Drawing on both expectancy and equity theory, identify and discuss the main factors that are likely to influence the effectiveness of performance-related pay schemes in organisations.

Performance-related pay is a financial reward to staff whose work is considered above average. It is usually used for employees whose work achievements cannot assessed simply through numerical measures. Performance-related pay schemes are usually linked to the appraisal process, on which evaluation on staff performance during the year can be made. Performance-related scheme is a highly attractive system to encourage employees towards the organisation's objectives. According to the Wyatt study (1990), which measured effectiveness of performance …showed first 75 words of 1161 total…

…showed last 75 words of 1161 total…the research for the definitive solution to the motivation problem, one part of which is a fair rate of pay, is another endless quest for the Holy Grail in organisational theory. Porter an Lawler emphasised that the expectancy theory is just a framework of requirements for motivational strategies. Equity and expectancy theory do not provide managers with a direct recommendation, but with a model within which performance-related pay schemes can be operated willingly and successfully.