Organizational Readiness for Performance-Related Pay: Focus on Government of India Employees

Abstract

In the recent zeitegist of competitiveness and drive for productivity enhancement, most organizations are experiencing challenges to revamp their existing systems. One such mechanism increasingly practised by organizations these days to enhance the performance of their employees is linking their pay to their performance. However, implementation of performance-related pay (PRP) is a challenging task for any organization and organizations need to check their readiness for it before implementing PRP. Besides, readiness in terms of various systems in the organizations, it also includes the psychological preparedness of employees. The study provides a framework to analyse the organizational readiness in the case of Government of India employees to implement PRP systems. The readiness analysis includes the following: Push factors: Push factors can include environmental, organizational, and individual issues. Right to Information Act, citizens demanding more accountability of the work of their elective representatives, etc., have given impetus to have systems to measure the work done by government employees. Competition for talent from corporate sector has made these organizations think about systems needed to be the employer of choice for the country�s youth. Rewarding excellence has also become important in order to attract and retain Generation Y. Pre-requisites: Successful implementation requires involvement and participation of the employees. The commitment and support of top management are very critical for the transformation process involving change in work culture and employee mindset. Challenges: Identification of proper parameters to assess performance and accurate measurement of performance has always been a major constraint in the successful implementation of PRP systems. People management skills of bosses are very important in providing timely and effective feedback to the employees. Expectations of employees also need to be handled carefully so that PRP systems do not end up engaging a few but demotivating the majority. The quantum and division of rewards play an important role in maintaining the interest of employees in the PRP system. The paper also presents a framework designed to understand the variations in the PRP system for the managerial and operative level employees. Employee participation, delegation, transparency, and accountability are some of the key factors essential for the successful implementation of PRP. In addition, it is also important that employees have trust in the PRP system and are receptive to building a performance culture in the organization.