ABSTRACT
On a global basis variable pay linked to performance is not yet common, but is emerging in countries such as the US, the UK and Australia, particularly among large hotel groups (ILO, 2001: Millett, 2002). Incentive pay falls broadly into two categories: PRP and payment by results (PBR). The former normally measures performance against previously determined criteria expressed as targets or objectives and has particular resonance with both a customer service-focused ethos and an HR philosophy designed to generate motivated and committed employees. A payment system that rewards employees for attaining quality goals is more likely to result in improved SQ (Redman and Mathews, 1998). By comparison PBR schemes, which measure fixed outputs, may be more appropriate to the factory production line. However, it is also important not to lose sight of fact that employee control also underpins both PRP and PBR, with PRP reflecting a tightening of the way in which individual performance is regulated (Rubery, 1995; Beynon et al., 2002). Hence increased performance may be required for the same or less pay where schemes replace non-performance based systems or provide for a derisory performance-related element.
