Payment Systems and Performance Improvement: Participation in Payment System Design

Publication Date01 Jan 1989
AuthorAngela Bowey,Richard Thorpe
SubjectHR & organizational behaviour
by Angela Bowey
Pay Advice and Research Centre, Gibraltar
and Richard Thorpe
Department of Management, Manchester Polytechnic, UK
Following our research findings (outlined in our last article in Employee Relations, Vol. 10
4) we have attempted to put our results into practice on a number of occasions. This
experience together with a desire to be as faithful as possible to our research results has
led us to follow three general principles when examining or installing new incentive payment
The advice we would give and the lessons we have
learned are as follows:
Extend the Information that is Taken into
Research has shown that a good management
team can motivate improved performance in an
organisation through a wide variety of different
kinds of payment systems, provided they put
considerable effort into involving people from all
levels and sections of the organisation in the design
and implementation of the scheme[1]. This is not
to say that the incentive scheme itself is totally
unimportant. However, the process of matching
a payment scheme to an organisation is one that
demands considerable time and effort and
achieving a match between the payment system
and the expectations, motivations, patterns of
inter-personal relationships and past history, and
understanding the people in the system, is more
important than matching the payment system to
non-social characteristics of the organisation and
its environment (such as terminology, market,
and size), even though some of these
structural contextual factors do have a small effect
on results.
The importance of how the incentive scheme is
designed and implemented is crucial to its
success; and success is associated with the extent
of consultation about the design and implementa-
tion of a scheme. This can be seen in Figure 1.
Ensure the Scheme is not Modified/Subverted
in its Implementation
One of our in-depth research studies demonstrated
how a company's strategic policy could be
modified or subverted by lower levels of
management pursuing other goals and objectives.
This process has been observed when other
change interventions have been made, for example
the introduction of new technology[2].
The gradual weakening of a policy by individuals
or groups pursuing other objectives at this
important operational level can be further
exacerbated by the failure to install adequate
operating or control systems along with the
introduction of the scheme. The effects at shop-
floor level of what was originally a firm
commitment at senior level to a policy or objective
is governed by how it is seen and experienced by
those lower down the organisation. It can differ
greatly from what was intended. This process is
shown in Figure 2. and is taken from one of our
in-depth studies. It demonstrates how, without the
necessary operating systems and controls,
schemes can fail to make the impact intended.
Be Participative
Research and the experience of companies which
have tried it have shown that consulting and
involving employees in making decisions which
affect the way they do their work leads to the best
results, and indeed can lead to dramatic
improvements in company performance[1, 3]. It
ER 11,1

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