. Appraisals will be seen as a management tool which should be used by line
managers (Covey, 1997).
6. Conclusions
The study has identified several concepts and approaches relating to people reward, recognition and
appraisal that leading organisations (and supporting literature) consider to be best practices. These practices
included pay for performance, 360 degrees appraisal, interactive reward structures, and so on. There is no on
single best practice system or formula for organisations to follow and implement. What the study has
provided are well proven best practices that represent the pieces to a puzzle. Each organisation should take
the appropriate ones and build their own picture that drives them and their people to excellence. The only
constant in all the practices proposed is the emerging theme of people involvement. Organisations must
learn to hand power down to the people who do the work and involve them in setting the reward schemes on
a win-win basis, involve them in the organisational profits, and involve them in the appraisal and feedback
system. This formula, coupled, with a shared vision towards the overall benefit of the organisation and its
people is the true path for future performance excellence.

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A Reward - Recognition - and Appraisal System For Future Competitiveness

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Research Paper: RP—ECBPM/0033

A Reward, Recognition, and Appraisal System for Future Competitiveness:

Research Paper: RP-ECBPM/0033

Professor M. Zairi, Dr. Yasar F. Jarrar & Elaine Aspinwall

Copyright © 2010 www.ecbpm.com

Copyright © 2010 www.ecbpm.com Page 1

A Reward, Recognition, and Appraisal System for Future Competitiveness: A UK Survey of

Yasar F. Jarrar 1, Elaine Aspinwall 2, Mohamed Zairi 3

1 Dr. Yasar F. Jarrar

2 Mrs. Elaine Aspinwall

3 Professor Mohamed Zairi

processes, and structures is unlikely to yield long-term benefits.

Copyright © 2010 www.ecbpm.com Page 2

the findings through a survey of leading UK organisations.

properly rewarded and recognised’ TNT Director, 1999.

by competitors. In fact, ‘human development’ is a viable alternative to ‘traditional’ organisational

Copyright © 2010 www.ecbpm.com Page 3

2. Study Objectives and Methodology

studies as reward and appraisal best practices (Quinn, 1996)(Lee, 1996)(Littlefield1996)(Imberman,

view points of experienced practitioners toward them.

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breakdown of the respondents by job function.

Senior Management (CEO, MD, GM)

Human Resource Management Head

Figure 1 - Breakdown of respondents by job functions

Copyright © 2010 www.ecbpm.com Page 5

3.1 The Future of People Management (PM)

1980’s and 1990’s. Figure 2 shows a summary of this study’s results.

Attribute % of study participants who strongly agree / agree

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the required future success.

Figure 2 - Changes in required attributes in employees (1980-1990) (Carnall, 1997).

managing people matches the complexity of human nature.

3.2 Reward, recognition, and Appraisal Best Practices

Copyright © 2010 www.ecbpm.com Page 7

from study participants.

4. Reward and recognition

employees that it affects in its design.

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Neither agree of disagree

Strongly agree / agree

Figure 3 - Employee participation in reward system design – study results

Neither agree of disagree

Strongly agree / agree

Figure 4 - Market based reward strategies – study results

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example team bonuses, that may total 40% of income.

1. Pay for performance

growing share of corporate profits.

Neither agree of disagree

Strongly agree / agree

Figure 5 Employee demands on corporate gain – study results

family anymore, then at least it ought to treat them as business partners.

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Neither agree of disagree

Strongly agree / agree

Figure 6 Sharing organisational profit with employees – study results

satisfaction results also contributed.

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temptation to sell out irresistible (Van de Vliet, 1996).

2. Skill based pay

Neither agree of disagree