The Importance Of Performance Related Pay In The Workplace

Performance related pay, also known as PRP, is a form of payment which correlates the amount in which an employee is paid with their performance such as the amount of work the employee has produced or the amount of progress they have achieved within a certain time frame. For example a call centre employee may not get a basic salary or if they do a very low one, but will then get a commission every time they sell a selected product. PRP can be used in the business environment for individuals, a team of employees, or even an entire company, but the majority of times it only applies to individuals (……….). PRP was first widely introduced to the UK in the 1980’s as many organisations believed that it could be a change in organisational culture and encourage a higher rate of individual and ultimately organisational performance (Kessler and Purcell, 1992).
In the modern business environment performance related pay is still a key component within many organisations. However it is increasingly more likely …show more content…
The idea behind this is that by compensating employees to learn new skills will mean they will be more enthusiastic and have a more positive approach whilst undertaking the training needed. Hence when applying these skills in the workplace the employee will be more effective and efficient whilst working benefitting them and the organisation.
There are advantages and disadvantages to the use of skill based pay. One advantage is that employees will have more self-esteem due to their increase in personal development which will also enhance their self-management capabilities. Also employees will be able to adapt to the ever changing advancements in areas such as technology due to their learnt