Unit 2 Rewarding performance

Process links

There are two important process links to be taken into account in a PMS:

·         first, links between effort and measured performance and

·         second, links between performance and rewards.

Links between effort and measured performance

The principle behind this linkage is that individuals must feel that by adjusting their on-the-job behaviour, they will be able to affect performance measures. So, if the organisation does not provide them with adequate tools and training to do the job, and yet still emphasises performance measures, the PMS will be counterproductive. This will also be the case if the size of the group being rewarded by the PMS is too large. If the performance of the whole team is being measured, there will always be questions about how accurately individual contributions are represented. If certain individuals get away with working less hard and/or contributing less than others, nobody will work hard and the whole system will backfire. Effective communications policies about exactly how the PMS works and what and how decisions are made with its results, should be in place.

Links between performance and rewards

There are two broad ways in which this link can be established:

1.         A formula-based calculation, such as individual bonuses or gain sharing. This provides an objective standard, but is inflexible.

2.         A more informally determined approach, such as discretionary awards based on individual performance made from a pool of resources. This can take account of unforeseen factors, but may appear to be arbitrary or politically influenced. If the system is to work, decision making must be transparent, accountable and consistent.