This is a book about two activities integral to human resource management (HRM): managing employee performance and managing how employees are rewarded. As we shall see throughout the book, there is a close and complex interdependence 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 acknowledging and analysing the interconnectedness of these and other aspects of HRM. For example, performance management systems provide inputs into other human resource (HR) functions such as evaluating HR decisions regarding employee recruitment and selection, training and development, and employees’ psychological engagement and wellbeing.Chapter 1 introduces you to those ideas and concepts that are fundamental to a rounded understanding of employee performance and reward management and, equally, to well-informed and effective practice in these fields – from basic system aims and requirements to the concept of total reward management.

There is a statutory right for employees not to be unfairly dismissed. The right usually requires a qualifying period of continuous employment, and claim has to be made to an employment tribunal within three months of the effective date of termination. The employee has to prove dismissal has occurred, though resignation in response to a fundamental breach of contract by the employer counts as constructive dismissal. The courts have interpreted the statutory test of fairness to require proof that the employer acted outside of the range of reasonable responses to the fault of the employee. Some reasons for dismissal are automatically unfair. The normal remedy for unfair dismissal in practice is not reinstatement but a modest award of compensation for which there is an upper limit.

The chapter examines bias and fairness in employment testing in Italy, comparing the public and private sectors. Public sector hiring is strictly regulated, based on transparency, equality, and meritocracy, as stated in the Constitution. Hiring occurs through public competitions with standardized exams focused on qualifications and technical skills, with growing attention to soft skills. The private sector is more flexible, adapting selection to business needs and emphasizing practical skills, experience, and cultural fit, enabling quicker hiring. Private companies often use innovative methods, including AI tools and social media screening, and value diversity and international profiles. Italian labor laws, aligned with EU directives, prohibit discrimination based on sex/gender, ethnicity, religion, sexual orientation, or disability. Employers must ensure fair, compliant selection processes. Professional guidelines stress the use of valid, unbiased tools. The rise of technology in hiring highlights the need to manage algorithmic bias, with final decisions remaining a human responsibility.

This chapter explores some of the key practices, trends and issues associated with executive reward. We begin by considering the role of executives in corporate governance as well as three influential theories of executive motivation, behaviour and reward: tournament theory, agency theory and managerial power theory. We then review the main components of executive reward, as well asrecent trends in CEO reward level and composition in a number of developed countries. Attention then turns to the various short-term and long-term incentive plans and associated techniques, including performance targets or ‘hurdles’, currently applied to executives. Next, we examine the academic research evidence and arguments regarding the effectiveness of executive reward practices, particularly the extent of the association between company performance and executive pay outcomes. Applying a multi-stakeholder perspective, the concluding section canvasses some of the wider implications of executive reward practice, as well as outlining illustrative configurations for aligning executive performance management and reward with organisational strategic priorities in the case of listed for-profit firms.

This chapter explores the legal frameworks that govern employment testing in Australia, including federal and state anti-discrimination legislation, and evaluates their impact on employment testing in the country. Overall, despite the existence of legal protections for individuals from diverse demographic groups (e.g., culturally and linguistically diverse backgrounds, sex/gender, age), judicial scrutiny of discrimination in employment testing remains limited. Practical challenges, such as difficulties in gathering evidence of discrimination, and the prospect of limited financial compensation, may discourage legal action. Moreover, statistical evidence is neither widely used nor required to demonstrate discrimination, resulting in a regulatory environment where employment testing practices are often guided more by organizational discretion and international perspectives than by legal mandates. However, as hiring technologies continue to evolve, this chapter highlights the opportunity for stronger regulatory oversight and empirical rigor to ensure employment testing remains both equitable and legally defensible.

Employment testing is routinely performed in South Africa today, but this was not always the case. Turning its back on its apartheid history of racial segregation and discrimination, South Africa has developed a progressive legal system to thwart bias and promote fairness in employment testing. This chapter explores employment-related testing in the public and private sectors, beginning with an overview of South Africa’s apartheid history, followed by a discussion of how the current legal system addresses fairness. A distinctive aspect of South African law is that preferential treatment, including lower cutoffs and within-group norming for protected groups, is not only mandated but also widely practised as the norm rather than the exception. Our review concludes that South Africa has enacted an extensive legal framework to promote equality and prevent unfair discrimination.

Belgium follows global standards in psychological assessments, and great attention is paid to issues concerning bias and fairness by legal authorities, test developers, and researchers. Anti-discrimination laws cover around nineteen protected grounds and align with European Union directives, but hiring discrimination persists. This chapter illustrates the tension between the law, test developers and researchers who promote proper test use, and practitioners who continue to rely on tools that can perpetuate bias, such as unstructured interviews and intuition-based decision-making. Despite comprehensive anti-discrimination regulations and affirmative action measures such as gender quotas, there are no legal requirements for the use of valid selection procedures in Belgium. Balancing validity and diversity is emphasized more in the public sector than the private sector. Although professional bodies offer guidelines for appropriate test use, they mainly target clinical settings rather than employment settings.

This chapter explores bias and fairness in Swedish employment testing from legal, historical, and practical perspectives. Swedish labor laws, influenced by trade unions and the welfare state, emphasize non-discrimination under the Discrimination Act. The law prohibits bias based on sex, gender identity, ethnicity, religion, disability, sexual orientation, and age, and requires preventive action. It is enforced by the Equality Ombudsman and Labour Court. Although validity evidence is not explicitly required, selection decisions should be based on a job analysis. No proof of intent is required in discrimination claims, and the burden of proof is shared. Quotas are banned, but positive action is allowed for gender balance when qualifications are equal. Psychological test certification is voluntary in Sweden; the Psychological Association offers guidelines on validity, reliability, and fairness. However, these are not mandatory, and many employers develop their own policies. International standards offer best-practice guidance for fair assessments, including for emerging artificial intelligence tools.

An employee share plan is any type of plan that allows some or all employees to acquire shares in the organisation that employs them. We identify the features of employee share ownership and the theoretical rationale for it. We then examine why employees participate in an employee share ownership plan and the empirical research on the impact of share plans on organisational performance and employee attitudes and behaviours. Finally, we consider the relationship between employee share ownership and other HR practices, with a particular focus on other forms of performance-related pay.

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. We then investigate the mechanism through which an employee is given feedback about their performance (the formal performance ‘review’ and check-ins). We focus on the provision of negative performance feedback: why it can be problematic for supervisors and employees, as well as tactics for its effective delivery. The chapter concludes with a discussion of performance development strategies and practices. We examine coaching and its impact on employees and organisations.