Wong, Lai Cheng
The Effectiveness Of Performance- Related Pay In Increasing Employee Motivation For Greater Performance: A Case Study Of Jurong Shipyard Pte Ltd (JSPL).
[Dissertation (University of Nottingham only)]
The design and operation of payment systems in many organizations has often been institutionalized by custom and practice, tradition and collective bargaining mechanisms (Beardwell & Holden, 1997) and that has resulted in individuals receiving rewards that are not based on their performances or contributions but rather independently determined. However, competitive pressures have resulted in the evolution of new forms and strategies of reward management that focus particularly on performance- reward contingencies. Moving away from traditional pay systems such as seniority- based pay, payment by time, payment by output etc, organizations are now continually looking to increase their effort and performance beyond that which is at a minimally acceptable standard, or by reducing labour costs to a minimum (Beardwell & Holden, 1997; MOM, 2005 ).
One way of achieving this is through the development of pay systems that reward individuals based on their performance levels and contributions to the organization. This proliferation in the use of performance- related pay (PRP) by organizations and its perceived effectiveness in motivating employees towards greater performance has been studied and debated by many authors (e.g. Marsden & Richardson, 1994; Pointon & Ryan, 2004; Lewis, 1998; Fombrum et al, 1984).
Unlike traditional pay systems, PRP allows organizations to reward able and industrious employees more generously than an idle and incompetent employee (Lewis, in Redman and Wilkinson, 2001). This ability to allocate rewards according to individual performance based on measurable goals/ targets creates a perceived level of equity in the reward system which may potentially lead to increased motivation and commitment and consequently enhanced performance/ productivity.
This study seeks to examine whether this is the case for PRP in Jurong Shipyard Pte Ltd (JSPL) in motivating their employees towards improving the quality and quantity of their work, and the extent to which the PRP problems highlighted in the literature have also emerged at JSPL.
To do so, the study will take into consideration the problems related to the 3 VIE (valence, instrumentality and expectancies) criteria of Vroom's Expectancy Theory (1964) in employee motivation as identified by numerous researchers, and seek to ascertain the extent to which these problems occur in JSPL in order to identify the degree of success/ failure of their PRP system.
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