Pay for Performance

By Smith, Catherine | Journal of Banking and Financial Services, April 2000 | Go to article overview

Pay for Performance


Smith, Catherine, Journal of Banking and Financial Services


You get what you pay for, and results are no exception. A well-designed performance-based pay scheme will give branch staff the motivation and accountability to achieve their objectives.

Performance pay, commission, bonus or profit share are some of the terms used to describe the variety of schemes used to compensate bank staff as an alternative form of remuneration. In most New Zealand banks, the concept has trickled down from senior management and is now used in branches to encourage, as well as emphasise, the sales-based culture.

Now, performance pay schemes are enjoying unprecedented popularity in New Zealand banks as the most successful way to motivate branch staff.

Most performance-related remuneration (PRR) systems have the primary goal of increasing staff motivation. A carefully designed system also should help move the organisation in the right direction by driving a culture aimed at continuous improvement and adding real value.

This article will explore different types of performance pay schemes used in branches of New Zealand banks, the reasons why banks should be using PRR, and the key elements of a successful PRR system.

The New Zealand story

I conducted a written survey of the five sponsor banks of the Bankers' Institute.(1) All replied, and in some cases Human Resources Managers agreed to be interviewed. (A summary of responses is contained in Table 1.)

Table 1 - High Level Comparison of New Zealand Banks' Performance Pay Systems

New Zealand Banks            BANK A                BANK B

Job roles contained in     * Manager             * Manager
branch                     * Personal Bankers    * Consultant
                           * Tellers             * Tellers

How are excellent          * Appraisal system    * Appraisal system
performers recognised      * Eligible for        * Eligible for
and rewarded?                financial and         financial
                             non-financial         and
                             rewards               non-financial
                                                   rewards

Rewarded in addition             Yes                   Yes
to base salary?

Do staff receive a           Yes, if               Yes, if skills
merit based                  performance           targets are
salary increase as           targets are           reached
well?                        reached

Financial/Non financial          Both                  Both
rewards?

Commission payments?             No                    No

Share Ownership                  No                    No
Scheme?

Rewarded on                      Both                  Both
Individual or
Team Performance?

Profit share?                    Yes                   Yes

Branch Key                 * Sales               * Sales
Performance                * Customer service    * Customer service
Indicators                 * Risk management     * Compliance
                           * Teamwork

Has PRR been                 Yes, very             New system,
effective?                   effective           too early to
                                                 comment

New Zealand Banks             BANK C                BANK D

Job roles contained in     * Manager             * Manager
branch                     * Sales               * Consultant
                           * Tellers             * CSO's/Tellers

How are excellent          * Assessed against    * Appraisal system
performers                   program             * Eligible for
recognised and             * Eligible for          finacial and
rewarded?                    financial and         non-financial
                             non-financial         rewards
                             rewards

Rewarded in addition to          Yes                   Yes
base salary?

Do staff receive a               No                Yes, if
merit based                                        performance
salary increase as well? … 

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Pay for Performance
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.