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Performance-related pay, when used correctly, is supposed to motivate employees to try harder, hit targets faster, and become more productive. And sometimes that works—but sometimes, it can have the opposite effect. In this piece, we’ll explore some of the issues around performance-related pay and motivation, and show some ways in which you can use PRP to make your business thrive.
Yes—and no. It depends on several factors:
If your business is heavily sales focused, it stands to reason that performance-related pay can be a very positive thing. Sales tends to attract outgoing, ambitious employees who are driven by targets, and get a thrill from achieving them—rewarding them financially for achieving these targets is another prime motivation.
But the same cannot be said for many other lines of work. Sales is something fairly easy to measure—when someone makes a sale, they’re rewarded for that performance. Manufacturing is another relatively easy line of work—quality and quantity of items produced is fairly easy to measure, and set targets for.
But measuring the relative performance of someone who works in admin, or in a creative role, isn’t quite so easy. And shoehorning a KPI into their job role can lead to frustration and resentment—making pay for performance in HRM a difficult task to do well. The best HR managers understand this, and will finely balance performance-based rewards with other reward schemes, to ensure everyone feels fairly treated.
According to the Work Foundation, there are some challenges to implementing performance-related pay across almost all sectors:
These all have huge potential negative effects. Each of them can lead to greatly increased absenteeism and presenteeism, and the stress/pressure performance-related reward can bring is linked to increased burnout in several sectors.
But the importance of performance-related pay in motivating employees in the sort of businesses who take that kind of pressure and turn it into spectacular results cannot be overstated. In the right place, PRP is the perfect way to grow your organisation. So, with that in mind, here are some ways to ensure your HR department is putting a PRP system in place in the right way:
If you have questions about this, or any of the topics covered in our blog, don’t hesitate to get in touch on 0844 891 0355
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