Managing performance‐related pay based on evidence from the financial services sector

The Dilemma of Performance Appraisal

“…Employees focus on the issues that gain key performance focus by focusing on specific objectives related to key performance indicators rather than all personal objectives. A study of banking performance pay by Lewis (1998) highlighted imposed targets which were unattainable with a range of 20 performance targets with narrow short term financial orientatated goals. The narrow focus on key targets and neglect of other performance aspects leads to tasks not being delivered.…”

Performance-Based Pay in the Australian Public Service

“…A well-functioning process of performance appraisal can also lead to the identification of the additional training needs of employees, and in all cases requires supervisors to provide employees with regular and constructive feedback regarding their work performance (Gomez-Mejia, 1989;Lewis, 1998). Under the process of performance appraisal in the Australian Public Service, a performance agreement is to be negotiated between a supervisor and employee at the commencement of an appraisal cycle, normally lasting one year.…”

“…As most female workers are assessed by male supervisors, the increased discretion provided to supervisors may be used to hide discriminatory practices (Rubery, 1995). Discrimination on the grounds of age, sex, ethnicity and the like can be obfuscated and made to appear as an objective assessment of performance under the appraisal process (Lewis, 1998).…”

The outcomes of variable pay systems: tales of multiple costs and unforeseen consequences

“…This appears to be a common problem highlighted in studies of pay systems that incorporate appraisal (e.g. Procter et al, 1993;Lewis, 1998) but may well be felt more acutely in smaller firms with more limited numbers of managerial staff and less organizational slack. Pressures of production mean that managers may well be short of time to conduct thorough appraisals, which raises the question of how well they are done and whether time spent conducting formal appraisals could be put to better use, particularly if managers discuss employees' performance with them on a regular basis during the course of work.…”