Assignment 2: Consultancy Report

Table of Contents

1. Introduction..............................................................................................................................3

2. Strategic analysis......................................................................................................................3

3. Management of performance, feedback and development.......................................................4

4. Management of the base pay system and structure and its relationship to the market.............5

5. Management of non-monetary rewards and of indirect and variable pay elements.................6

6. Conclusion................................................................................................................................7

References........................................................................................................................................8

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1. Introduction

Court, Case & McGowan is one of the largest national law firms in Sydney. With a large

number of qualified solicitors and staffs, the company is facing many issues related to human

resource management. This comes from the reward system and base pay of the firm. In this

report, the situation of the firm will be analysed to come up with recommendations related to

remuneration and performance management system of this company.

2. Strategic analysis

Based on the Human Resource Matrix (Shield et al. 2016), there are four elements in the

managing employee performance and reward as they are staffing, development, rewards and

performance management. In the case of Court, Case and McGowan, in staffing, as a legal

firm, the company has a hierarchical structure based on seniority. The number of staffs in the

company is quite large with 200 graduates at law, 400 junior solicitors, 500 senior solicitors

and 100 senior associates. Besides, there is a large number of legal support staff, secretarial

staff, librarians, administrative staff and human resource practitioners. The recruitment and

selection process of the company focuses mostly on the quality and knowledge of solicitors.

As a result, in term of development in Court, Case & McGowan, knowledge and skills of

staff are quite advanced and qualified. However, for staff, despite accounting for 80 per cent

of human resource, women in-company work in lowly status and have less voice in the firm.

Regarding rewards, in the company, there is currently not any reward system for solicitor

working exceeding hours required. The systematic performance appraisal is also absent,

according to Goodchap. Similarly, the performance management in the firm is quite poor as

it could not provide critical feedback and evaluation on the performance of outstanding

solicitors. The reward and pay base are not transparent to determine the level of pay for

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staffs. As the performance pay has impacts on other factors including unfair distribution,

staffing and development, the consequence is that the recruiting process faces with difficulty

in attracting highly qualified law graduates and many solicitors choosing to job hop (Wilson

2019). The rumour about pay and reward system also have an influence on attitudes of

employees in development, causing contentious behaviours (Ogbonnaya el at. 2017).

In term of internal factor, Court, Case & McGowan owns a large number of high

qualified solicitors that make it compete well with other legal firms. However, the better

reward and pay system with more equality in gender are strengths of other competitors to

compete with this firm. This excellent scheme could act as an element to attract current

highly qualified solicitor of Court, Case & McGowan. Based on the above analysis, there are

two major issues related to motivation and fairness in the firm. Firstly, it is a lack of

transparency in remuneration and reward system for highlighted staff. Secondly, the

hierarchical structure with more higher positions belonging to males leading to females in the

firm having less voice and power. This creates gender inequality in the firm. As a result, this

impacts the satisfaction of employees and lets them leave the firm.

3. Management of performance, feedback and development

Human resource is the most important source in the firm as, without human, a company

could not operate. A analysis conducted by the Human Resource Management Journal

explored that job satisfaction, along with organisational commitment and trust in

management measured the evidence of every payment strategy which was in association with

the employees’ experience of welfare. The study illustrated that performance-related pay was

positively related to those three factors. Profit-related pay, however, did not have the same

positive effects; in fact, some levels of profit-related pay resulted in employees being less

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committed and trusting management less (Ogbonnaya el at, 2017). Thus, the management of

performance could be seen as the management of various factors from operating

performance, financial or market performance, and Human Resource Management

performance. In the business context, managing performance is not as clear as things and

people actually perform. In other words, the human factor is the key to the management of

performance. There are various practices to manage employee performance as they are

employment security, selective recruitment, high wages, incentive pay, promotion, job

rotation and training (Pfeffer 1998).  

However, in order to help employees, remain satisfied with these practices, it needs to

raise their motivation to change attitudes. Besides, attitudes and behaviours are under the

influence of a legal contract and psychological contract (Shields 2016). While the legal

contract is what is written or verbal agreement related to exchange, the psychological

contract is known as the assumption filling the gaps in the legal contract (Shields et al. 2016).

While the legal contract is tight between employees and employer, the psychological contract

includes the work motivation, satisfaction or commitment. With a low level of the

psychological contract, employees could choose to leave or be absent. In order to remain a

high level of the psychological contract, justice or fairness infirm should be prioritised

(Greenberg 1990). The reward should reflect the fairness in the organisation as to make it be

valued, and employees could trust the process (Pfeffer 1998).

Referring to the case of Court, Case & McGowan, it is clear that fairness and reward are

not promoted in the firm that leading to lowering motivation of employees working in the

firm. In term of fairness, it is seen that employees are not aware of the payment system. The

schemes for payment are not clear and not based on their performance. This is rather based

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on seniority, experience and competence. This allows more senior solicitors to less try hard

but still have a higher salary. The senior solicitor would feel that this performance

management is not fair enough when their trying is not considering and worth. Although the

legal contract is signed annually between these staffs and the firm, their psychological

contract is reduced. According to job performance evaluation with declarative knowledge,

procedural knowledge and motivation (Williams 1998), motivation acts as an important part

in leveraging the performance of an individual. In the firm, it is certain that solicitors are

qualified as they know what to do and how to do, but without motivation, the performance

could not be complete. While justice is not promoted well, the reward is also lacked by the

firm. Reward acts as motivation factors for attitudes and behaviours of employees

(Pinnington and Edwards 2000). For example, a promise of reward could promote behaviour

to try hard to achieve this award from employees or rewards for others could motivate

employees to try hard to copy other behaviours. All of these contribute to better performance

of the employee in the firm which the management of performance, feedback and

development in Court, Case & McGowan is missing.

4. Management of the base pay system and structure and its relationship to the market

Base pay is defined as the hourly, weekly or annual salary, and it is not related to

performance or targets (Shields et al. 2016). Paying base pay remains as a part of an

organisation, but it has some potential advantages. It requires employers to commit to a fixed

payment despite the performance of employees and has less motivation toward task

behaviour of employees (Shields et al. 2016). In a hierarchical structure like Case, Court &

McGowan, the pay base is critical to the managers as it means that each grade will receive

fixed salary and promotion is made based on seniority but not on performance (Shields et al.

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2016). This means that people with better performance but in a lower position receive less

salary. Despite how hard they try; the salary is still fixed. It is seen that the motivation will

not have remained for these positions. As a result, employees will jump to other

organisations where the pay is more flexible, and the employers highly appreciate the skills

and knowledge of the employees, although they could be new graduates. As mentioned,

based on the job performance evaluation of Williams (1998), the declarative knowledge,

procedural knowledge and attitude and effort are important to judge. Skills and knowledge in

this model become an important factor in evaluating the performance of employees as the

employees need much effort and time to build and learn these. Therefore, competency or

skill-based pay seem to encourage employees to follow their careers and continue developing

skill in line with organisational needs. Indeed, in human resource management now,

development and training are an important aspect that could not be missed from the

organisation as it meets employees’ expectation in developing themselves and serves the

needs of an organisation as well. Therefore, with the case of Case, Court & McGowan, it is

seen that the firm with pay base structure is not appropriate. Applying the skill/competency-

based pay helps to develop knowledge and skills of employees, thereby improving the quality

of service offered by the firm. Furthermore, this could also motivate employees in working.

A pay base with hierarchical structure focuses more on seniority and position that dissatisfies

junior employees who could also contribute as much as other senior solicitors. In order to

increase employee retention in the company, it is necessary for Goodchap to offer a

competitive salary with other firms as well. The market pricing also impacts on the level of

pay to the manager. Employees will consider salary, opportunity, satisfaction, and training to

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choose the company. Therefore, the managers need to balance these elements to make sure

the salary is competitive and attractive enough to employees.

5. Management of non-monetary rewards and of indirect and variable pay elements

Besides performance-related pay, the performance-related reward is considered as

general motives for attracting, retaining and motivating employees (Shields et al. 2016). The

performance-related reward is considered in four ways. Firstly, it is considered based on

what to measure behaviours, results or both from employees’ performance. Secondly, it

considers whose performance is. The third way is based on the time frame, and the last one

relates to either monetary or non-monetary reward (Shields et al. 2016). Indeed, the reward

could be non-monetary that in some cases, it provides more motivation for employees. Based

on Herzberg’s two-factor theory, there are two types of factors affecting employees’

motivation. These are hygiene factors and motivating factors. The hygiene factors will lead

employees to work less hard while the motivating factors drive them to work harder

(Herzberg 1987). The hygiene factors could be salary, wage, supervision or working hours,

whereas the motivating factors consist of reward, recognition or achievement. In some

organisation, employees could receive motivation when they are highly appreciated or

recognised by their employers and other colleagues. This creates a feeling of achievement

and pride that make them more satisfied than receiving a monetary reward. There are many

companies applying employees of the month or holiday entitlement to give employees to

recognise their achievements that make them and their family members really proud. In the

case of Case, Court & McGowan, Goodchap could also apply this non-monetary reward for

young employees or junior solicitors. For the junior solicitors, it is obvious that when their

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talents and skills are recognised and appreciated, they will feel more confident in their career

path to continue learning and developing themselves.

Indirect pay is known as supplements to base pay, such as superannuation or severance

pay (Shields et al. 2016). The indirect pay is paid for different types of time as it could be

normal working time or abnormal working time. Employees could receive pay for time not

for their work as it is more effective. This is because when employees are paid with time,

they could work overtime. Meanwhile, when time is not considered to pay, employees could

choose to be absent for their personal work. Therefore, the company should consider working

time as a factor to have salary scheme. Overall, for the case of this company, in order to

reduce the inequality between senior and junior position, men and women, various paying

schemes should be taken into consideration. Goodchap could offer performance-based pay or

skills or competence-based pay to motivate solicitors to contribute their knowledge and

ability to the organisation, and they could feel that their salary is worth for their contribution.

Besides, recognition is an effective way to reward staffs and motivate them which relate to

psychological factors.

6. Conclusion

In conclusion, the current system of Case, Court & McGowan has multiple problems that

it could intensify the injustice and fairness in the firm in term of seniority and gender. In the

long term, it will lose qualified staffs to other competitors. Therefore, it is suggested that the

firm apply performance-based or knowledge and competence-based pay. In addition, the

reward system should be built to motivate, retain and attract employees.

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 References

Greenberg, J 1990, ‘Organizational Justice: Yesterday, Today and Tomorrow’,

Journal of Management, vol.16, no. 2, pp.399-432

Herzberg, F 1987, ‘One more time: How do you motivate employees?’, Harvard Business

Review, vol.65, pp.109-120

Ogbonnaya C, Daniels K & Nielsen K 2017, Research: How Incentive Pay Affects Employee

Engagement, Satisfaction, and Trust, Harvard Business Review, viewed 11 August 2019

< https://hbr.org/2017/03/research-how-incentive-pay-affects-employee-engagement-

satisfaction-and-trust>

Pfeffer, J 1998, ‘Six dangerous myths about pay’, in Harvard Business Review (ed.),

On Managing People, Harvard Business Review, Boston, pp.73-100

Pinnington, A & Edwards, T 2000, ‘Motivating employees’, Ch 6. in Introduction

to Human Resource Management, Oxford University Press, Oxford, pp.122-144

Shields, J, Robinson, J, Brown, M, Kaine, S, Dolle-Samuel, C & North-Samar, A 2016,

Managing employee performance and reward, 2nd ed, Cambridge University Press

Williams, R 1998, ‘Defining performance by setting goals’, extract from ‘Individual

performance: Outputs and results’, Ch. 4 in Performance Management: Perspectives

on Employee Performance. International Thomson Business Press, London, pp.79-92.

Wilson, J 2019, Total Pay and Performance System, Lecture 11, slide 7., MGMT3728:

Managing Pay and Performance, University of New South Wales