Performance-related pay schemes fail to impress

Performance-related pay schemes are only ‘reasonably successful’, according to a separate IRS survey.

The study of 87 performance-related pay schemes at 48 companies in the public, manufacturing and service sectors, showed mixed results.

The majority (91 per cent) hoped that schemes would be a better mechanism for rewarding the performance of individuals. Seven in 10 hoped it would improve the performance of individual employees, and a similar number hoped it would boost staff motivation.

Eight in 10 respondents reported that the pay schemes had led to improved individual performance, and three-quarters felt it had provided a better system for rewarding performance. But only half believe the pay scheme managed to motivate staff.

Respondents also reported a number of problems with implementing performance-related pay schemes. They were cited as time consuming by 67 per cent of the respondents. And the issue of pay awards being too small to motivate employees was an issue for 60 per cent of the respondents.

Clarity, transparency, consistency and communication were cited as the most important aspects of performance-related pay schemes.

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