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Study Notes: People ManagementFinancial motivation - Performance related pay Performance-related pay is a financial reward to employees whose work is: • Considered to have reached a required standard, and/or • Is above average Performance related pay is generally used where employee performance cannot be appropriately measured in terms of output produced or sales achieved. Like piece-rates and commission, performance related pay is a form of incentive pay. Whilst the detail of performance-related schemes varies from business to business, there are several common features: • Individual performance is reviewed regularly (usually once per year) against agreed objectives or performance standards. This is the performance appraisal. • At the end of the appraisal, employees are categorised into performance groups – which determine what the reward will be (if any) • The method of reward will vary, but traditionally it involves a cash bonus and/or increase in wage rate or salary. Performance-related pay has grown widely in recent years – particularly in the public sector. This is part of a movement towards rewarding individual performance which reflects individual circumstances. According the Equal Opportunities Commission, a well-designed performance-related pay scheme would have the following elements: •
Objective setting Disadvantages of Performance Related Pay There are several problems with performance-related pay: • There may be disputes about how performance is measured and whether an employee has done enough to be rewarded • Rewarding employees individually does very little to encourage teamwork • It may encourage unhealthy rivalry between managers • There is much doubt about whether performance-related pay actually does anything to motivate employees. This may be because the performance element is usually only a small percentage of total pay.
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Related Study Notes HRM Strategy Organisational Structure Motivation at work Recruitment & Training Workforce planning Communication
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HRM Strategy HRM introduction HRM objectives HRM influences Hard & Soft HRM Organisational Structure Org charts Delayering Span of control Centralisation & decentralisation Matrix structures Motivation at work What is motivation? Theory - Maslow Theory - Herzberg Theory - Taylor Theory - McGregor Financial motivation Pay Package Time rate Piece rate Commission Performance pay Share options Job rotation Job enlargement Delegation & empowerment Recruitment & Training Recruitment intro Internal / external Job descriptions Interviews Job analysis Job advertising Person specification Training - intro Induction training On-the-job training Off-the-job training Workforce planning Workforce planning Flexible working Benefits & issues Labour supply Workforce roles & workload Annual hours Job sharing Temporary staff Teleworking Flexible hours Communication Overview Barriers Benefits Employee Representation
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