Monthly Archives: October 2013

Performance Related Pay – Carrot or Stick?

Teachers across the UK have begun to strike causing chaos in the many schools that have had to close placing extra burdens on working parents.  The teachers are striking about government plans to change pensions.  They are also concerned about increasing workloads and the introduction of performance related pay from September this year.

The government wants to introduce controversial performance related pay in an effort to raise standards in schools.  The long standing practice of linking pay to increasing length of service will end.  The teachers are not convinced – a poll done by YouGov on 1,000 teachers resulted in 16% who would like pay linked to results, 44% who didn’t and 44% who said it would not make a difference.  Many teachers fear the admniistrative burden of the introduction of performance related pay.

Performance related pay links pay progression to the assessment of individual performance according to set objectives.  It has been extensively used since the 1980s as employers sought to improve profits through employee reward. It works best where the employee’s contribution or input is measured alongside their output therefore being a more holistic approach. It does help to retain key talent.

An advantage of performance related pay (PRP) is that it can be motivational.  However it only works for those individuals who are motivated by financial reward, but many employees are not.  More often job satisfaction and doing a job well is more rewarding than an increase in the pay packet. PRP can nevertheless help to motivate unproductive employees.

PRP can embed a high performance culture but only if it is managed consistently and fairly. PRP promotes fairness and equity with the idea that employees who work harder than others should be rewarded for that effort.  However it can cause a rift between those employees who are rewarded and those who are not.

The process works much better in the private sector than the public sector.  In fact it is the norm in many private sector organisations particularly financial services.  Many public sectors workers are used to receiving their annual increase based on continued service.  It does not encourage motivation to improve job standards when workers know they will get an increase regardless.  Perhaps this is why so many teachers are up in arms.

Measuring performance is key to the effective operation of PRP as well as the consistent operation and objectivity of line managers.

The recession put employee reward on the back burner so that even pay increases were scrubbed.  Perhaps now the country’s economy shows signs of improving performance related pay along with other forms of employee reward will be put back firmly on the agenda.

As for the striking teachers only time will tell whether they will accept the government’s initiative or not and how quickly their differences can be settled.