Performance Pay Choices: Evidence From Certified Agreements

Abstract

A number of factors have converged to create a revival of interest in performance pay schemes. This paper takes a sample of certified agreements filed with the Australian Industrial Relations Commission to examine, firstly, the extent to which the parties have used the formal industrial relations machinery to make agreements about performance pay and, secondly, to examine the choices that the parties have made in relation to performance pay scheme design. The areas of scheme design covered in the study are the objectives of the performance pay scheme, eligibility to participate, the unit of performance measurement, the relationship between the performance payments and base salary, tbe evaluation-payment cycle, the size and form of payments, consultative mechanisms used in establishing and/or monitoring the performance pay scheme, appeals and reviews.