Blogs - Margo McLay

Why performance based are the new recruiting tool, and why they may be failing (part 2)

Continuing on from my blog about performance based pay and the limitations of traditional organisational structures, another factor that comes to mind which create barriers is how much incentive does pay really provide?

I know of a few cases where the bar was raised quite significantly on an employee with the promise of performance based pay. At the review time, the employee was provided with (after tax) the meager amount equivalent to one week’s pay. Is this really incentive to an employee to make a quantum leap in their performance?

Psychologists agree that incentives have no lasting benefit, and we have seen already that money has limited motivational value. While performance based pay is supposed to be a win-win situation, often the employee can be left feeling dissatisfied or exploited.

On the flipside, often it is the employer, who, because of the demotivational aspects of missed targets, allows targets to be set that are too easy, and so the bonus element simply becomes a de facto pay increase; an employee "right" with no link to a real improvement in productivity.

This is actually rather ironic, because PRP schemes can initially be seen by a skeptical and mistrusting workforce as a management tool to squeeze more out of them - which, given the goal of improved productivity, is not incorrect, but more of a mutually beneficial scenario.
The jury is still out on PRP. Critics say that the concept is good for short-term bursts of productivity, but unlikely to contribute to a change to long-term behaviour patterns. Others purport that remuneration does not simply compensate employees for their efforts - it also has an impact on the recruitment and retention of talented people.

The real problem according to organisational psychologists is that employees and employers fail to find the middle ground to identify the real crux of the issue – that workplace support is one of the most important factors affecting job satisfaction.

Perhaps organisations – lead by executive teams and HR departments - could take a leaf out of government books and look to “engagement” as a way to forge successful partnerships between employers and employees. Just as government has adopted community engagement as a way to align their self-interest and create a meaningful partnerships and joint ventures with stakeholders, perhaps they should consider more employee involvement to enable them to participate in the decision-making processes that affect their working environment.

It sounds simplistic but in reality, it’s probably a very practical way to remove barriers to performance and directly contribute to morale, productivity, and employee satisfaction.

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