+44 203 318 3300 +61 2 7908 3995 help@nativeassignmenthelp.co.uk

Pages: 8

Words: 1941

Performance-related pay is the best way of rewarding employees

Introduction: Performance-related pay is the best way of rewarding employees

Native Assignment Help provides assignment help to assist students in research, writing and proofreading process.

The topic of the following study is “Performance related Pay is the best way for rewarding employees” in relation to increasing employees motivation and satisfaction within the workplace. By getting sufficient return on their contribution employees will feel valuable at their workplace and will be dedicated to utilise their maximum potentiality for gaining opportunity and expertise in their professional field. The study will discuss the effectiveness of performance related pay with its advantages that will clearly represent its competency over other reward strategies. Performance related Pay is best for organisations as they can attarckt potential candidates and hold them within the organisation that may increase the overall productivity and growth of the organisation. 

Main Body

Discuss “Performance-related pay is the best way of rewarding employees”

Variable Pay to workers consists of three main types of payment offered to workers that are performance related, employee share scheme and profit related. Performance related Pay (PRP) is a type of compensation that connects rises in basic pay or cash bonuses to performance assessments, usually in relation to predetermined goals (Bender and Skåtun, 2022). This definition adequately describes the aim of performance-related pay. In Performance related pay the payment to workers is linked with the employee’s contribution to the performance of a company or according to the financial performance of the company over the specific pay period. Performance-related pay (PRP) is an approach to managing compensation that connects income advancements to an assessment of a person’s skills, usually as measured towards pre-established objectives.

By offering better compensation or other benefits to workers for their progress and achievement will increase employee’s satisfaction and motivate them to give their best effort to their work to gain better efficiency and expertise (Hussain et al., 2019). Offering monetary rewards to potential workers for their valuable contribution will offer long term opportunities to organisations that foster better growth and success. By getting better rewards and benefits workers will be able to meet their requirements. That means better compensation will provide a better lifestyle to workers that may increase their motivation that plays a very significant role for enhancing productivity of employees and the organisation.  

The Performance Related Pay is linked with several objectives such as employees see rewards given to them by evaluating their performance and effort that will make them more inspired to make more productive outcomes. The purpose of PRP is to increase the focus of workers on their task and also make better commitment in accordance with corporate objectives of the organisation (Rohim and Budhiasa, 2019). Most of the organisations use PPR to incorporate a performance based culture that will foster the performance growth of workers and also it is important to reinforce existing corporate culture that also boost up the dedication of workers for increasing the productivity of the workplace. It also enables organisations to attract potential and qualified candidates towards the company that may power up the workforce and fill up the skill gap within the organisation. According to the principle of the PRP system employees get rewards aligning with organisational objectives. Managers or leaders should lead and direct performance of workers focusing on the objectives of the organisation for ensuring future growth and potentiality of success.  

Performance Related Pay ensures better employee loyalty. Employees get extra pay so they will desire to stay reliable with their company. It helps the organisation to gain a better competitive advantage over competitors that may ensure long term existence of the organisation within the market. By creating financial ties of business goals and performance of individual workers business will get compliance for assuring long term commitment of individual workers (Paais and Pattiruhu, 2020). By implementing performance based pay within the workplace the hard working environment will get raised in the workplace. It may increase the efficiency level of workers that may ensure better future performance. Everyone needs and expects better pay and with passing of time employees expect a better return on their effort that may make them satisfied by their profession.  

Within an organisation there are employees of various skills, competencies, capabilities and experience it is best to offer pay to individual workers based on the evaluation of their performance. By offering performance related pay the organisation will be able to get maximum outputs by utilising skills and knowledge of workers. Organisation have to have proper infrastructure and capability for implementing the performance related pay system that plays a crucial role for assuring productivity and efficiency of the organisation. Performance related pay is closely related with a comprehensive performance management process thus the organisation must have a proper system for tracking and evaluating performance level and progress of individual workers for paying workers according to their performance (Perkins and Jones, 2020). If an organisation can implement a Performance related pay method efficiently it will foster employee motivation and encourage workers to give their best effort to get the desired outcomes. It will inspire workers to try harder, work faster and with the best quality to reach the goals faster, and be more productive to gain competency over others. 

PRP is the best way to boost the growth of an organisation. The HR department of an organisation should follow the right and appropriate way to enhance better performance of workers. It helps to build ethics and morality throughout the workplace that may support personal and professional skill development of workers that may support better future growth among workers. PRP is the efficient way to create a strong bonding among workers and the organisation through setting a reward based culture across the workplace. It is the process of rewarding employees on the basis of their individual performance that may give better personal satisfaction and boost productivity of individual employees. PPR establishes a performance based workplace culture that may support better utilisation of skills and capabilities and each employee will be dedicated to their work to get better return. It will make the maximum utilisation of skills so the cost of the business will get reduced and business will be able to gain sufficient profit.  

Many workers react by demanding extra compensation on consequences when the management authority pressurised to improve performance, but the company may not have efficient performance management system. However, unless there is an existing framework, it is not appropriate to employ performance-related pay. It is quite difficult to assemble every element of the process properly, and there are numerous examples of Performance Related Pay schemes—also referred to as “merit pay”, “performance bonuses”, “incentive bonuses”, etc.—that has now become despised.

Through PRP employees get financial rewards in accordance with their individual performance. PRP includes various types of commission such as Sales Commission, Compensation bonus and financial profit sharing (Peckham and Wallace, 2018). Managers should offer commission and extra pay to workers for meeting their target that may inspire other workers to give their best effort to meet their target that has been set by the management. PRP is not given only for meeting the target it also includes the accuracy and quality of work so workers will also feel inspired to complete their work by maintaining the proper instructions and guidelines. 

According to the opinion of experts, PRP is the appropriate method for rewarding employees as it makes effective evaluation of performance of workers without any partiality and conflict (Perkbox, 2022). With the increase of the performance level of individual employees the rate of payment to workers will also be raised accordingly, which may help to ensure better employee retention and create better communication and bonding among workers and the management. 

Based on surveys, Performance related pay is closely associated with employee satisfaction, organisational commitment and ensuring trust among workers that may assure better efficiency and productivity of the organisation. Based on performance based evaluation skills and performance of employees will offer ultimate rewards to workers that may support professional development of workers. Potential candidates get attracted to companies that offer better monetary incentives in return for their unique and productive performance (Resce, 2020). It may offer higher salaries to workers that may make them interested in their work. PRP ensures efficiency and productivity of workers through offering financial benefits that may help employees to gain better performance proficiency. By implementing PRP workers will get inspired for invest their effort to get the best outcomes that may help to gain better success as the result of better effort. 

Based on the above analysis and discussion it has been clear that “Performance Related Pay” is the perfect way for valuing the contribution of workers and inspiring them to make further productive efforts that may also support growth and success of an organisation. Organisations should measure performance of workers with proper concern and by considering different variables that may impact on the performance of workers and reduce their productivity. It is considered as the best approach as employees will be paid according to their own performance evaluation and assessment (Kang, 2021). By getting an appropriate return on their contribution employees will feel interested to make more effort for getting the highest return that may assure personal and professional development of workers. 


The study has discussed the appropriateness of “Performance related Pay” for ensuring success and performance growth of individual workers. Organisations should implement an efficient Performance Management system for tracking day to day performance of workers and measure their performance in accordance with standard criteria that has been set by the organisation. The above study has evaluated the effectiveness of Performance related pay for considering it as the best reward approach for valuing performance of workers.


Bender, K.A. and Skåtun, J.D., 2022. Performance-Related Pay: The Expected and the Unexpected. Handbook of Labor, Human Resources and Population Economics, pp.1-28.

Hussain, S.D., Khaliq, A., Nisar, Q.A., Kamboh, A.Z. and Ali, S., 2019. The impact of employees’ recognition, rewards and job stress on job performance: Mediating role of perceived organization support. SEISENSE Journal of Management, 2(2), pp.69-82.

Kang, Y., 2021. How you pay matters: performance-related pay and learning by exporting. Empirical Economics, 60(5), pp.2455-2475.

Paais, M. and Pattiruhu, J.R., 2020. Effect of motivation, leadership, and organizational culture on satisfaction and employee performance. The Journal of Asian Finance, Economics and Business, 7(8), pp.577-588.

Peckham, S. and Wallace, A., 2018. Pay-for-performance schemes in primary care: what have we learnt?. In The Quality and Outcomes Framework (pp. 137-146). CRC Press.

Perkbox.com, 2022. Performance-related pay: everything you need to know [Online] Available at: https://www.perkbox.com/uk/resources/blog/everything-you-need-to-know-about-performance-related-pay Accessed on: 14th December, 2022. 

Perkins, S.J. and Jones, S., 2020. Reward management: Alternatives, consequences and contexts. Kogan Page Publishers.

Resce, M., 2020. Evidences from the monitoring on tax bonus on the performance-related pay increases.

Rohim, A. and Budhiasa, I.G.S., 2019. Organizational culture as moderator in the relationship between organizational reward on knowledge sharing and employee performance. Journal of Management Development.

Recently Downloaded Case Studies by Customers
Our Exceptional Advantages
Complete your order here
54000+ Project Delivered
Get best price for your work

Ph.D. Writers For Best Assistance

Plagiarism Free

No AI Generated Content

offer valid for limited time only*