Performance Related Pay and Employee Performance
Linking pay to performance is critical aspect of management of employees that several
employers seek to achieve. Studies show that jobs that have greater performance related pay tend
to attract employees with greater ability and subsequently, induce them to attain excellent
outcome. PRP is referred to as a mechanism that entails management of pay through linking the
salary paid to an individual employee alongside the subsequent performance of an individual in
the work place. The goal of this essay is to critically evaluate individual performance-related pay
(PRP) impact in the workplace (Chien et al., 2020).Consequently, assessment will be undertaken
to know the influence of PRP in stimulating better outcomes with reference to employee output
and better level of performance in the work setup. At the same, an overview shall be carried out
on the theories of motivation that concern implementation of PRP mechanism in the work
place.
At its core, the individual PRP system is formulated on the assumption that monetary
compensation provided to every employee essentially motivates a person to perform better.
According to Surf et al 2007, the correct behaviour, of a given employee is reinforced via
application of reward systems. Similarly, organization pay for performance objectives is geared
towards attracting and retaining employees.
Concept of Motivation and Performance pay
Employee motivation is a critical aspect of management that employers seek to meet
amidst balancing costs of operating their businesses. Motivation can be defined as a mechanism
of psychological forces that influences the trajectory of an individual behaviour, persistence and
their level of effort in a given task. There are myriad theories of motivation that aid in explaining
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the use of pay as a reward system that catapults the level of performance of employees to gain
greater levels of performance.
Expectancy Theory of motivation
Victor Vroom proposed the expectancy theory of motivation. As such, the theory
emphasises the value of outcomes, where the intensity of an expectation that a certain level of
performance. In essence, the theory stresses, that employees motivation is a product of how
much that a given reward/valence, examination of the possibility that the employee effort will be
generate expected performance/expectancy and the belief that employee performance shall lead
to a reward/instrumentality (Deshmukh, 2017). As such, the Vroom’s expectancy theory is based
on three key nature of relationships of efforts and performance relationship, performance and
reward relationship and reward and personal goals. Essentially, Vroom perspective was that
employees have a chance to consciously decide whether to perform or not at the job. As such,
rewards in form of money for pay is meant act as pointers that motivate employees to perform in
the work setting. At the same time, it depends three factors valence, instrumentality, and
expectancy.
Managers can therefore, in the work setting correlate preferred outcomes to the aimed
performance levels of their employees. Also, managers have to ensure that the employees attain
their desired levels of performance. Moreover, expectancy theory provides an avenue for
motivating deserving employees through monetary rewards to achieve excellent performance in
the work place. Further, PRP should be aligned to organizations need for designing dynamic,
challenging jobs and interesting tasks.
Reinforcement Theory of motivation
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Apart from the expectancy theory of motivation, the reinforcement theory is also aligned
to motivation that employees in the work place derive in their work station. The reinforcement
theory seeks to attain desired level of motivation among employees through process of
reinforcement, punishment and extinction. The theory was put forth by Skinner and his
colleagues, based on the framework of Law of Effect. The law of effect seeks to explain that the
behaviour adopted by an individual along the lines of positive consequences, is mostly repeated.
However, the behaviour of people along the continuum of negative consequences are often not
repeated (Deshmukh, 2017). Most significantly, Skinner posit that human behaviour that gets
reinforced is often repeated whereas that behaviour of employees that is not reinforced tend to be
extinguished. Thus, the reinforcement model of motivation can entrench both negative and
positive outcomes to promote a positive desired behaviour.
Punishment of employees to employees through techniques such as