This is a book about two of the core activities integral in the field of human resource management: managing employee performance and managing how employees are rewarded. As we shall see throughout the book, there is a close and complex inter-dependence between these two activities; so much so that it makes little sense to consider them in isolation from each other. Equally, while the book’s central concerns are with performance and reward practices and processes, attention is also paid throughout to recognising and analysing the interconnectedness of these and other aspects of human resource management. Performance management systems provide inputs into other HR functions such as training and employee development, as well as evaluating HR decisions such as recruitment and selection.

The concept of ‘total reward management’, which was canvassed in chapter 1, acknowledges the growing importance of benefit plans in strategic reward practice, particularly in attracting and retaining high capability employees with specific demographic characteristics, such as women professionals, experienced older workers of both sexes, and younger workers, such as ‘Millennials’ (born between 1985 and 2000) and ‘Generation Z’ (those born since 2000).

Whereas benefits were once the least glamorous of all aspects of reward management – and were literally referred to as ‘fringe’ reward practices – many organisations now consider them to be an important means of gaining a competitive advantage in labour markets where key ‘talent’ is in short supply. As the workforce becomes more diverse and as the level of employee education and reward expectation rises, financial and non-financial benefits are assuming an increasingly critical role in the reward management system’s ability to attract, retain and motivate high-potential and high-performing employees.

Describes the development of the automobile as a product, from the first simple horseless carriages to today’s highly sophisticated vehicles with a large dose of electronic controls – and how, in its present form, it is threatened by environmental pressures and the development of new technologies. We present the spectacular growth of demand, the saturation of developed country markets, the emergence of China, and the persistence of regional particularities.

Having laid out all the pieces of the performance and reward puzzle, it is time for us to consider how to go about assembling these elements into a coherent whole. In previous chapters, we have offered you some insights as to how the practices referred to in the chapter might support certain strategic priorities rather than others. In this chapter, we detail common approaches to assembling the various concepts, practices and strategies explored previously. In developing an integrated, strategically aligned and psychologically engaging performance and reward system, we need to remember that nothing is ever ‘finished’ and that change is the great constant. Accordingly, we examine the requirements for performance and reward system review, the steps involved in system change and development and challenges that may be encountered along the way. Although our approach here is primarily prescriptive in nature, we also draw on a range of insights from the research literature that has been referred to at various points throughout the book.

Introduces the concept of a life cycle in powered land transport, starting with the growth, maturity and partial decline of the railways in the United Kingdom (their birthplace) and the United States (their greatest extent). Tracks the spectacular rise of the automobile, its mature phase and possible incipient decline in its present form.

Looks at the quality of the evidence, analysis and recommendations put forward by major reviews of the industry, and comments on their efficacy. It identifies the need for better definition of present and desired future states, objectives and paths to them, and management, controls and incentives. It emphasizes the need for proper sectoral analysis in support of government intervention – and not only in the automotive industry.

The practice of recognising and rewarding the individual performance of employees is not only becoming more common but also more varied in form. It ranges from the traditional merit-based pay increments to a suite of non-cash reward programs that claim to provide a cheaper and more effective means of rewarding desirable performance and fostering employee satisfaction and engagement. This chapter provides an overview of these practices, starting with merit pay. Merit pay is the most widely applied of the individual performance pay plans, and takes two main forms: merit increments and merit bonuses. We then consider some of the oldest and most enduring of all performance pay plans, results-based individual incentives. Also known as individual ‘payment-by-results’ plans, these include piece rates, task-and-time bonus plans (where employees are rewarded for completing a specified volume of work or a task in less than a ‘standard’ time), sales commissions and bonus payments to individuals for achievement of goals.

In this final chapter, we explore emerging trends – the new horizons – in business, technology and society with a particular focus on how these developments are influencing ideas, practice, employee experience and academic research in the field of performance and reward management. We begin with emerging trends and practices that have already begun to impact the design of performance and reward management systems and academic research in the field. We focus on three interconnected global trends that have already started to change performance and reward management practice; an impact that is very likely to increase in the years ahead. The first of these trends is the technological revolution associated with ‘Industry 4.0’; the second is the economic disruption and employment uncertainty associated with what has come to be called the ‘gig economy’; and the third is the social transformation flowing from generational change around the world.

Sometimes employee performance will be below that established or expected by the organisation in the first stages of the performance management process. In this chapter we examine how to diagnose the causes of underperformance. Having identified the primary causes of performance deficits, we then investigate the mechanism through which an employee is given feedback about their performance (the formal performance ‘review’). We focus on the provision of negative performance feedback: why it is problematic for supervisors and employees as well as tactics for the effective delivery of negative feedback. The chapter concludes with a discussion of performance development strategies and practices. We examine mentoring and coaching and their impact on employees and organisations.