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Performance-related pay (PRP) 
is related to output (in terms of the number of items produced or time 
taken to produce a unit of work), or results achieved (performance to defined standards in key tasks, 
according to plan). 
The most common individual PRP scheme for wage earners is straight 
piecework
: payment of a fixed 
amount per unit produced, or operation completed. 
For managerial and other salaried jobs, however, a form of 
management by objectives 
will probably be 
applied. PRP is often awarded at the discretion of the line manager, although guidelines may suggest, 
for example, that those rated exceptional get a bonus of 10% whereas those who have performed less 
well only get, say, 3%. 
(a) 
Key results can be identified and specified, for which merit awards will be paid. 
(b) 
There will be a clear model for evaluating performance and knowing when, or if, targets have 
been reached and payments earned. 
(c) 
The exact conditions and amounts of awards can be made clear to the employee, to avoid 
uncertainty and later resentment. 
For service and other departments, a PRP scheme may involve 
bonuses
for achievement of key results, 
or 
points schemes
, where points are awarded for performance of various criteria (efficiency, cost 
savings, quality of service, and so on). Certain points totals (or the highest points total in the unit, if a 
competitive system is used) then win cash or other awards. 
6.4.1 Evaluating PRP 
Benefits of PRP

Improves commitment and capability 

Complements other HR initiatives 

Improves focus on the business's performance objectives 

Encourages two-way communication 

Allows greater supervisory responsibility 

Recognises achievement when other means are not available