Performance pay too small to motivate

Performance-related pay awards are too small to motivate employees, despite being widely used, according to pay analysts XpertHR. That assessment is based on the median (mid-point) paybill increase on which performance-related pay rises have been awarded over the past year of 2.7%, which leaves employers “little scope for vastly different pay awards between exceptional and poor performers”.

The employers taking part agreed that the “key objectives” for these schemes are improving individual and organisational performance, focusing attention on key objectives, motivating staff and rewarding exceptional achievement. But they acknowledged that the greatest positive effect of performance-related pay is on staff who are already high performers, with only a small improvement, or no effect, on average and poor performers. A couple of respondents even felt the scheme “had the effect of worsening the performance of average and poor performers”.

www.xperthr.co.uk