Abstract
M.Comm.
Paying for performance is however not an easy solution for organisational performance
problems. As stated by Wright (1991: 16), "even the most ardent supporters of performancebased
reward systems recognise that it is extraordinarily difficult to manage well".
There is also a school of thought that rejects the claims made of performance-based rewards. A
recent survey of British Telecom executives carried out by the Society of Telecom Executives (1991: 35) revealed that only 6 per cent of those responding to the survey thought that
performance-based rewards improved their performance compared with an overwhelming 70
per cent who thought it had not.
Research conducted by Carmen and Wood (1992: 8) on behalf of the Institute of Personnel
Management and the National Economic Development Office into payment schemes, did not
confirm that performance-based pay was a motivator. Face-to-face interviews were conducted
with 40 personnel directors and managers from large and medium organisations. They
concluded that the personnel managers interviewed were by no means certain that performancebased
rewards succeed in motivating people. Most were not convinced they could
unequivocally identify that performance-based rewards was increasing either individual or
organisational performance. When these research findings are closely investigated, it can normally be established that
specific reasons contribute to the failure of the performance-based reward systems to increase
motivation and organisational performance. Armstrong and Murlis (1994: 252) believe these
reasons are mostly:
A failure to involve employees sufficiently in the design and implementation of the system;
A mistaken belief that the performance-based reward system on its own will achieve the
expected increase in motivation and performance; and
The poor people skills of those managers that are responsible for managing implemented
performance-based reward systems.