Just a thought all performance pay does is make people do the things that get them extra money and forget the rest, which actually makes them worse at doing their job!!
I’ve heard a number of people say that’s all very well but in sales work it is easy to introduce performance related pay because it is easy to measure success. I’m not so sure if the remit of a job is so narrow that a simple measure of performance can tell you all you need to know about how well someone is doing, then it seems to me that other people must be contributing to the overall result,
Taking sales as an example if the people delivering your product don’t do a good job or if your MD stands up after a few glasses of sweet sherry and says that your product is “crap”, your Salesforce is going to have a real problem achieving their targets.
Likewise if you have an excellent operational division and a workforce that is totally committed to your product then sales should be much easier. But shouldn’t all these other people be rewarded for their efforts?
What you end up with in a lot of companies is a group of employees whose only job is to measure the success of everyone else (I assume they get performance bonuses for stopping other people getting theirs). Having worked as a trade union official for 12 years and on the management side for 15 my view is fast becoming that performance related pay does not work, the only measure that is both simple and everyone can contribute to is the profits the company makes, and even that can be subject to outside influences that nobody can control, but at least the total contribution of every member of staff is involved in this, plus as a measure it tends to encourage people to work together rather than in competition with each other.
This video from TED has an interesting take on the subject http://www.ted.com/talks/dan_pink_on_motivation.html
It would be interesting to hear anyone else’s views