The Value of Performance Related Pay
The value of performance related pay
Currently, many companies are utilizing the performance related pay (PRP) scheme. The PRP is often regarded as an effective method to achieve a better performance in both individual and collective terms.
In the study of Cutler and Waine (1999), PRP affords employees with opportunities to increase return after the performance appraisal. It is quite different with certain salary schemes, such as those offering an automatic increase in pay but despite employees’ real performance. The PRP scheme is usually designed to increase employees’ commitment and motivate employees through implementing an incentive system and assessing employees’ work performance (Varone and Giauque, 2001). The reasons for utilizing PRP scheme are various. Apparently, it is vital for the management layer to maintain a high level of consistency between employees’ and employers’ interests. Unless the two originally separate interests being aligned, can the corporation operate normally. Since it is difficult to attribute the output to individuals, PRP is an appropriate approach to make the incentives of the company and employees consistent (Kruse, 1996). Besides, the intent to maintain the stability in the employment acts as another reason for the utilization of PRP schemes. The research by Chelius and Smith (1990) indicates the fact that the enterprise with a PRP scheme can have a higher level of stability in the workforce. Also, PRP’s effect on the enhancement of individual employee’s effort towards tasks and the corporate productivity promote its implement to a rather large extent.
PRP’s effect on individual employee, team, organizational motivation and productivity
The PRP scheme can affect a wide range of subjects. In terms of individual employees, the company with a PRP scheme tends to be more attractive and it is more probable for them to increase the input (Lazear, 1986). Since the pay level is related to the different levels of work
Currently, many companies are utilizing the performance related pay (PRP) scheme. The PRP is often regarded as an effective method to achieve a better performance in both individual and collective terms.
In the study of Cutler and Waine (1999), PRP affords employees with opportunities to increase return after the performance appraisal. It is quite different with certain salary schemes, such as those offering an automatic increase in pay but despite employees’ real performance. The PRP scheme is usually designed to increase employees’ commitment and motivate employees through implementing an incentive system and assessing employees’ work performance (Varone and Giauque, 2001). The reasons for utilizing PRP scheme are various. Apparently, it is vital for the management layer to maintain a high level of consistency between employees’ and employers’ interests. Unless the two originally separate interests being aligned, can the corporation operate normally. Since it is difficult to attribute the output to individuals, PRP is an appropriate approach to make the incentives of the company and employees consistent (Kruse, 1996). Besides, the intent to maintain the stability in the employment acts as another reason for the utilization of PRP schemes. The research by Chelius and Smith (1990) indicates the fact that the enterprise with a PRP scheme can have a higher level of stability in the workforce. Also, PRP’s effect on the enhancement of individual employee’s effort towards tasks and the corporate productivity promote its implement to a rather large extent.
PRP’s effect on individual employee, team, organizational motivation and productivity
The PRP scheme can affect a wide range of subjects. In terms of individual employees, the company with a PRP scheme tends to be more attractive and it is more probable for them to increase the input (Lazear, 1986). Since the pay level is related to the different levels of work
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