Redfive looks into the benefits of Performance Related Pay

May 23, 2012 - PRLog -- Redfive delves into the reasoning behind for Performance Related Pay
Performance related pay is usually given in sales roles where targets must be met on a monthly basis. As this type of payment method will usually be paid as an addition to an employee's salary it is an opportunity for an employer to maintain employee retention and recruit new talent. A simple way of evaluating performance related pay is with football player’s salary, if he scores a goal or keeps a clean sheet, then a performance bonus will be paid on top of his weekly earnings.
This tried and tested method of remuneration can also be cost saving for a company as it allows them to pay lower salary workers a basic rate, then an employee can make the rest up with higher productivity.
Another method which companies implement; are to pay solely on performance, many sales companies use this method. Due to the high level of value it creates to their clients, the majority of sales companies provide a service to their clients and are paid on the results they obtain; in turn that’s how they pay their team.
All companies are paid on their performance; that is, if a clothes shop doesn’t have consumers, then it isn’t making money, overheads are not met and in short the company folds. In sales, many companies offer performance only pay, in order to filter the weak from the strong or those that can achieve from those that can’t, ensuring that their teams are paid fairly; I guess they see it as if you are not putting into the pot then why should you take anything from it.  
Redfive researches the types of Performance Related Pay
Performance related pay can be issued in a variety of ways, in cash as part of an employee’s commission package or for reaching a target. Another method of PRP may involve issuing gift vouchers such as childcare or leisure vouchers. This can often be a very cost effective method of performance related pay in the long term. In addition, offering share options can lure talented employees and will give them an incentive to stay with the company. Another method is to offer a business development program to those who demonstrate ability and promise, offering an incentive for achieving more; you work hard; you learn you progress.
Redfive understands the benefits of Performance Related Pay
Performance related pay structures have had a proven track record when it comes to productivity and motivation, most likely the highest benefit of a performance related pay scheme will be an increase of overall sales for the company. However, employers will also benefit from an increase in skills their employees will possess as part of the scheme.
Critics of these type of reward schemes would argue that it can be hard to measure performance related pay if an employee is not part of a target driven role, an answer to this would be a skills based scheme, however this may be difficult to distinguish a 'cut off' point at where an employee’s stops learning a new skill.
Redfive believes that performance related pay, allows the company to offer a fair opportunity to others, ensuring that people earn their worth, rather than those who work hard achieving the same earnings as those who do not. Whatever performance related pay method you to put into practice each have the same outcome; higher productivity and a greater motivation to succeed.