Performance-related pay (PRP) is a common way of managing pay by linking salary progression to an assessment of individual performance, usually measured against pre-agreed objectives. But despite the wide use of PRP schemes, questions still remain around the effectiveness of PRP as a motivator.

This factsheet explores the rationale for linking pay and performance as well as the potential issues around implementing PRP schemes, both generally and with a specific focus on PRP schemes in the public sector. It also provides an overview of key issues including the role of line managers, measuring performance, distribution of awards and the impact on employee behaviours.

CIPD viewpoint

What is performance-related pay?

The rationale for performance-related pay

Measuring performance

Coverage and trends in performance-related pay

Implementing PRP schemes

References

Further reading

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