A critical look at performance pay however points to the fact that this method utilizes only performance as the determinant factor. It neglects other important determinants of pay such as no knowledge and skills, educational background and orientation, possession of relevant experience and other extraneous factors that play equally important roles in determining the amount of salary. The performance pay system may sometimes lack proper control system therefore giving superiors unwarranted control over the system. The system relies on money as the sole motivator hence it assumes that workers are so interested in monetary gains such that they will increase production as long as they are paid for it.
However there exists checks and balances which if put in place will make the implementation process of this system all much easier and acceptable to the employees. Many organizations have turned into the performance pay system as their basis of rewarding, reviewing salaries as well as for job evaluation. Also many organizations have resorted into the performance pay system in order to motivate their employees who achieve outstanding and exemplary results. The pay system just like many others is vulnerable to abuse and misuse. Research has shown that there have been many cases of discrimination and segregation, which happens in organization as a direct result of an employee's gender, colour, race, political orientation as well as religious affiliation.
Performance Pay and Unfair Discrimination
When discrimination is applied to employees, it contributes to de-motivation and therefore affecting output. Countries have put in place anti discrimination laws to check on arbitrary and unfair discrimination against employees. Discrimination can be in various forms such as, on gender, race, nationality, marital status, ideology, political inclination, disability or religious affiliation. Anti discrimination laws protect employees and ensures that they are treated in respect to terms entered in the contract of employment. Employers should ensure equal pay regardless of individual backgrounds or circumstances. Equal pay is different from identical pay in that the latter depends on other factors such as length of service and age. Discrimination can either be direct, i.e., whereby and employer treats a person less favourably than others on the grounds of sex, marital status or race.
Indirect discrimination occurs whereby the effect of a condition of employment is discriminatory.
Employers should offer or make adjustments to working conditions in order to ensure that vulnerable groups are not at a disadvantage and thus they can perform or deliver like the rest of the employees. Victimization should be eliminated for it will affect the output of the victim and eventually lead to unfair reward.
Management of companies can use the performance pay system as a human resource strategy in order to attract and retain the best employees.
There is a significant relationship between pay and performance in order for organization to attract appropriate staff their pay must look relatively attractive. While it is in the interest of most employees to earn the best salaries possible it is worthy noting that the interest of employer and employee significantly differ. For the employer the interest is more on employee performance hence they will not mind paying more in order to getting more