Understanding Performance-Linked Pay: How Does It Differ and Is It Used in Hotels?

Hi,

What is performance-linked pay? What is the difference between performance-linked pay and the normal one? Is performance-linked pay applicable to the hotel industry?

Thank you.

Hi Tania,

Performance-linked pay is very simple. It is just a part of the pay that is linked to the performance appraisal. According to the performance level you achieve, you will receive a corresponding pay. There will be levels set in the pay system, so if you achieve 90%, you will receive a certain amount of pay, and more for higher levels. Some amount of pay is stable and guaranteed, while the remaining amount is tied to performance.

SBI is currently implementing this system, and many other banks are also trying to adopt performance-linked pay.

Hi, Tania.

Pay-for-performance systems are systems in which pay decisions are based on defined performance levels rather than entitlement, tenure, or other non-performance related factors.

Benefits of a Pay-for-Performance System:
1. Rewards high-level performers.
2. Provides greater incentive.
3. Provides opportunities to encourage higher performance.
4. Increases employee motivation.
5. Contributes to employee retention.
6. Deals more effectively with marginal performers.