Internal data bank

To improve this situation, some organizations use 360 degree appraisal or some other methods to modify the appraisal system, but since the basic problem of appraisal is people, such modification cannot solve the problem thoroughly. As a result, the appraisal system not only works poorly in offering effective estimation of performance but also increases the administrative cost due to its complexity. In the light of all the accounts above, PRP seems to work ineffectively in practice.

A variety of difficulties derived from implementation of the scheme are identified and examined explicitly to show the evidence that PRP is deficient while being adopted to operate in reality. However, is it really so vulnerable and problematic in practice? In the case, The Contract with Caesar ( Cannell and Wood in IPM, 1992), it showed clearly that when PRP was introduced to the senior executives in a firm, the objective was not to offer more monetary advantage for them but to lead them to focus on things which mattered to the business, and therefore, to improve the overall organizational performance.

In this study, managers would be set targets and must understand that they had to achieve them. Thus, the adoption of PRP here "offered a positive balance-'if you succeed, you'll be paid more'-to its negative side-'if you don't deliver, you're out'" (1992: 56). Brown and Armstrong in Paying for Contribution (1999) claimed that there were almost as many studies implying PRP can reinforce and contribute to organizational and individual performance as those suggesting that it cannot. According to Lewis (1998), the key point lies in the employees' intention.

If both the principle and practice of PRP are generally agreed by employees, the motivation purpose will be achieved by the improvement of job performance and profitable organizational outcomes will follow. On the contrary, if such agreement doesn't be met, then employees will not be motivated to perform their jobs effectively and consequently organizational outcomes will probably not occur (Marchington and Wilkinson, 2002). After examining the most applicable payment schemes nowadays, what can be observed is that for each scheme there must be advantages and disadvantages in both theory and practice.

There is no absolute evidence to support whether human resource management indeed only works well in theory but not in practice. Actually, in the light of our discussion, we found that the conclusions are balanced, which means for some theories they not only flourish in books but also effect well in real case studies. Time rates for instance, are generally applied in managerial and white-collar work, and PBR as well thrives in clothing industry and later on insurance business. Each scheme has its strengths in dealing with particular problems.

Though weaknesses may be found while implementing the theory, the effectiveness in practice cannot be ignored. Besides, no theory is flawless, and even though there is, the implementation would generally not go as smoothly as the theory does. The critical reason behind this could be certain uncontrollable factor which varies hugely from place to place, time to time; that is-people. No matter how perfect a theory might be, when it comes to people, there could be some problems occurring.

As what has been mentioned above, in most schemes, such as PBR and PRP, the standards of performance are often disputed and not easy to be decided. The obvious key point lies in personnel. The same as what happened to the performance appraisal evaluation system, a major argument about the justice of appraisal arose from the managers who made those assessments and might not have done them fairly and effectively. Because of this, many defects occurred while implementing the schemes.

While more flaws may be uncovered, more improved human resource management theories would also be investigated and generated. Until now, there seem to be no theories in this field which can be proved to work perfectly well in practice, and such situation may still remain in the future. People changes; hence the study of human resource management must be varied and modified along with such fact. Does human resource management simply work well in theory but not in practice? The answer is uncertain and there are always more theories to come.


Armstrong M. (1977) A handbook of personnel management practice. Essex, The Anchor press Ltd. Advisory, Conciliation and Arbitration Service. (1991) Introduction to Payment Systems, ACAS Advisory Booklet No. 2. London. Armstrong M. 'A lesson in how not to', People Management, 12 October 2000. Armstrong M. (1999) Employee Reward. 2nd edition. London, CIPD. Brown W. and Armstrong M. (1999) Paying for Contribution. London, Kogan Page. Bowey A. (2000) 'Gainsharing', Strategic Reward Systems. London. Cannell, M. and Wood, S. (1992) Incentive Pay. NEDO/ IPM.