The impact of performance related pay on employees : a case study of a Maltese listed entity

Abstract

Purpose: Performance Related Pay (PRP) is a scheme that intends to boost employees' performance and motivation by linking financial incentives to individuals' performance. This study intends to conceptualise the various elements that contribute towards the success and failure of a PRP scheme implemented in an organisation. Design: This research is conducted using a qualitative case study to investigate a public-listed financial institution based in Malta within a real life scenario. Data was gathered through a series of interviews with managers and employees subjected to the PRP scheme implemented by the organisation. Findings: From the interviews conducted, it emerged that the main benefits gained from PRP was enhanced performance through increased motivation and organisational direction. A number of downsides were also identified, mainly attributable to the human element present in the scheme such as morality, judgement and pressures on employees. Conclusions: On the whole the scheme appears to be beneficial to both the organisation and employees. However this is only possible through controls and monitoring implemented by the organisations to limit the downsides. Implications The major implications resulting from this study are that although the majority of the themes identified are in line with what is found in the literature available, some of the identified factors seem to be more apparent in the local context, mainly the issues of familiarity among employees and morality. Also, the fact that the scheme appears to be operating successfully, raises the question of the validity of pressures to abolish PRP.