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Since then, many organizations have adopted meritless remuneration systems, where employees are rewarded more on political savvy than on productivity. Currently, however, organizations are starting to pay more attention to rewards based on performance - referred to as performancebased pay systems. Performance pay is based on the notion that individual equity suggests that "better workers should receive higher wages on the same job than poorer workers" (Wallace and Fay, 1988, p. 18). This wage differentiation supposedly helps motivate workers to produce closer to their maximum potential (Cascio, 1987). Performance pay became a major area of strategic management change in the 1980s (see Kessler and Bayliss, 1992; Kerr and Slocum, 1987). In a survey of over 1,600 US organizations, 75 percent indicated having some form of incentive scheme, with more plans having been introduced in the past five years than in the previous 20 years (McAdams, 1988). Performance pay is distinct from "merit pay" in that it is systematic and open, in that employees have at least some awareness of the criteria being applied to measure performance and the consequent rewards.
Approximate Word count = 719
Approximate Pages = 2.9
(250 words per page double spaced)
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