Performance-Related Pay Essay examples

1993 Words 8 Pages
Performance-Related Pay (PRP) has become a growing trend in the last two decades in many organisations (Cadsby, Song & Tapon, 2007). The concept of performance-related pay was designed as a way to motivate employees and encourage desired behaviour due to individuals being different in terms of their own levels of motivation, drive and initiative. Organisations need to take this into account and set overall targets clear to individuals which are also in line with organisational goals to make sure incentive plans work effectively. Numerous researches have been conducted regarding the issue of the effectiveness of incentive plans. Some management experts suggested that incentives can be a powerful tool to motivate employees (Bennett, 1993) …show more content…
By rewarding good workers, it can increase productivity and secure dominance in potentially lucrative markets (Bates, Mirza & Fox, 2003). Although these bonuses may be very small, it represents a promise to the employees that better performance results in better compensation. In addition to this, forward-thinking companies believe that this is the time to capture market share, by doing things that are uncommon in a down economy to gain competitive advantage (Bates, Mirza & Fox, 2003).

Team incentives do motivate
The current trend in organisations is toward less hierarchal and more teamwork based with an increasing emphasis on cooperation among employees themselves. According to Cumming’s (1994) article, it proved that team incentives are really motivational. Given the facts of the manufacturer case, team incentive programs encourage employees to work together to generate ideas for improving operations and to implement changes that they agreed would assist in meeting the incentive goals. Additionally, it helps to reinforce a new attitude among employees in achieving the goals. In an environment where individual contributions are clearly measurable, targets are clear and realistic, and employees can be aligned to focus on a common goal where team incentives are most effective. It is clear that team incentives can work well when there is a group of like-minded people with clear organisation goals working together. This helps to build cooperation and collaboration, as it
Open Document