It is also necessary to consider its types and analyze their advantages and disadvantages.
Then, it will be possible to properly understand the ways, in which performance-related pay influences job satisfaction and performance of the employees.
There are different variants, on which payment can be based, such as performance of the whole organization, its division, team or individual results.
Usually PRP involves the following three stages: development of the criteria, with the help of which employee’s performance will be assessed, defining whether employees meet the set criteria and link the achievements of employees to the payment structure.
Introduction This paper is aimed at understanding whether performance-related pay can lead to improvement in employee’s performance and job satisfaction.
In order to answer this question, it is first of all necessary to research the nature of this payment system, analyze the reasons why employers choose it for their organizations.(PRP) represents a kind of payment system that depends on the employee’s performance.It can be completely or partially dependent on performance and usually it has a form of bonuses over some set sum of money (Heywood and Wei, 2006).First of all, let me describe advantages for employees (Rynes, Gerhart and Parks, 2005): 1) career boost: if effectively implemented, employees with the help of PRP can effectively monitor their own performance and further their careers.For those who perform well it is also possible to back their words up and prove that they deserve bonus or salary increase.In order to do it properly, results of various studies will be analyzed.In the end recommendation on the choice of appropriate pay scheme will be offered and overall conclusions will be drawn to finally answer the initial question.In both cases there are certain advantages and disadvantages.PRP has benefits in multiple fields both for employees and employers.Ability of reward system to encourage and satisfy the employee depends on the structure of the system and the degree of realization of it.Different companies have developed many different systems and practical ways to reward and effectively stimulate employees to achieve satisfaction of each worker.