Performance Related Pay
Author of Report:
Shevon Oxford (Personnel manager)
The purpose of this report is to gather views from staff regarding the introduction of a performance related pay system.
Requested by: Tony Milward (Personnel Director) of Transmitacom. Transmitacom is a company, which produces software for the telecommunication industry.
Date request was made: 01/11/04
Date completed: 16/11/2004
The data was collected from a variety of books dedicated to the subject of Performance Related Pay and from an article entitled: Performance Related Pay is it a motivator? Also from internet sources.
What is Performance Related Pay?
Performance related pay is the idea of Frederick Taylor who comprised his theory of scientific management. It is a bonus salary increase awarded in line with an employee's achievement over a range of criteria.' These criteria depend on each job. (David Lines and Ian Marcouse pp) A company that adopts this method has to set clearly defined objectiveso that staff know what they rae doing. Awards are decided based on appraisal results. They must link achievements to pay (and decide how much to pay and where the money comes from). This table looks at the advantages and disadvantages of Performance Relate Pay from the article: Advantages
Only those who perform well get paid
Rewards employees with highest productivity
It is argued this system motivates staff
It enables firms to recruit highly qualified staff who like the idea of being able to earn a bonus
Encourages employees whose performance is not up to scratch to leave company on a voluntary basis
Easy to identify companies aims and objectives
High flyers find it attractive
Possible to give employees no pay rise at all
Inflations means pay will be cut and this coupled with the indignity of being judged and found wanting would, would make it that employees seek a job elsewhere
Union influence within the company...
Bibliography: David Lines and Ian Marcouse (2000) A-Z of Business Studies 3rd Edition. Hodder and Sloghton publishing
Edward Lawler (1983) Pay and Organisational Development. Addison and Wesley publishing company
Ian Brooks (2003) organisational behaviour: individuals, groups and organisations. 2nd edition. Financial Times prentice hall
www.tutor2u.net (2004) tutor 2 U limited. Accessed 16/11/04.
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