Introduction
Performance management (PM) entails a constellation of programs, activities, and procedures to define, develop, and evaluate employee input. Most organizations utilize PM to compensate workers and encourage talent development (Pulakos and Mariangela 3). The employees must perceive the PM program as fair to minimize dissatisfaction and promote job efficacy. Therefore, FashionFushion should consider adopting a standard PM to provide their workers with an equal platform for good competition and evaluation.
Commission-Based Incentive
The commission-based incentive is a PM strategy in which the employees receive a percentage of what they have sold. The implication is that the salary they get is directly tied to the money they manage to bring to the company (Addabbo et al. 24). Therefore, it is possible to control labor costs even when they have many employees. Moreover, commissions increase the workers’ aggressiveness to increase sales, which translates to higher revenues. However, with this PM, the expenses remain unpredictable, which can negatively impact budgeting and forecasting.
Tenure Pay Rate
As the name suggests, the tenure pay rate is a form of appraisal where a worker is offered a permanent contract after a specific period of time. Mostly, the company can use ten years of consistent hard work and commitment to the company to decide on the workers they retain. The primary advantage is that it ensures job efficacy for good employees and increases the level of commitment. However, there can be shrewd employees who pretend to have high performance until the end of their tenure, and then they start neglecting their duties. Thus, instead of focusing on the inputs, the managers should also evaluate the character.
Flat Pay Rate
The company using this PM pays all workers employed within the same job group an equal salary. It does not matter who did the most work as long as the job was done as agreed in the contract. The primary advantage of FashionFusion using this strategy is that it makes workers focus on doing their best at work because they are assured of a salary. The downside is that some people may relax because there is nothing pushing them to improve their input further.
PM Recommendation and Rationale
FashionFusion should integrate the three PM systems to realize the best returns from the workers. Particularly, there should be a small basic salary in the form of a flat rate. Noteworthy, this flat rate pay should be minimal with an intention to help the workers have some money for personal maintenance even in seasons when sales are bad. In addition, they should have a commission-based appraisal so that those who desire to earn more have an opportunity to strategize on increasing their sales. The employees who consistently demonstrate a good attitude towards work and have consistently shown good performance should be offered a permanent job after ten years.
The rationale for combining the three PMs is that they mutually compensate for the drawbacks. For example, if a flat rate is used exclusively, there is no motivation to work harder, but tenure and commission come in handy to compensate workers for their performance. Likewise, the use of commission only may lower job efficacy and increase pressure, especially in low seasons for the fashion industry. However, adding the flat rate and tenure gives them a sense of job security.
Conclusion
FashionFushion should stop using different PMs across their various subsidiaries to encourage perceived fairness by the employees. Moreover, the company needs to be uniform and standard for accounting and planning purposes. All the PM strategies currently used by the different stores have some merits and demerits. The ideal PM should motivate employees, promote job efficacy, and provide basic means for workers to continue working during low seasons. Therefore, combining a commission-based, flat-rate, and tenure-based system is the ideal PM strategy as it eliminates the shortcomings of using any single of the strategies.
Works Cited
Addabbo, Tindara, et al. Performance Appraisal in Modern Employment Relations: An Interdisciplinary Approach. Palgrave Macmillan, 2020.
Pulakos, Elaine D., and Mariangela Battista. Performance Management Transformation: Lessons Learned and Next Steps. Oxford UP, USA, 2020.