THE EFFECTS OF PERFORMANCE PAY PLAN ON THE PERFORMANCE OF EMPLOYEES (THE CASE OF SOUTH WEST ACADEMY)

Abstract

This study aims to examine the effect of performance-based pay on employee performance within the context of South West Academy. Performance-related pay, also known as individual PRP or merit pay, serves as the focal point of investigation. A combination of random sampling for employees and purposive sampling for managers, directors, and administrative staff was employed to ensure comprehensive insights into the research problem. This sampling approach allowed for a deeper understanding of the subject matter from the perspectives of individuals with diverse levels of expertise and knowledge. Data collection involved the use of questionnaires and interviews. Primary data was gathered through interviews with school administrators, while questionnaires were distributed to a sample of 150 respondents selected from a target population of 241 individuals. A total of 138 respondents successfully completed and returned the questionnaires, yielding a high response rate of 92%. The collected data was then analyzed using pie charts, tables, correlation, and regression analyses. The findings of this study indicate that salary increment is predominantly utilized as a performance-based pay measure in South West Academy. The school employs the criterion of taking on additional work to implement their performance-based system. A significant majority of teachers (79%) responded positively, stating that the school's performance-based payment system has helped improve their performance. The data further suggests that financial incentives such as salary, bonuses, and allowances positively correlate with employee performance and productivity, demonstrating statistical significance. On the other hand, non-financial forms of incentives, such as praise, recognition, and accommodation, also exhibit a positive correlation with employee performance and productivity, but without statistical significance (p>0.05).