`Performance related pay improves both motivation and individual performance`. Critically discuss.

Introduction

Performance related pay or performance-based pay has caused quite a buzz in the past decades . It has grown in popularity and controversy among different proponents of business and economic scholars . Moreover , the concept of motivation and efficiency it rouses brings about a number of debates as to how effective it is and to what extent it supports the status quo of certain organizations both in the private and public sector . While there are numerous debates as to its use and practicality it stirs my interest in the direction of whether or

not it motivates individuals and how it affects individual performance

Performance Related Pay : What it is

With this in mind , we can first look at the whole concept of performance related pay . When we talk about performance related pay we cannot ignore the concepts of motivation and reinforcement for these may be the very backbones of why it was conceptualized

Although Performance related pay or PRP can be tied to organizational growth and development or increasing capital and such , its main impetus is based on the fact that it used to increase the productivity in whatever setting it is used in . As such , we find it employed in various industries from accounting to healthcare , there have been numerous studies on its effects . This is highlighted by Maguire and Wood (1992 when they cited that the basic appeal of performance related pay or what they referred to as performance based schemes to public service was the fact that it was linked under the premise that public servants would in fact work harder in a setting wherein their pay is directly proportionate to their work . PRP is a type of payment pay scheme that makes use of appraisal systems that are measured against objectives that have properly been established . Taking this into account , we can broadly define PRP as a payment system or model that rewards the accomplishment of goals and objectives set by an organization through bonuses or monetary compensation . An example of such can be drawn from outbound telemarketers nowadays . For some companies , each sale made entitles the sales agent to commissions and such . Within this context , we can see that performance related pay is a form of reinforcement . This takes a psychological approach in understanding the whole system of PRP

Performance related pay in actuality is a form of behavior modification that has an additional effect of increasing motivation and individual performance . Looking back at the work of Behavioral theorists we take into account the work of Skinner . B .F . Skinner believed that behavior was in fact a product of what he called operant conditioning and that a certain behavior can be learned or bolstered through a system of conditioning , which implored reinforcements . Skinner 's theory simply states those employees ' behaviors that lead to positive outcomes will be repeated and behaviors that lead to negative outcomes will not be repeated (Linder , 1998 ' In this sense , we can view increased productivity , efficiency and motivation to be the end...