Performance-Related Pay

No employer will be happy by having demotivated workers, yet when workers are not paid based on their performance, their enthusiasm at work drops and their productivity levels decline. If you are an HR specialist, labour economist, organizational behaviour expert or gamification professional, this challenge is for YOU! Develop a new mechanism for rewarding the workers, morally or financially, such that it links compensation with performance and productivity.

A reward of about 20,000 L.E. will be provided to implement the best solution, read below for more details!

 

Challenge Background:

The productivity of any factory can be attributed to the selection of good workers and their continuous training, however, other factors are also important. Wrong and inaccurate performance appraisal and evaluation systems in general make it difficult to motivate and retain good talents in the workplace. Recent studies have shown that the compensation that workers get in return for their efforts, in different companies and factories, affects their activity level and enthusiasm at work and that in turn is reflected on their productivity. For these reasons, many experts are advocating for the implementation of Performance-Related Pay (PRP), where “pay” in this context also refers to non-financial incentives. When such fair measures are implemented, workers feel more appreciated and attached to their workplace and thus turnover rates are lowered[i].

When it comes to wages (the main financial compensation), most companies and factories are committed to the annual raise of 10% and most of them usually provide their workers with a raise after passing the probation period. In addition, 86% of the companies surveyed in one study, provide financial rewards in different social occasions and national holidays.

 

The Problem:

There is a lack of a performance-oriented culture by paying for results, where, despite the benefits for PRP, many business owners find it difficult to apply, which negatively affects the workers’ satisfaction.

In a study conducted on the quality of employment in the Canal region [ii], more than 3^rd of the workers surveyed were unsatisfied with the criteria on which annual reviews are based, as well as, the management transparency in this regard as the graph below shows. 

Moreover, workers were concerned that there is no obvious track for career and professional development, where the norm is that workers get promoted after sometime to become supervisors, however, without clear criteria.

 

The Challenge:

The main challenge is the lack of innovative and appropriate mechanisms that link pay with performance so that workers become more motivated[iii]. This leads to a number of issues, on top of them is equating good and poor workers, which leads the good ones to become demotivated and negatively affect the workplace productivity.

At the same time, the dissatisfaction with the current methods for evaluation is common between the workers and the management, which opens the door for accepting new ways for performance measurement and subsequent rewarding.

This challenge aims at developing a new mechanism for rewarding the workers, morally or financially, such that it links the reward with productivity in different ways to eventually improve workers’ performance. This linkage would provide the workers with clear objectives and standards that they should work to meet and make them more aware of the objectives and targets of the business as a whole.

It is important to highlight that the required solution does not have a specific format, for example, it could be innovative ways for measuring the workers’ performance and linking it to pay and other incentives, a new incentive system- either financial or moral- that is linked to productivity and the worker general performance etc. Also, the solution can be in the form of administrative measures, training programs, and/or technological solutions.

 

The proposed solution has to satisfy the following specifications and criteria:

Moreover, the proposed solution should be compatible with the work activities in different factories and companies, the differences in the number of workers in each entity, as well as the difference in workers’ education level where the majority cannot read and write.

Reward and Conditions:

A reward of about 20,000 L.E. will be provided to implement the best solution in collaboration between the factory seeking the Solution and the Innovator, according to the following conditions:

1. The presented solution is in the form of a proposal including the implementation and follow-up details as well as the expected results.

2. In the case of technological solutions, it is preferred to present a proof of concept or a prototype.

3. The proposed solution should be Open Source such that it can be replicated in different factories and companies without restrictions.

4. The solution should include a clear action plan for implementation, clarifying the time estimated for each action and the required budget, where the reward money will be given in instalments based on milestones defined by the innovator in the plan.

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