Blogs - Margo McLay

Why performance based are the new recruiting tool, and why they may be failing (part 1)

As competitive pressures mount, organisations are compelled to consider strategies that will help them become more innovative, productive, and efficient. The use of Employee Incentive and Recognition Schemes such as performance related pay (PRP) have become significant elements – and increasingly commonplace - in the HR toolbox.

The primary objectives and perceived benefits of performance related pay are that they:

  • Give the employee some control over their income.
  • Create a greater sense of responsibility/more ownership of the job on the part of the employee.
  • Stimulate the employee to work harder than they might otherwise do.
  • Identify more effective means of measuring performance.

While in theory the concept sounds good, in practice the subject raises some important issues for both the employer and employee. For example, does the employee really have control over their incentive income? For those employees who are working in a traditional organisational structure, they have little ability to alter their behaviour to significantly affect their earnings potential. After all, employees cannot, and invariably will not, take ownership of their own jobs if they are not empowered to work with others to overcome the day-to-day issues that form the barriers to their better performance.

Traditional command and control disciplines, enforced by the dictatorship of job descriptions, undermine initiative and independence of thought and action and so sabotage all the good intentions of PRP. PRP therefore remains pointless in such traditional environments.

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