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significant
. 
(b) 
There should be a 
clear and timely link 
between effort or performance and reward. Profit shares 
should be distributed as frequently as possible, consistent with the need for reliable information 
on profit forecasts, targets, etc and the need to amass significant amounts for distribution. 
(c) 
The scheme should only be introduced if profit forecasts indicate a 
reasonable chance of 
achieving 
the above: profit sharing is welcome when profits are high, but the potential for 
disappointment is great. 
(d) 
The greatest effect on productivity arising from the scheme may in fact arise from its use as a 
focal point for 
discussion 
with employees, about the relationship between their performance and 
results, areas and targets for improvement, etc. Management must be seen to be committed to 
the principle. 
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PART D: LEADING AND MANAGING INDIVIDUALS AND TEAMS 
 
392
 
6.6 Other issues 
It is important that 
senior executive pay packages
provide incentives for them to improve business 
performance – that the package encourages behaviour that is consistent with achieving the organisation's 
strategic goals. Rewards should focus on the medium and long term, not just the short term.
Pensions
are becoming an important part of the remuneration package. With individuals living longer 
and interest rates (and therefore investment income) being very low, pensions are the main source of 
income for a growing proportion of the population. Pension schemes in which the company pays 
significant contributions (rather than only the employee contributing) are very attractive to employees – 
pensions are an increasingly important element of the pay package. 
In order to retain a key employee, particularly in a business where the workforce is traditionally highly 
mobile, the organisation may be prepared to offer long-term rewards, such as share option schemes to 
retain the employee longer. This approach, using a future reward to encourage staff retention, is referred 
to as