The direct linkage between performance and rewards also tends to impoverish both management and employees in the kinds of rewards that are valued. Within the definition of rewards there are a large number of rewards that indicates to an employee that his contribution is valued. However, once a formal system is set up to publicise a direct link between performance ranking and reward, the reward chosen becomes the only credible indicator of management’s evaluation of individual performance (Oberg, 1972:62).

Performance-based remuneration plans motivate employees to devote effort to in-role performance by controlling their behaviour and

· The reward system is not designed to meet the objectives sought to be achieve

· The skill and training of the manager conducting the evaluation is a further factor that erodes the effectiveness of the causal link between performance and remuneration. Employees who are aware of this have no trust in the system and there is no need to perform exceptionally

· Non-recognition of the fact that performance, especially profit, is sometimes (even often) dependent on factors outside the control of employees e.g. management decisions, exchange rates, and recession

There are a number of other implications to take into consideration regarding performance-based remuneration.

· It forms “…part of an overall human resource management system, which includes intrinsic rewards. This is an important aim, as extrinsic rewards alone do not provide a sustainable motivating environment.”

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