Performance-Related Pay
Canterbury Business School
Working Paper Series
The Characteristics of Performance Related Pay Schemes
Dr Mark W Gilman Canterbury Business School
Working Paper No. 59 March 2004
THE CHARACTERISTICS OF PERFORMANCE RELATED PAY SCHEMES
Mark W Gilman
Dr M W Gilman Canterbury Business School University of Kent at Canterbury CT2 7PE Tel: 012227 823797 E-mail: m.g.gilman@ukc.ac.uk
1
Abstract Despite the growing amount of literature on performance related pay (PRP) schemes there is still very little, which examines the organisation of the schemes on a comparative basis. This paper does so by examining the nature and characteristics of those establishments with PRP schemes from the WIRS90/WERS98 data followed by an examination of the schemes of 16 different companies from various sectors of the economy. The examination of the WIRS data highlighted certain distinctive features portrayed by establishments with PRP. A closer examination of the schemes, however, highlights that similarities on paper disguise many of the practical differences, while the similarities in practice are masked by the different rhetoric and terminology utilised by the companies.(112 words)
2
Introduction Arguments concerning PRP usually revolve around whether the schemes actually work or not. Very little work looks at the organisation of schemes in order to highlight any similarities or differences. In order to understand their purpose and whether they are successful one must first understand the subtleties of such schemes. Building on attempts at generating richer material on the operation of PRP schemes (Kessler & Purcell, 1992) this Paper aims to do just that by: • • examining the patterns of use (i.e. the characteristics), and examining the structure of schemes (i.e. the detail).
In doing so the paper will also seek to address the nature of PRP as an integrated part of HRM systems. It will achieve this by firstly examining data from the Workplace Industrial
Working Paper Series
The Characteristics of Performance Related Pay Schemes
Dr Mark W Gilman Canterbury Business School
Working Paper No. 59 March 2004
THE CHARACTERISTICS OF PERFORMANCE RELATED PAY SCHEMES
Mark W Gilman
Dr M W Gilman Canterbury Business School University of Kent at Canterbury CT2 7PE Tel: 012227 823797 E-mail: m.g.gilman@ukc.ac.uk
1
Abstract Despite the growing amount of literature on performance related pay (PRP) schemes there is still very little, which examines the organisation of the schemes on a comparative basis. This paper does so by examining the nature and characteristics of those establishments with PRP schemes from the WIRS90/WERS98 data followed by an examination of the schemes of 16 different companies from various sectors of the economy. The examination of the WIRS data highlighted certain distinctive features portrayed by establishments with PRP. A closer examination of the schemes, however, highlights that similarities on paper disguise many of the practical differences, while the similarities in practice are masked by the different rhetoric and terminology utilised by the companies.(112 words)
2
Introduction Arguments concerning PRP usually revolve around whether the schemes actually work or not. Very little work looks at the organisation of schemes in order to highlight any similarities or differences. In order to understand their purpose and whether they are successful one must first understand the subtleties of such schemes. Building on attempts at generating richer material on the operation of PRP schemes (Kessler & Purcell, 1992) this Paper aims to do just that by: • • examining the patterns of use (i.e. the characteristics), and examining the structure of schemes (i.e. the detail).
In doing so the paper will also seek to address the nature of PRP as an integrated part of HRM systems. It will achieve this by firstly examining data from the Workplace Industrial