Performance-related pay is a financial reward given to employees whose work is considered to have met a required standard or is above average. “PRP criteria may relate to the individual employee, work groups, or the organization as a whole” (Armstrong, 2002). It is right to offer people financial rewards as a way of compensating them for their contribution (Armstrong 1993: 86). The main objective of performance-related pay in any organization is to recruit, retain and motivate the workforce. It also helps to focus employees' minds on particular goals (Protsik, 1966); communicate to employees the core values ​​of an organization and change the culture of that organization (Kessler and Purcell, 1991). People spend a large part of their lives at work, so it's no wonder they expect to be rewarded and fulfilled in their work. what they do. Motivation concerns why people do things as well as what drives them to act in a particular way. Understanding what motivates an individual is important in a workplace. Motivated employees are happier at work. They get more satisfaction from their work, are absent less often and work with more enthusiasm. This encourages them to contribute more, thereby increasing the productivity of the organization. Unmotivated workers will not be as satisfied with their position in the work environment as motivated workers. The work may not be as important to them, which may lead to poor performance, which will result in less efficiency and therefore low productivity. A number of motivation theories explain how rewards affect the behavior of individuals and teams. Performance-related pay can have a motivational effect. Employees are motivated to increase production...... middle of paper ......nna, Strategic Human Resource Management, New York: Wiley.Lazear, EP, 2000, Performance Pay and Productivity, American Economic Re- view, 90, 5, 1346-1361. Paarsch, HJ and B. Shearer, 2000, Piece rates, fixed wages and incentive effects: statistical evidence from payroll records, International Economic Review, 41, 1.59-92. Prostik, J. (1996). “History of Teacher Pay and Incentive Reforms”, Journal of School Leadership, 6, 3,265-89. Taylor, Frederick Winslow (1911), The Principles of Scientific Management, New York, NY, United States and London, United Kingdom: Harper & BrothersThompson, R, 2005 “Is pay for performance ethical? » The Physician Executive, November-December 2005, pp 60-63 Vroom, V H. Work and motivation. New York: Wiley, 1964. 331 p.ANON (2009) Tesco shows what performance-related pay really means. Available at www.taxpayeralliance.com/bettergovernment