Performance-related pay introduced

BY CHRISTINE O. ASABA

 

Performance-related pay has been introduced in the country. The remuneration package consists of a range of payment methods and accompanying benefits which can be used as motivators by modern companies. The payments are part of the human resource management philosophy in modern business.

 

The remuneration consists of the rewards the human resource receives from their work. And, there are various ways of rewarding employees, including, basic pay for standard hours: An employee works to a set contract e.g. Frw x per hour for a y hours a week, of a salary of Frw z per month.

 

 This scheme alone does not provide an incentive to work harder, but if the rewards are good relative to those offered for similar work then this will act as a motivating factor in itself.

 

Then, there is additional hour’s reward: Here employees are usually paid extra for working unsocial hours (e.g. a night shift) or for working longer hours (overtime rates).

 

Commission: Sales staffs are typically paid on a commission basis. The commission rate depends on their success rate so acts as an incentive to employ effective selling techniques.

 

Bonuses are another form of incentive to meet particular targets. Typically these will be used to encourage and motivate employees to work harder when required, e.g.; offering football players an incentive bonus to win an important game.

 

Performance related pay: Many companies operate some form of performance related pay scheme. This type of pay is being introduced in the civil service today. Pay is then related to the achievement of objectives and targets. The performance that is measured may be at company wide level, plant level, team level or individual level.

 

Profits related pay: Employees pay and bonuses may be related directly to the profits that a company makes.

Payment by results: This is a similar form of incentive scheme to profit related pay.

The results measured will be key results areas for a company such as sales. Piece rate reward systems relate to paying employees according to their level of output. Where such a scheme operates it is essential that there is a good quality checking procedure to make sure that the ‘pieces’ are of the required standard.

 

 The remuneration package therefore consists of a range of payment methods and accompanying benefits which can be used as motivators by modern companies and are all part of the human resource management philosophy prevalent in modern business.

 

All in all, managers at all levels need to have management skills to manage human resource! Any payment scheme can not succeed if some of the managers are unskilled.

 

Human Resource Management involves treating employees as the most important resource of the organisation. Unfortunately you find that, this is the most forgotten resource by some managers, and most expensive to maintain and retain.

 

There is evidence where civil servants are leaving not because they have better choices, but due to other reasons, trouble with simple management. Management should not be taken so trouble-free! It is an issue that can fail a business in a fortnight.     

 

Civil service

Whereas the government may be under the pressure to reduce the total wage bill in the public service against the backdrop of growing public deficits, it also has the responsibility to promote equitable employment practices and to ensure that the public service can attract and retain the calibre of staff it requires.

 

 It is therefore unfortunate, to find in some places a big gap of over Frw 200,000, which actually may not be justified. Although human beings are not only motivated by money rewards, but where inequality surfaces in the work place, the work force starts to be demoralised. Thus, low productivity is expected.

 

While the country is in the process of changing the rules governing pay structures and wage determination, different approaches to pay reforms may be observed in different countries. In some, the main target is the total wage bill, in others it is the structure of pay or its role in promoting productivity, efficiency and labour market flexibility.

 

 As a result of decentralisation and deregulation, various public service sectors are being encouraged to adopt new approaches to service provision and to establish the corresponding pay and grading structures.

 

Flexibility in pay in the form of performance-related pay (PRP) has been introduced in some government entities as a motivational tool to retain high-performance staff. However, if it is not supported by employees in general, it will not have any motivational impact. PRP has also encountered a number of challenges.

 

Christine O Asaba is a banker

semanore@yahoo.com

 

 

ENDS

 

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