The impact of performance related pay on employees - A case study of the performance incentive bonus scheme at the Motor Vehicle Accident Fund.
Shilongo, Helena Ndilimeke
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The Performance Incentive Bonus Scheme (PIBS) is part of the broader market type transformations occurring in Public Service in Namibia today (Mwita, 2002). The thesis claims that the value of PIBS policy is a function of the organizational setting, objectivity of performance measurement process and perceived equity of the fixed scheme. The research uses survey based data for the Case Study of PIBS in the MVA Fund. The issue of employees’ performance in persistence of organisational objectives has employed management consideration for long. This study examined the issue of performance-related pay as a motivational device for realizing organisational performance at the Motor Vehicle Accident Fund of Namibia as a Case Study. The main objective of the study was to survey the impact of the current MVA Fund Performance Incentive Bonus Scheme on employee motivation, employee performance and organizational performance. Sixty one respondents took part in the survey. The sample comprised 3 executives and 58 employees. The research instrument was the questionnaire. The result of the study revealed that the effect of performance-related pay on employee performance is very high; and the motivational effect of merit pay is often supported by Performance Incentive Bonus Scheme. Most outstandingly, in conjunction with the goal setting theory, the point to which both employees and executives are involved in crafting the organizational objectives is a main source of motivation to the MVA Fund employees. It was also noted that there is buy in from the employees, which actually helps the institution to attain its set objectives. This inclusiveness assisted the MVA Fund to make the Performance Incentive Bonus Scheme a success. Evidence indicates a robust support at all level on the acceptability of the scheme in the Fund. The main limitation of the study is that it could not cover all employees within the target population, due to time and financial constraints. In this respect, the interpretation of the results of the study should not be over-generalised.