Performance related pay
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what is performance related pay?
the explicit link of financial reward to individual,group, or coumpany performance (or any combination of three)
2. Link perfomance and reward
What is perfomance targets?
- 1.Setting clear perfomance criteria and target
- 2. Monitoring the outcome
- -> PRP in this context can be understood at three level (McCauley, 1996)
What is three level of perfomance?
- 1. Trait: knowledge and skill of worker (ability to apply in the job. (staff must have suficient training opportunitiees to acquire the skills and plentiful opportunities to practice the skills )
- 2. BEHAVIOUR: good communication, customer care, save working practice,conflict resolution
- 3.OUTCOME: What is the employee's record meeting require targets> (sales fingure, production level, staff turn over)
How to measure perfomace?
some job are easy to measre (sales, out put...) for other job must be difficult) (service) ->
Virtually all work can be subject to the traditional measures of quality, quantity, time and cost (Armstrong,2002)
1. Rating = (1) Scalar method Outstanding (20%), Good (10%). Satisfactory (5%), Room for improvement (General annual increase only), unsatisficatory (no general annual increase)
(2) Analytical method
What is the recent trend of PRP
Reduce the number of perfomance targets as to focus employees on key business fundamentals
eg. BT earning pershare (61% increase), customersatificasion (37% drop in customer complaints)
What is Validity of PRP
- 1. Motivation: seeking to reward good performance from current staff -> help to recruit new staff with appropriate attitude and skills
- 2. Communication : powerful message are sent to employees abt the culture of org -> demand and reward good perfomance and high contribution
- 3. Equity: Those who make the biggesst contribution receive the biggest reward.
What are requirement for PRP?
- 1. must be under control of the employee (trait and behaviour)
- 2. Should involve the exercise of some discretion on the part of the employee.(set the same obj, will be doing the same job)
- 4. Shoud be reasonable objective
- 5. Good performace should be accountable to the individual employee
What is Method of PRP
- 1. Salary increase within pay scale (minimum to maximum 16k to 20k)
- 1.2.Possible increase above the maximum
- Exeptional perfomer can recieve additonal rewards.
- 2. Increase to single point salaries
- 3. A lump sum payment
- 4. Hybrid schemes (get best of both lump sump and monthly reward payment).
- 5. Presentation (best perfomance can receive a thank letter)
- 1. Refine and clarify your objective
- 2. Ensure that ur PRP system is design to meet those objectives
- 3. Consult widely at all design stage (line manager and employee representative)
- 4. Communicate the purpose and mechanics of the schemes- it must be transparent
- 5. Develop a comprehensive perfomance management system (involving staff)
- 6. Train every one (manager and staff) in the necessary skill and processes/
- 7. Ratings. Define levels carefully and provide guidelines for their applycation
- 8. Ensure there is adequate budgeting perfomane and on adjuding appropriate PRP increase
- 9. Training managere on rating perfomance and on adjuding appropriate PRP
- 10. Moniter the out come of the scheme and provide means of dealing with inconsistances, controversial judgement and deviations from guide line
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