KNOWLEDGE WORKERS PERCEPTIONS OF PERFORMANCE RELATED PAY

Abstract

Companies implement performance related pay systems with the belief that it will improve employee performance. The companies rarely test the effectiveness of PRP after it has been implemented. This study will test knowledge workers‟ perceptions regarding the effectiveness of PRP. This research will contribute to empirical data available on the perceived effectiveness of PRP, specifically focusing on the perceptions of knowledge workers. The research was conducted using a survey. A questionnaire was compiled from the literature and based on the feedback received from five interviews using open-ended questions. The quantitative questionnaire was then handed out at a Business School to knowledge workers from a wide variety of industries and on various salary levels in their respective organisations. A hundred and nineteen questionnaires were received back from two hundred questionnaires handed out. The result indicated that performance related pay is not perceived by knowledge workers to encourage performance if PRP is linked to annual increases. The respondents indicated that PRP, if linked to annual increases, have a perceived effect on tenure, does not influence loyalty and does not contribute to the performance of knowledge workers. PRP were seen as recognition for work done but had no perceived influence on motivation