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Looking at the positives and negatives of performance-related pay

Despite constraints on pay budgets, performance-related pay remains popular in the private sector. Towers Watson research finds employers with low pay budgets offer pay rises twice as high for high performers while employers with average or generous budgets offer 67% higher rises. And it’s only a matter of time before performance-related pay hits the public sector, as we explore on p22.

However, Angela Wright from Westminster Business School believes such pay schemes don’t always work. “Employers are keen on the idea, but the problems come with the architecture,” she says. “There needs to be a thorough debate on performance-related pay at every level.”