Performance-related pay

Sheila Attwood Editor's message: Many organisations link either all or part of the pay awards made to individuals to an assessment of their performance - measurements of performance can include competencies, skills and knowledge as well as results and achievement of objectives.

However, a performance-related pay scheme (also called a merit pay scheme) has to be carefully designed to ensure it will fit with the organisational culture and values and have the confidence of employees.

Although performance-related pay awards are common in certain sectors of the economy - such as finance - they account for only around a quarter of the pay awards made each year.

Sheila Attwood, managing editor, pay and HR practice

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