PRP has been in thick of arguments with advantages and disadvantages being displayed. There has been a studying on the role of giving prp to teachers in schools. There has been a studying of achieved objective on reality and compared it with perceived advantage.
The performance is assessed in almost all incentive schemes and increase in incentive would be given. When merit system is followed, the performance of the individual is studied in detail and then there would be procedures like filling up forms and filling or getting completed interviews for performance appraisal. The score is important in getting a hike.
There can be marks awarding, and in some cases, these marks are awarded as a percentage. The other is like research paper when an individual is assessed across parameters like excellent. Good, satisfactory, inadequate and soon.
Draw back of merit based system is that assessor can get personal and can give more marks based on their subjective assessment In certain cases an overall performance is not taken into consideration, and only recent performance are taken into consideration. This can hamper or improve the score.
If one is looking into a parameter for incentive scheme for management work, then a goal based system can work as it is objective in nature. There would be talk in the beginning about the goals and objectives that should be achieved within few months.
There would be interlinking of individual goals along with organizational goals, so that company objectives are met. In year ending a score would be awarded, and this would be based on the number of objectives met and not met and this would be a straight forward method of calculating a score.
This objective method would not give importance to the level of hardship faced by employees and would not also take into consideration the effort taken by employees.
PRP has gained attractions among management people, and it is believed that it helps in retain and attraction of employers. It has also helped in improving corporate performance along with individual performance. There would be clarity on jobs, and there would be a change in communication. Motivating and morale aspects would become positive, and there would be strength or control from management. Developmental objectives can be strived for. There would be a system in which employees are getting rewarded without getting a promotion.
An aim of prp is to find out who all are performing well and how to reward them. Brown, Armstrong feels that this is what majority managers would like to see in reality. There are functional problems when these principles are put into practices.
Academic researchers have criticized prp system way back in the 80 to 90’s. Human resource consultants have been strongly advocating for this. Kohn in 93 as an occupational psychologist had questioned the role of prp scheme in employee motivating. Hendry as a sociologist in the year 2000 had advocated this system as getting back too much management control. Rubrey way back in 85 had raised the issue of gender equality that can happen through prp. Deeming who has been a big fan of TQM felt prp was not a nice thing that can happen. The reason is that supervising gets more importance than leadership and this can affect the morale of employees.
Kohn feels that incentives would achieve only short term objectives and to keep employees motivated and to make them achieve organization goals much; more needs to be done.
Many authors have argued that PRP would make workers obsolete by making them focus on aspects that bring pay rise. This system can bring a reduction in team working abilities as the system is more individualistic. PRP is a rating system, and this can demotivating workers as they feel they should have scored more than perceived by management. This would lead to negative synchronizing, and this would make employees less morale. There are external factors that would affect the performance of an employee. There would be bias towards some employee that would help them get good ratings, and there would be some anger against some employees that would affect their ratings.
An organization would be forced to change certain objectives based on external factors like government intervention and so on. This change in the scheme can make employees feel demotivated as they do not want to work for changed priorities on the part of an organization.
PRP is not a system that is found to encourage a creative style of thinking. There would be restrictions that happen due to a meeting of goals and objectives. Budget constraints on the part of a company can lead to a reduction in ratings and can also lead to a reduction in incentives.
Every manager would not follow the same style in awarding ratings, and this can lead to resentment in an organization. Weaknesses of employees are not given importance during appraisal meetings, and this can affect the need for training that can affect company objectives. There are occasions in which employee would give a better rating for fear of resentment, and this can increase cost.
Brown, Armstrong had said about these reservations in their case study about pop. HR managers have been found to apply this PRP universally, and Mejia , Balkin have asserted that if individual performance could be measured objectively and individual have a capability of knowing the outcome, then this system is good. The system would be favorable of team performance would not be in important factor.
Brown , Armstrong has said that incentive scheme like prp would get judgment only based on payment but the ways it has helped in improving motivation of employee and improve the security of a job, Organization priorities is what drives prp forward and this gives more importance than individual priority. This is an advantage that everyone has agreed to.
Sometimes management would include objectives in subordinate with an aim for getting it, and there would be no change in that idea comes whatever may be. Prp can be used to reward along with another mechanism so that employee would not feel bored.