ABSTRACT
One of the hallmarks of the 1980s was a recognition by corporate strategists of the need to survive in increasingly turbulent conditions. With widely fluctuating exchange rates and interest rates, a year could see a profitable plant turned into a loss maker. One specific strategic tool commends itself already through reason and evidence as being of possible benefit to managers in the years ahead: profit-related pay. A growing body of evidence supports the view that profit-related pay can secure for companies both flexibility and retention. The Business Performance Group studied the British financial services sector, the sector of the economy where profit-related pay is the most common and long-established. Two apparent stumbling blocks are especially large. The first, how to introduce profit-related pay in the first instance; the second, how to maintain it in operation.
