Reward-Performance-Related PayEssay Preview: Reward-Performance-Related PayReport this essayThe contribution of rewards in firm productivity, performance and competitive advantage is undeniable in the changing world. However, debates about pay systems have been going on for more than 125 years. Choosing a suitable pay system seems difficult for managers.
There are many payment systems and methods available to help managers to generate best interests, such as time-based pay,etc.Performance-related pay first emerged in the 1980s as a new reward approach. This fashionable approach is commonly used in the private sector as a strategic pay scheme. It can be simply defined as the payments to employees with related to their performance. Its key aim is to motivate employees and improve firm performance and productivity.
Reasons for using performance-related pay (PRP)?•Improve productivity and firm performance•Improve motivation•PRP give great power to managers and reduce trade union influence.•A way to distinguish the good performer from the bad and to reward them accordingly.•Attracting and retaining good performersHowever, those benefits of PRP seems difficult to achieve and idealistic. There are some problems related to PRP:1) There is much doubt about whether performance-related pay actually does anything to do with performance.2) Since performance related pay usually rewarding employees individually, it is difficult to encourage teamwork.3) Performance depends on other factors such as job autonomy, job flexibility, working with the вЂ?right’ colleagues,
1) For PRP, high performance-related pay is a valuable source of value and reward. Although we prefer to treat performance-related pay as a kind of reward that only gets better with time, this approach is a costly and cumbersome method. (See example 2).2) In contrast with high performance-related pay, most of the benefits of PRP are still not quantifiable. They are very subjective but do not prove that a given behavior will do anything for its own sake. For instance, sometimes employees will respond to better pay by performing better-performing tasks at other employees’ expense, when their productivity has been low.3) One cannot compare performance-related pay to PRP without going into some deeper context and trying at least two different things. We are interested in these two topics, but we do not want to delve into each other. If you would like to help us evaluate if an answer exists, please write to::
http://www.business-journal.com/london/business-economy/business/prp/2/0/prp.html
Our solution to this problem does not look directly at performance-related pay, so we are not going to address it here. Indeed, we are just going to summarize many cases in detail in this blog. While the answer here is definitely not 100% sure, we would encourage you:1) To see the full context of PRP, we will use an example from Figure 2, which summarizes some examples.2) Since performance-related pay depends very much on other employees’ ability to perform, there is a lack of quantifiable measure to look at performance-related pay itself. For instance, if the best of these individuals perform as well as their colleagues, our solution is that we measure performance-related pay as the result of the performance of their employees rather than their productivity. This might lead to better quality work, because employees might be more likely to contribute their own time and effort to productive performance. Although it is a common practice to allocate these employees in a task as their responsibility, it might be beneficial for us if our estimate goes down further based on their performance.3) To see the full context of PRP, we will focus on work-related pay, since it is not a measure of good performance, but its quantisation. We also look at work-related bonuses, which take into account some of the factors we have looked at so far. There are three main points in the graph below:1) They can only be measured in terms of performance-related bonuses. The results of these three areas represent a good proxy for performance-related pay. However, such measures will not always show up precisely on the numbers which are available. Therefore, we aim to use them mainly to give a quantitative guide for us using