Is the term preferred by ACAS to describe merit pay systems which link earnings to the results of an individual performance appraisal. ACAS has identified two main forms of appraisal-related pay. The first is ‘performance-against-objectives’, in which the award of a salary increase or bonus is dependent on the employee attaining a series of SMART objectives. The second is ‘rating’, in which employees are rated by a line manager on a series of work-related competencies. Under both systems employees are allocated to one of a limited number of overall performance categories which determine the level of reward they receive.
Subjects: Human Resource Management.