Analyse the advantages and disadvantages to an employer of using performance related pay.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2016). The mark or mark type is shown in brackets.

1. Definition: Performance related pay has been defined as a way of linking salary progression to an assessment of individual performance usually measured against pre-set objectives. (Reference may be made to ways of giving PRP through piece rate, bonus, and commission payments.)
2. Advantages: a bonus scheme to reward staff for above average performance will motivate those who seek increases in financial reward it is suggested.
3. the targets set for PRP will focus workers.
4. it helps to retain and attract new staff.
5. recognises individual contribution.
6. it may be an effective way of dealing with poor performance.
7. it can lead to an increase in staff productivity.
8. it can be an important element of a performance culture.
9. Disadvantages: it is suggested that PRP inhibits team performance with its focus on individual performance
10. it may be seen to reduce pay equity and increase disparities
11. disputes can arise relating to how to measure performance.
12. arguably too much relies on the judgement of the assessor.
13. does PRP really motivate workers significantly? – other incentives (non-financial may be more important.
14. it may encourage unhealthy rivalry.
15. NB: please note this question requires an analysis of the advantages/disadvantages of PRP to an employer.
16. [7-8] Good analysis of the advantages and disadvantages of performance related pay to an employer
17. [5-6] Some analysis of the advantages and disadvantages of performance related pay to an employer
18. [3-4] Some application of performance related pay to a business context
19. [1-2] Understanding of performance related pay
20. [0] No creditable content
21. Staff development/training considered to be essential for a progressive company – though it may require considerable investment.
22. Training refers to the process of acquiring the essential skills for a job - e.g. hotel receptionist/manager/chefs - while development may be a focus on broader skills, such as decision-making and managing people, dealing with customers/guests or specific attention to employee needs and career aspirations.
23. Staff training and development considered to be important in order to: address employee weaknesses - skill gaps - brings staff to a higher level of skill - important in a service business.
24. improve worker performance and confidence.
25. give consistency of information about procedures and policies.
26. motivate employees - better able to perform - feel valued by a company and develop better customer relationships
27. become more productive - become more efficient, more responsive
28. become more self-reliant - reduced supervision required.
29. at the cutting edge of new technology - new ways of working
30. flexible, agile workforce.
31. Good answers will give examples of jobs in a hotel (i.e. context) that require constant training and development e.g. from Porters to Duty Managers.
32. So the individual and organisational benefits of staff development and training can be an important contribution to achieving the objectives of an organisation such as a hotel.
33. A large hotel will have a variety of job roles, all of which require staff development and training to produce a distinctive culture of service efficiency that will attract and retain a variety of guests having a complex set of customer demands.
34. [9-12] Effective evaluation of the importance of staff development and training for a large hotel
35. [7-8] Limited evaluation of the importance of staff development and training for a hotel
36. [3-6] Analysis and some application of staff development and training for a hotel
37. [1-2] Understanding of staff development and/or training
38. [0] No creditable content