Individual performance-related pay has had a bad press. It can be fiddly and time-consuming to administer, often leads to claims of unfairness and can be just as much of a demoralising influence as an incentive.
However, new research from the Department of Trade and Industry's employment market analysis and research team suggests that schemes which link pay to group or company performance have a positive association with labour productivity.
The report uses the term "fair share capitalism" to cover a raft of schemes including profit-related pay, group payment by results and employee share ownership, and concludes that there are benefits, no matter what measure of labour productivity you use.
The findings are not entirely straightforward. Apparently, the positive association is there when employers use a combination of shares, profit-related and other schemes - but not when they opt for just one measure. And the positive links were strongest in workplaces where employees had greater autonomy in decision-making.
It's no good confining "fair shares capitalism" to managers, either. Schemes that do not include all employees have little impact on workplace productivity.