Introduction
This report is an attempt to analyse the existing Performance Management System for
Large Financial Service Organisation (LFSO) and from this information, recommend, and
implement an appropriate new performance management system.
LFSO is an organisation, which traditionally has a paternalistic culture with low levels of
unionisation. LFSO current Performance Management system was implemented two years
ago changing the nature of the previous incremental salary scales described as Prerogatives
by Lupton and Bowey and led to the abolition of the annual cost of living increment. This
change by LFSO was an attempt to achieve a strategic, integrative and flexible approach to
pay, in order to address its organisational objectives. Therefore it *ƒ*…½*ƒ’reflected on a
pluralist approach with the use of job evaluated grade structures regarding financial
rewards and benefits*ƒ*…½*ƒ‚¦. (Heery, 1996) despite the fact that with most paternalistic
culture have a Unitarist approach to Performance Management systems.
Initial research conducted by the organisation indicated that objectives are not always
established and reviews were spasmodic. There was a high degree of resentment between
the different members of staff leading to unhealthy competitiveness and unwillingness to
support others. (Kerr, 1995) describe this behaviour as *ƒ*…½*ƒ’esprit de corps*ƒ*…
½*ƒ‚¦. This resulted in an increase in general grievances. The BFU have been aware of this
anxiety and have started a strong recruitment drive amongst employees but no figures on
existing membership were available.*ƒ*…½*ƒ‚¦
In general, both employees and management did not fully understand the scheme at its
inception and saw it simply as a cost cutting exercise. The reward levels introduced were
seen to be too small to act as a *ƒ*…½*ƒ’motivator*ƒ*…½*ƒ‚¦. There was also debate
about the role of the annual appraisal interview as there was no consensus view on the
purpose of these, which were regarded as an *ƒ*…½*ƒ’inconvenience*ƒ*…½*ƒ‚¦.
Now two years into the scheme, LSFO is facing the threat of a *ƒ*…½*ƒ’Bargaining
Unit*ƒ*…½*ƒ‚¦ or possible Unionisation. Alongside high levels of dissatisfaction from
employees and some line managers who have also expressed serious concerns about their
role in the process. The system itself is under severe criticism with large numbers of
appeals although only a very few of these have been upheld. Performance results currently
could be described as *ƒ*…½*ƒ’Poor*ƒ*…½*ƒ‚¦ due to the new system and negative
behaviour has resulted from the low monetary reward system.
Therefore the psychological contract defined as *ƒ*…½*ƒ’ the set of expectations held by
the individual employee the specify what the individual and the organisation expect to give
to and receive from each other in the course of the working relationship*ƒ*…½*ƒ‚¦ has
