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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
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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)
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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)
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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
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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)
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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.
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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
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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)
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PRP plan?
- 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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