Page 5: Motivation, performance and pay
In the UK, there is a movement towards relating pay and promotion to measured performance. The PRP (Performance Related Pay) approach is based on a philosophy of agreeing:
- the key results areas of the job
- clear standards of performance and target levels of competence
- regular, objective reviews of performance and competence.
In 2000 a Taylor Woodrow survey of its employees showed that 94favoured a Performance Review and Pay Review Cycle. This is typical of many companies, where employees prefer objective standards for measuring their performance rather than rely on the subjective views of their line manager.
Individual rewards for employees are therefore based upon:
- the Group's and the individual company's overall business performance and ability to pay
- each individual's contribution to the company's success
- the level of salaries and benefits necessary to attract and retain people, taking into account competitive salary arrangements elsewhere.
The Performance Review examines:
- the level of skills, competencies and knowledge an employee demonstrates in his/her particular role
- the degree to which set objectives have been achieved.
These are documented and evidence is provided. Employee rewards are then tied to this Performance Review, which is rated using a scale of 1 to 5, with 5 being the highest. Bonuses and salaries are then related to this rating, after consideration of company financial performance. Where employees have skills that are in short supply, the review also considers wages being paid elsewhere for similar work.
Salary increases based on the past calendar year's performance are effective from April 1. Bonus payments in respect of the previous year are paid at the end of March.
A major aim of the company's Performance and Development programme is to create commitment and motivation at all levels of the organisation; by the organisation itself, managers, and all employees.