Reimbursement for Performance in the Real Estate Industry

Merit-based compensation, often known as the pay for performance package, is said to be an effective tool for encouraging employees to execute their jobs effectively (Armstrong and Taylor, 2014, p. 697). A systematic adoption process from the human resource department based on specific factors is required to complete the assignment. Strategic planning, resource development, motivation, as well as rewarding behavior and comprehending the function of line administration, are among the ones listed by Kavanagh and Johnson (2017). (p. 63). The paper endeavours to delve into the human resource management franchise relative to the management of employees and how its operations affect product quality and staff members’ performance within the real estate industry.

The Duty of Human Resource Section

The endeavour of the staff management department in real estate is to manage people within the businesses. To achieve success, according to Marchington et al. (2016, p. 112), management requires prerequisites in the administration of resources segregated in managing the workforce. Such events include the hiring, training, recruitment, as well as coordination of the benefits suggested in motivating the employees (Nafukho et al., 2004, p. 545).

Literature Review

1. Hiring and Recruitment

The primary duty of the human resource department to recruit as well as hire employees who are qualified to fill in positions created within the business (Aswathappa, 2013, p. 70). Therefore, the department is tasked with the initiative to scout, list, short-list, and hire the people who will fill in the positions efficiently. The task entails the posting of jobs to the public or to the company itself (inside marketing) through advertising, screening the applicants, conducting the preliminary interviews as well as coordinating the effort in the hiring process with the line managers (Budwar and Debrah, 2013, p. 3).

2. Ensuring Safety of Employees

The Occupational Safety and Health Act mandates that the safety of the employees, both physical and mental, is maintained under the working conditions of the company (Chelladurai and Kerwin, 2017, p.66). The efforts involve the training of the workforce and retaining the Federally mandated roles such as reporting of any injuries or mistreatment of workers. The idea is to ensure that the human resource department works closely with the employees to maximise the benefits accrued to the staff (Nafukho et al., 2004, p. 550).

3. Employee relations and Compensation and Benefits

Unionisation of employees is provided by law, and the human resource department has to cater for that (Gatewood et al., 2015, p. 461). Hence, some specialists handle the administration of member relations such as work function of the growth of management retort to amalgamation establishing operations. Compromise shared bargaining covenants and the rendering of clarifications of workers' association contract matters. Brewster and Hegewisch (2017) indicate that the benefits and the compensation portion of human resource management are touched by one human resource professional who has dual expertise (p.72). They include the setting compensation structures as well as evaluating the competitive pay structures.

4. Strategic Planning

Strategic planning within the human resource department is necessary for ensuring that resources dedicated to the employees are well distributed and well utilised (Storey, 2014, p. 82). Hence, requires decision making in achieving the goal as well as the mission of the business such as selling a certain proportion of real estate within a given period. The task requires the creation of roadmap which acts as a guide to the achievement of the goals as well as objectives of the business. For instance, according to Knowles et al. (2014, p. 36) with the recent upgrade in real estate market, there is a necessity for the real estate companies to find ways in motivating their employees to sell more real estate due to the cut-throat competition.

5. Resource Development

There is the requirement to improve on the skillsets of the workers as well as the general organisation through empowerment of knowledge and abilities of the employees. The skills include a decision on planning on how to do the task which entails coaching, mentoring and succession planning. Sparrow et al., (2016) states that development of a superior working force is necessary for the organisation and especially to the workers to achieve their work goals (p.56).

6. Motivation and Reward

The role of rewarding and motivation of employees create goals of earning more for the employee as well as rewarding the employee as a motivational gimmick to perform better (Renwick et al., 2013, p.10). Hence, works as an incentive to motivate the employees to work harder and achieve higher than expected prospects. Moreover, the requirement is placed that there is less turnover in employees primarily within the real estate industry (Purce, 2014, p. 67). It is only right to provide for motivation and compensation packages in the real estate due to the competition and work ethics that are required from the employees (MacArthur et al., 2014, p. 470). Finally, self-motivation for the employees is key to ensure that their performance is higher than expected, increasing the profitability of the company (Bamberger et al., 2014, p.115).

Role of Management in Promoting Efficiency in Work Performance and Productivity

The success of an organisation is not dependable on the right strategy and resources on the workforce; hence, relies on the performance management of the administrators (Steffen et al., 2015, p. 15). The goal allows the employees to grasp the intent of the goals and objectives of a company. Hence, there ought to be an effective goal setting system which comprises of a goal tracking of the progress as well as managing the day to day activities of the workforce (Bamberger et al., 2014, p.118). Hence, the role of the line management in achieving highly motivated workers is done through aligning of the employee’s day to day activities with the suggested business ‘objectives such as the clarification on the accountability of performance expectations for the employees (Anderson, 2013). Also, brings about the creation of documentation for legal purposes to support the decisions as well as any disputes that may arise (Brewster et al., 2016, p.116).

Due to the high competition in the real estate market, the adoption of the PRP in the industry may be seen as the best option for motivating the employees (Cummings and Worley, 2014, p. 114). Nonetheless, there is discretion that comes to handling the pay for performance in a new market segment unlike in the health sector (Reynolds, 2017, p.126).

Pay for Performance Model: Disclaimers in its Introduction into the Real Estate Industry

One of the critical disclaimers in the adoption of the pay for performance policies or models is that they are reliant on the type of industry and amount of employees. There are numerous forms of pay for performance (Urech et al., 2015, p. 902). They include the compensation annual salary augmentation, which is based on the assessment of the operative’s efficiency during the year judged as being improved, and merits, an increase in yearly salary (Park et al., 2016, p. 200). There is also the bonus program (Chi et al., 2016, p. 615). The reward system works only for the superior employees who work efficiently and bring in more margins than other employee or employees combined. Also, there is the direct compensation for quantified production (Bardach et al., 2013, p. 1053). But the latter does not affect the real estate as it is not a production industry, such as, for instance, steelwork production (Zyung and Sanders, 2014, p. 176).

Process of Implementing Pay-for-Performance

There are eight processes in implementing the PRP which include determining needs. Determining the requirements is based on the business primarily on what the objectives and goals entail (Doran et al., 2014, p. 348). The next step is defining the metrics based on forecasting what the business would like to achieve regarding short term and long-term goals (Vermeulen et al., 2016, p. 500). As such, there is need to place purposes within the business which should be specific, measurable and attainable (Epstein et al., 2014, p. 729). It requires the tracking of progress of the set goals in addition communicating the achievement (Eijkenaar, 2013, p.165).

Issues and Limitations with Pay for Performance

Logical and Clear Expectations

Another disclaimer in effect on adoption of a pay-for-performance program is that there is a list of expectations (Gregory-Smith et al., 2014, p. 124). Such set standards that may be demotivating for the employees, especially those unable to cut into sales (Ederer and Manso, 2013, p. 1417). However, the idea is to inspire employees to achieve at higher points which may increase healthy competition (or sometimes bring negativity in performance) affecting the overall performance of the business (Ederer and Manso, 2013, p. 1510). Hence, pay-for-performance program may encourage negativity (Pieroni, 2014, p. 47).

Measurable Outcomes

Pay-for-performance possesses the qualities of measurability. In the case of real estate, sales jobs are more prominent (Starfield and Mangin, 2016, p. 147). The number of sales, number of clients, or the total income accrued within a given time frame contribute to the outcome of the goal and objectives (Pieroni, 2014, p. 47). It requires that the managers exercise on discretion which may be a limitation since real estate is all about the sale of property which is public and bragged about. Hence, keeping it discretionally will be difficult (Barlas, 2015, p.185).

Reward System

The rewarding system varies depending on the number of employees as well as the industry (Doran et al., 2014). In this case, the reward system maybe lockstep. It is based on the numerous set amounts that are required to be achieved in particular discrete performance levels in certain distinct performance levels (Vermeulen et al., 2016, p.164). It includes bonuses to aid the sales team to make more in the work positions. In this case, the rewards may be proportional to the performance, such as the commission granted to a salesperson (Epstein et al., 2014, p. 730). In this case, some of the pay-for-performance programs can include non-monetary compensation as well as time off, or professional development through paid training (Eijkenaar, 2013,p. 118).

Potential Unintended Unethical Practices

In achieving the goal set, employees have to compromise or cross the line to benefit. Employees will do anything to get the bonuses without considerations of ethical misconduct or neglect of organisational culture (Rajaram et al., 2015, p. 897). The management may not set precautions in attaining the goals, and lack of boundaries makes the thought competition even more difficult for other to accomplish (Eijkenaar et al., 2013, p. 119). For instance, employees may create fake sales to maintain their position within the company and receive more bonuses (Figueroa et al., 2016, p. 2214, Eijkenaar, 2013, p. 121). Another risk is that the incentive system will only benefit the executive and not necessarily the workers. The controversy that may lead to unfair competition among the employees to make more sales that help the administrators (Francis and Clancy, 2016, p.184).

Conclusion and Recommendations

The pay for performance policies are guidelines through which the performance and actual salary is related. The advantage is bringing about the setting of the instructions to address the issues of the wage increase, bonuses, as well as setting other incentives for the employees. In the real estate industry, as the paper has described, a lot is riding on the motivation of employees due to the cut-throat competition that resonates within the industry (Navathe et al., 2016, p. 919). Hence, the use of the pay for performance system evades disadvantages for the performance of the drop-offs when using the policies for the business.

One of the recommendations is that the business should use a pilot model to ensure that the employees adapt to the new system that did not exist before, meaning that the employers have to comprehend the merits and the demerits that come with the adoption of the program to the employees as well as how human resource management would affect the overall performance of the business. Moreover, there ought to be a performance measurement strategy through which the employers determine whether the adoption of the pay for performance system works best for the business or it does not.

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