QUESTION

Research Proposal

1. 1.               An investigation if performance related pay increase job satisfaction in sales industry
2. 2.               Compensation is as important as any other human resource management. It has been bringing interest aligning close to employees’ heart. In such of a developed country, it has led to increase competition on how firms are looking at various ways to improve productivity in order to attain job satisfaction in a competitive sales industry. It is found that worker’s overall job satisfaction is linked to how they are being paid. There is various compensation structure or system in how firms used to pay their employees. Performance related pay is one of them.

Concept of performance related pay is to encourage and motivate individuals where they themselves as being unique as individual behavior due to being different will drive levels of motivation and initiative to their sales performance. Performance related pay remains well-liked and generally used to increase employee productivity and align the objectives of employees and firms. There is a longstanding curiosity by economists in the role played by pay and reward structures in determining employee’s performance, effort and job satisfaction. Job satisfaction is one the major criteria for establishing the health in any firms which contribute to service quality employee provide and overall organizational growth and profitability.

The relationship between job satisfaction and performance related pay is an ongoing continuing debate and controversy. Labor turnover and absenteeism are commonly associated with dissatisfaction, but although there may be some correlation, or some other possible factors that might contribute to it. No universal generalizations about worker dissatisfaction exist, to offer easy management solutions to problems of turnover and absenteeism. Does job performance based pay help to increase job satisfaction which in turn help to reduce less turnover rate?

One link the early human relation’s approach that satisfaction leads to performance. An alternative angle to look is that performance leads to satisfaction. It has been agreed by most people that performance pay related pay significantly correlated with job satisfaction. Is it really true that there is a correlation between them? For this research study, it is to investigate why does performance related pay can increase job satisfaction in a sales industry and examine the influence in the relationship between performance related pay and job satisfaction.

 

1. 3.     Research Question:

• Does performance related pay positively increase job satisfaction in sales industry?

         

Research Objectives:

• To find out what in the academic literature relate performance related pay and job satisfaction in sales industry.
• To identify what are the advantages and disadvantages of performance related pay that could affect job satisfaction in sales industry?
• Apart that performance related pay can increase job satisfaction, what else can it boost in other areas to increase job satisfaction.
• To find out how performance related pay affects employee psychologically.
• To identify if there is any unresolved issue that could provide opportunities for further research.

1. 4.     Keywords: Performace related pay, Job satisfaction, Sales Industry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. 5.     References

 

1. Articlesalley (2011) Performance Pay and Job Satisfaction, [online] Available at: http://www.articlesalley.com/article.detail.php/135900/208/Article_Writing/Writing/29/Performance_Pay_And_Job_Satisfaction [Accessed: 2th Jan 2012]
2.  Brencic, V, & Norris, J 2010, ‘On-The-Job Tasks And Performance Pay: A Vacancy-Level Analysis’, Industrial & Labor Relations Review, 63, 3, pp. 511-544, Business Source Complete, EBSCOhost, viewed 9 January 2012
3. CentrePlace Spring (2004) Value for Money, [online] Available at: http://cep.lse.ac.uk/pubs/download/CP154.pdf [Accessed: 9th Jan 2012].
4. Ezinearticles (2011) Job Performance and Satisfaction, [online] Available at: http://ezinearticles.com/?Job-Performance-and-Satisfaction&id=290072 [Accessed: 3rd Jan 2012].
5. Gielen, A, Kerkhofs, M, & Van Ours, J 2010, ‘How performance related pay affects productivity and employment’, Journal Of Population Economics, 23, 1, pp. 291-301, Business Source Complete, EBSCOhost, viewed 9 January 2012
6.  Griffith, R, & Neely, A 2009, ‘Performance Pay and Managerial Experience in Multitask Teams: Evidence from within a Firm’, Journal Of Labor Economics, 27, 1, pp. 49-82, Business Source Complete, EBSCOhost, viewed 9 January 2012
7.  Ismail, A, Mohamed, H, Hamid, N, Sulaiman, A, Girardi, A, & Abdullah, M 2011, ‘Relationship between Performance Based Pay, Interactional Justice and Job Satisfaction: A Mediating Model Approach’, International Journal Of Business & Management, 6, 11, pp. 170-180, Business Source Complete, EBSCOhost, viewed 9 January 2012
8. Kuang, X, & Moser, D 2011, ‘Wage Negotiation, Employee Effort, and Firm Profit under Output-Based versus Fixed-Wage Incentive Contracts’, Contemporary Accounting Research, 28, 2, pp. 616-642, Business Source Complete, EBSCOhost, viewed 9 January 2012
9.  Merson, R 2010, ‘Mismanaging Pay and Performance’, Business Strategy Review, 21, 2, pp. 54-57, Business Source Complete, EBSCOhost, viewed 9 January 2012
10.  Petrescu, A. and Simmons , R. (2008) International Journal of Manpower, Human resource management practices and workers’ job satisfaction, 29(7), p.651-667.
11. Stanford (2010) Human Resource Management And Productivity, [online] Available at: http://www.stanford.edu/~nbloom/w16019.pdf [Accessed: 9th Jan 2012].
12.  Thetutorspage.com (2009) Performance Related Pay and Job Satisfaction, [online] Available at: http://www.thetutorpages.com/tutor-article/university-business/performance-related-pay-and-job-satisfaction/1766 [Accessed: 3rd Jan 2012].
13. Spreitzer, G. (1995) Psychological Empowerment In the workplace: Dimensions, Measurement and Validation , Academy of Management Journal, 38(5), p.1442-1465.

SOLUTION

1.1Introduction

 

One of the most common trends most private firms in sales adopt is to link pay with job performance instead of paying as per time rate in order to increase the productivity of the company (Artz, 2008). This kind of link definitely helps in providing an incentive to the workers to work harder and certainly helps in attracting more effective, hard working and productive workers towards the company (Lazear, 2000). But it is still an open question whether performance related pay increases job satisfaction in sales industry or not. This will ultimately help in determining the long term success plan or motivational plan which can be devised using the performance related pay.

Sort term or temporary increase in performance pay can easily get overshadowed by increased turnover, not being ready to invest in the firm specific training and diminished morale if there is lower level of job satisfaction. So it is very important to find the right implication of performance related pay on job satisfaction before implementation of performance pay schemes.

Sales industry being very dynamic in the recent literature a robust relationship has been witnessed with job satisfaction. In this research paper we will study the impact of performance related pay when linked to sales of large Italian Company which runs and is the sole owner of huge number of fast-foods, self-service restaurants and snack bars. Most of these chains stores are located by country’s main roads just adjacent to the gas stations.

In this situation a comparison is done between the performance and job satisfaction level of workers where some workers are being paid on the basis of their performance at work place while some are paid fixed wages. Sales being a convenient measure to record so here sales would be used to find whether performance related pay will have effect on job satisfaction or not. The local manager’s bonus will be paid as per the profits of the store, whereas the regular employees like cooks and waiters will be paid fixed wages.

The complimentarily out here implies that managers will definitely enhance their individual efforts in order to organise and to improve the coordination between the salaried labour and will start allocating the workers to every task in the company more efficiently (Bandiera, Barankay and Rasul, 2007).

 

1.2 Research Topic, questions and objectives

 

An investigation if performance related pay increase job satisfaction in sales industry

Research Question:

• Does performance related pay positively increase job satisfaction in sales industry?

         

Research Objectives:

• To find out what in the academic literature relate performance related pay and job satisfaction in sales industry.
• To identify what are the advantages and disadvantages of performance related pay that could affect job satisfaction in sales industry?
• Apart that performance related pay can increase job satisfaction, what else can it boost in other areas to increase job satisfaction.
• To find out how performance related pay affects employee psychologically.
• To identify if there is any unresolved issue that could provide opportunities for further research.

 

 

 

1.3 Research Rationale and Contribution

 

 

This research would be helpful for the Italian Chain of Restaurant Company to find out what kind of effect performance related pay has on the job satisfaction of the employees. It is expected that the sales might decrease, however the labour productivity will definitely rise because the measuring standards for the managers have been replaced by sales instead of profits. The reason being now the managers will try to reduce the cost of salaried workers. The new system introduced in the restaurant is expected to increase the local profits also, till the time the manager’s start getting very generous performance related pay.

 

2. Reaserach Methodology

 

2.1 Overall research Structure

 

In this particular study regarding studying relation between performances related pay and job satisfaction the theoretical model has been used in order to measure the level of job satisfaction. The Research Methodology can be broadly explained by comprehending the following topics of descriptive survey method, sample and sample profile, framing hypotheses and tools and design used for the study.

 

2.1.1 Research Design

 

In order to conduct any research it is very important to first conceptualise the thought, so for this study a model of job satisfaction has been developed. This model has been developed after extensive study of the literature survey and the researchers have found 10 variables which have direct impact on the job satisfaction of the employees. The figure 1 shown in this Research clearly indicates the proposed model of measuring the job satisfaction level. Based on this model descriptive survey method is being used to conduct the study. This technique is used because it is most economical method for conducting research.

According to Cooper and Emory a descriptive survey helps in collecting data from various members of selected population, in order to find the current status of the population with respect to one or more variables. Steps which will be used in conducting research are:

 

 

 

Study the selected population of the company

Sales department of the company will be chosen

Primary data collection done using structured questionnaires, face-to-face interview, hand delivery or emails.

Likert-style rating scale used to collect the data opinion

Descriptive Statistical Measures will be used to measure frequencies and percentages.

Tabulated data would be analysed using the SPSS (computer software programme).

Final conclusions drawn from the tabulated results

Random Sample Taken from sales department. Sampling Method used to collect the data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 1: Research Design

 

2.2 How to conduct paper research

 

Take around 5 years of research papers

15 references, half is academic lit. Referring journals and textbooks

Websites have to be govt, official company websites, and association of industry

 

Keywords: Performace related pay, Job satisfaction, Sales Industry, performance related pay and job satisfaction, performance incentives,

 

2.3 Research Limitations

 

 

• The limitation out here is that the new pay system was introduced in all the stores at the same time, due to which the changes which are occurring overtime might be taken or read as changes occurring due to incentive pay.
• Data limitation is also there as the data available for study is just the local profits which are calculated for shorter time series. So calculating the direct effect of new performance system on any outcome cannot be estimated.
• Another limitation of this research is that the results cannot be generalized for the whole sales industry as we have chosen cross sectional and conceptual model which does not allow conclusions to be drawn based on casual references (Chaudhry et al., n.d.). Results might vary for retail stores or any other organization.
• Variable pay of Italian Managers show that it is not just based on indicators like sales, receipts and revenue, but it is also linked to revenue margins and profits.
•  There are numerous implications of the outcomes but the samples size being too small to draw a generalized implication.

 

 

3. Presentation and Discussion of Research Findings

 

 

3.1 Actual Performance related pay compared to Simulated Performance related pay

 

Regular employees in these Italian stores are being paid fixed monthly salary , where as the local manager receive both fixed salary which is  defined by a similar process as in the case of regular employees that is  local as well as national bargaining process. But the local managers on top of the fixed pay receive bonus payments which are directly linked to their performance in the stores that is the sales figures. This system of incentive pay or Performance Related Pay(PRP) was being introduced in the company in the year 2000 where the bonus or PRP was paid quarterly and was calculated annually on the basis of sales , an the adjustments were made against productivity and the quality of services being provided.

But in the year 2003 the PRP pay system was changed in a major manner, where sales was still the part of the formula measuring the quarterly bonus. However, now the most important element which became part of quarterly bonus formula was local profits.

 

LOCAL PROFITS= Value of Sales – (Purchases + Labour Costs + Admin .Costs)

 

 

 

Thus now operationally all the performance indicators that is:

• Sales
• Quality of services
• Profits

Are being converted in to “points”, where higher performance means better points or higher points and lower performance means lesser points. Now the bonus payment will be calculated as the sum total of summation of all the points of all the indicators and the “point value” which is monetarily associated.

It has been found that the “ point value” keeps on changing with the kind of stores means the most complex and large stores will have  higher “ point values” as compared to smaller and simple stores.

Another modification which has been done to the system after 2003 is that the point values have been raised in substantial manner; this has made the system much more generous. This is clearly visible from the figure 1 shown below:

 

 

The figure clearly indicates that for the given performance the new system is much more generous and that too by more than 50%. The whole data set is the data extracted from all the stores and evaluation of all the store managers over the period of 2000- 2005. The store data covers all the relevant information related to sales, employment levels and composition, hours spent working, and the traffic flow of clients in the corresponding motorway tract at quarterly frequency.

The descriptive statistics related to all these variables can be seen from the Panel A of table 1.1 shown below:

 

	Incentive Scheme
	Total	Old	New
Panel A: Store characteristics ( n= 186)
Hours worked	11,380	10,993	11,765
Productivity	69.085	68.175	69.995
Profits	619,275	597,824	626,401
Sales	787,110	751,015	823,189
Traffic Flows	49,337	47,874	50,880
Number of workers	36.823	36.392	37.254
Number of Fixed term workers	9.349	10.533	8.167
Number of Part-time workers	20.565	20.297	20.832

 

Table 1.1: Descriptive Store characteristics

All the variables shown below depict a marked trend which shows higher mean results under the new system where the PRP was linked to job satisfaction.

3.1.1 Performance of Stores in New System

 

The results after implementation of new system indicate that controlling of all the time varying and fixed characteristics of the store, the work hours show a decline of 4.6%, where as the sales declined by 3.3% and the productivity shows an increase of1.4%.

There is a clear cut link between job satisfaction and the turnover rate of sales force. The sales force which has dissatisfied individuals will show lower motivation levels (Artz, 2008). The result is they would like to quit, in order finding more satisfying position in another company. The firm’s characteristics and decisions affect the several components of job satisfaction. For example the relation between sales force turnover and satisfaction with job, pay, supervisors and promotion is totally negative. The most important character which motivates the sales staff regarding the company policies related to supervision, promotions, compensation, quota settings, control procedures and dismissals.

Many studies have also found a link between intrinsic and extrinsic job satisfaction and turnover of the company. There has never been a positive relation between them. For intrinsic job satisfaction from the 28 studies it has been found that 25 show negative relation and 3 have shown non-significant results (McCausland, Pouliakas and Theodossiou’I., 2005). In case of extrinsic job satisfaction the empirical evidence is very less so it stands non-conclusive.

Research tends to show supportive trend towards a negative relationship between turnover and various components of job satisfaction. For example the sales force turnover tends to show an increase whenever the sales force is not satisfied with supervisors, promotions, pay, job or PRP (Newman 1974, Water, Roach and Waters, 1976, Hom and Hulin 1981). Amongst all these relations the strongest one is the negative relationship between job satisfaction and turnover (Darmon, 2007).

The turnover of sales force can also be related to the performance. However researchers suggest that it is not simple relationship, whereas some researchers are of the opinion that turnover just affects the high and low achievers of the sales force. Amongst them the high achievers are most likely to quit the company because either they get promoted or they leave the company as they get better PRP and better opportunity in other company (Artz, 2008).

While other studies say that low achievers are more likely to leave or quit the company, thus there would be more functional turnover as compared to dysfunctional turnover (Darmon, 2007). Thus the rationale behind this theory is that the low achievers are more likely to leave as they are highly discouraged and they really want to get out of their current situation by changing the job due to dissatisfaction is very high in their current position in the company (Darmon, 2007).

 

 

 

Environment (economic conditions, labour market)

Characteristics of recruited salesperson

SALES FORCE MANAGEMENT   Policies for: Promotions Dismissals Compensation Training/ Retraining HRM Recruiting and Selecting Support/Supervision

Sales Person Motivation/ satisfaction

Salesperson’s activities

SALES FORCE TURNOVER Voluntary Leaves Dismissals Promotion Leaves for Uncontrollable Causes

Variations of Sales force and sales territory conditions

Sales revenues/ Performance

PROFITS

Selling Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 2: Causes and Consequences of sales Force Turnover (Darmon, 2007)

3.2 advantages and disadvantages of performance related pay that could affect job satisfaction in sales industry

 

3.2.1 Advantages of Performance Related Pay on Job Satisfaction in Sales Industry

 

A research shows that there is very vital change in job contentment of the employees which get performance related pay and the ones who do not get performance related pay and there is instantaneous relationship between them and job satisfaction, salaries and job enticements (Pouliakas and Theodossiou, 2009). In the same manner job involvement is said to be a situation where one gets appointment with their job, classify with their work and then job is observed as dominant factor to go along with self esteem and uniqueness, just opposite to the idea of insignificance or isolation (Fisher, 2010).

The study of the impact of monetary rewards on job satisfaction is an empirical issue which has been researched very much recently. In Britain it has been found that bonuses and profit sharing schemes result in higher level of average job satisfaction , however the effect of individual-based  pay systems do not have any impact when we take heterogeneity into consideration which was unattended matter once upon a time (Green and Heywood, 2008) (Pouliakas and Theodossiou, 2007).

However an experimental study recently done  on PRP suggests that there exists an inverse U-shaped relation between incentive intensity and effort levels (Pokorny, 2008).Some of the advantages associated with the performance related pay increasing the job satisfaction are:

• Workers who earn more under the performance pay head always demonstrate higher job satisfaction level as a result.
•  Performance pay is an efficient tool to align both the company’s objectives with the worker’s or employees objectives.
• If the workers are paid on the basis of performance instead of getting paid on the basis of time, the workers get the incentive so that they can put in more efforts if the employer is ready to pay for their added effort in sufficient manner.
• Thus the workers who get PRP posses the ability to optimize their efforts, the job satisfaction will definitely increase (Heywood, 2006).
•  The job satisfaction of the workers also increases if they feel that they are near to the management and feel that they have a say in decision making process. This is what happens in High Performance Working Organizations (HPWO) do, where their workers are very much satisfied with their jobs (Bauer, 2004).
•  Developing a supportive performance scheme can help in accomplishing the same kind of effect and effective in large sales oriented firms where the distance between workers and management is too much and they do not take part in decision making as the employee productivity and efforts are not monitored. In such cases PRP allows the larger firms to rewards workers for their productivity without overlooking it and thus decreasing the distance between workers and management. This helps in creating a job satisfaction enhancing link between rewards and efforts.

 

3.2.2 Disadvantages of PRP on Job Satisfaction in sales

 

PRP sometimes does have negative impact on the job satisfaction in many ways as can be seen below:

• Performance Related Pay will increase the efforts of workers and many a times stress levels are also increased which will have negative impact on job satisfaction overall.
• If the management uses wrong performance pay scheme which does not permit worker to optimally equate the marginal cost of the extra effort put by worker with the marginal benefit of extra pay (Baker, 1992). This will prevent effectual resource allocation and tension between the teammates because the efforts are not rewarded in right manner (Marsden, 2009).
• PRP creates a wider distribution of income or earning between the employees because the payment is not based on the time which is being spent rather it depends on the efforts , so the worker earnings will be potentially higher for the ones who will put in more efforts as compared to the ones who will pot lesser efforts. Thus employees in the lower rung of earning distribution will feel as if they are of no use to the organization and will lower the productivity of company.
•  If Performance pay becomes too much manipulative or seems very much controlling it will start diminishing the worker’s job satisfaction. Thus the whole job satisfaction level will get lowered.

 

3.3 Other impacts of PRP on Job Satisfaction

 

For the organisations PRP has following impacts (Weibel, Rost and Osterlok, 2009):

• Staff Motivation:  It has been noticed that the staff which receives bonuses for their actual performance results are more motivated and result oriented.
•  Attracts new Talents: New and qualified talented people get attracted towards the company due to PRP.
• Enhances the productivity of the staff: By selecting the right PRP scheme the productivity of the sales staff can be enhanced.
• Existing employees stay with the company:  The loyalty factor towards the company which rewards their employees for their performance increases for the employees who are performing well in the company. Thus the attrition rate decreases due to increased job satisfaction level.
• Goals Achievements:  With the implementation of PRP the organizations especially sales organizations encourage their employees to achieve company goals which are aligned with company objectives.

However the PRP also has other impacts like PRP schemes used by employers increases workers productivity, earning and  effort (Lazear, 2000).Recent years have shown considerable trend mainly in the private sector where the rewards have been linked to the performance of employees in order to increase the alignment of achievement of objectives of the organisation (Mullins, 2004). That is why compensation has been tied up with performance and in several developed economies the resurgent interest in PRP is very much discernibly seen which is even encouraged by the governments too (Perry, Engbers and Jun, 2009).

 

3.4 Effect of PRP on Employees Psychology

 

Employee’s motivation is the main key which leads an organisation towards high performance in effective manner (Boachie-Mensah and Dogbe, 2011). Motivation is the psychological force which is helpful in determination of employee’s behaviour in the organisation along with the person’s level of persistence and level of efforts which the person will put in the organisation (Jones and George, 2007). According to Perry, Engbers and Jun (Perry, Engbers and Jun, 2009), the expectancy theory truly supports the concept of PBP.

Employees along with employers get affected by implementation of PRP. It has been argued that if wrong monetary incentives are implemented they might incite dysfunctional behavioural responses shown by the employees, because it will more likely induce ‘multi-tasking’ in a deliberate manner (Holmstrom and Milgrom, 1991) (Baker, 1992) or incite other biases like  leniency or centrality in employees efforts (Prendergast, 1999).

This might lead to undermining of innovation, teamwork, and creativity (Kohn, 1993) or can cause unfavourable impact on the employee’s morale as well as the job security because of risky and inequitable pay distribution system which arises due to PRP schemes (Baker and Murphy, 1988).

Increasing the risk of earning, lower employee morale and getting out of the crowd created due to performing one’s job and inherent unpleasantness can always lead to disgruntled and psychology impacted employee. If we relax the standard assumptions of agency model, then there would be many reasons which will suggest that PRP is not going to have negligible impact on the job satisfaction of the workers.

Expectancy based theories of organizational psychology suggest that the attitudes regarding work are being shaped from the rewards which are being produced through employees performance (Lawler and Porter, 1967) and these are considered as considerable outcomes themselves (Judge et al., 2001) (Brown and Sessions, 2003). Employees show high inclination towards employment practices which are being associated with ‘new high performance workplaces’ which is related directly to job satisfaction in a positive manner (Bauer, 2004). The evidence clearly suggest that morale of employees and job satisfaction is related to intrinsic status of pay (Ferrer-i-Carbonell and Fritjers, 2005) (Panos and Theodossiou, 2008) therefore any variability in the wages and  demoralising dispersion which raises form PRP schemes will most likely affect the  attitudes and psychology of workers in negative manner.

3.5 Other unresolved issues related to PRP’s effect on Job Satisfaction

 

Performance related pay or Performance –based Pay(PBP) not just affects the individual and organisational performance , but researchers have studied and found several intermediary effects , out of which  employee perception is the main one (Egger-Peitler, Hammerschmid and Meyer, 2007). In the studies where there were clear goals, significant support regarding the merit pay plans existed and the compensation was accurate PBP has shown positive effects or outcomes (Perry, Engbers and Jun, 2009). However in many cases the expectancy theory was unable to hold good as the foundation of the study.

Although it has been established in most of the scenarios that PRP has positive impact on job satisfaction because it has been found that employees really enjoy their work and the work environment too in the organisation where their productivity is properly rewarded in the form of PRP and this simultaneously increases their optimism. This is the reason why high performance workplaces always are in the big picture because they instil the sense of commitment, esteem and belongingness amongst the employees. Thus there is a positive connection between job satisfaction and PRP which is higher in case of company’s which have PRP schemes in place (Bauer, 2004).

However, there are many issues which have been showing negative impact of PRP o employee satisfaction. Amongst all the main reason for the negative influence of PRP on employee satisfaction is found to be inappropriately chosen or realized PRP scheme ( Frey and Jagan 2001). If the workers or employees feel dissatisfied with the fairness of distribution of bonus or profits or any other aspect of PRP, then they will not be or hardly get satisfied with their job and workplace which will lead to diminishing job satisfaction level.

In a study done (Green and Heywood, 2008) , several dimensions which were related to job satisfaction were found and analysed as well. It was analysed that on the whole PRP tends to enhance the security and job satisfaction of employees, however one of the major outcome of this study was that PRP causes work intensification which will ultimately, might decrease the level of satisfaction which employee gets form his work. Then took the authors that the interpretation of the results should not be done. This way PRP scheme implementation will definitely result in enhanced job satisfaction, but the results might vary on the basis of the PRP scheme selected and the appropriateness of the PRP scheme in every case.

 

4. Conclusion

 

4.1 Summary

 

As a result of this research paper various studies and research done related to performance related pay and its effect on job satisfaction were analysed and studied thoroughly. With the help of this study it has been analysed that PRP does have positive relation with job satisfaction. There are several advantages attached to the implementation of PRP scheme in the organisation. The implementation of right or appropriate PRP scheme leads to employee satisfaction, salary satisfaction as well as job satisfaction. This kind of model is being followed in High performance work organisations, where PRP plays a vital role in reducing the gap between management and the employees. PRP helps in increasing the motivation as well as performance of the employees in the organisation too.

Along with the advantages there are several disadvantages too which have been found attached to PRP on job satisfaction. Like it creates gap between the high performing and low performing employees in the organisation , which might lead to lesser integration between the teams and this will have negative impact on sales industry because sales is more of a teamwork effort .

So to nullify the negative impacts of PRP on job satisfaction the sales industry must choose the right PRP scheme and the implementation of the scheme should be fair and reasonable. Right implementation will not only enhance the performance of the employees but will also increase the productivity of sales organisation too.

4.2 Implications

 

 

Recommendations for the sales industry which can be helpful for the sales industry regarding PRP are:

1. The process of appraisals and rewards distribution should be transparent and clear cut at all the levels of any sales organization for the performance related pay to be fair and reasonable. This will definitely show positive impact on job satisfaction of the sales force employees in the organization (Bajpai and Sharma, 2011).
2. Piloting of the PRP schemes is necessary, as it will help in finding whtheer the scheme will be effective or not, so fist the scheme should be tried in one office or on a small sample size to check the results.
3. The managers should get enough and adequate time for appraisals, so that they can show some strong results on the basis of which they can get good rewards or PRP’s.
4. The development of criterion for assessment of the employees should involve the employees to form the very beginning, so that they also feel that they are part of decision making in the organization and this will provide them the power of negotiation regarding the objective and design of PRP.
5. Training is very vital, so all the levels ranging from managers to the workers should get proper training.
6. The realization process for the scheme should be clear and fair for the staff, because they are the ones who will avail the benefit from these schemes.
7. The employees as well as the managers should be clear about the PRP scheme which is being implemented in the organization.
8.  The goals and objectives should be realistic so that they can be accomplished by the employees as a well as the managers (Muralidharan and Sundararaman, 2011).

 

4.3 Research Opportunities

Further research opportunities in the field of performance related pay’s effect on job satisfaction has still very large scope as it is not done sector wise. There is scope of doing research in each and every sector ranging from financial to service and many more where we can try and find out what effect PRP has individually on each sector of business regarding job satisfaction and what can be done to enhance the satisfaction level. A standards model is still not been developed for the performance related pay structure which can be used by companies or organisation to enhance the job satisfaction level. Another aspect on which further research can be conducted is the workers profile which gets maximum job satisfaction due to implementation of performance related pay can be researched for better organizational productivity.

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Boachie-Mensah, F. and Dogbe, O.D. (2011) ‘Performance-Based Pay as a Motivational Tool for Achieving Organisational Performance: An Exploratory Case Study’, International Journal of Business and Management, vol. 6, no. 12, December.

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