Does this image represent an idea in your language? If so, what does it mean?

1. Does this image represent an idea in your language? If so, what does it mean? to provide an incentive / motivation to do something

2. What could be used to incentivise performance in a company?

3. Performance related pay

4. Arguments for: ? Arguments against: Performance related pay

5. Arguments for: • Money is the best motivator • Productivity should be rewarded ? • Arguments against: • Employees behave irresponsibly to get bonuses • Employees only think about short term targets which will earn them bonuses. They may not consider the long term Performance related pay

6. Plan A Introduction Background information Essay purpose: Describe the advantages and disadvantages of PRP Main body The arguments against PRP The arguments for PRP Conclusion PRP can help to secure the long-term success of a company Which plan? • Plan B • Introduction • Background information • Essay purpose • Argue that PRP can help to secure the long-term success of a company • Main body • The weaknesses in the arguments against PRP • The strengths in the arguments for responsible PRP • Conclusion • PRP can help to secure the long-term success of a company Activity 2.3

7. Plan B is more suitable because it enables the writer to: provide information about both sides of the argument. inform the reader of their answer to the question in the main body. Which plan? • Plan B • Introduction • Background information • Essay purpose • Argue that PRP can help to secure the long-term success of a company • Main body • The weaknesses in the arguments against PRP • The strengths in the arguments for responsible PRP • Conclusion • PRP can help to secure the long-term success of a company Activity 2.3

8. Plan A is less suitable because the writer is not able to state their answer in the main body. Therefore: the reader must decide the writer’s answer to the question. the writer has less influence over the reader’s interpretation of the essay. Which plan? • Plan A • Introduction • Background information • Essay purpose • Describe the advantages and disadvantages of PRP • Main Body • Arguments against PRP • Arguments for PRP • Conclusion • PRP can help to secure the long-term success of a company Activity 2.3

9. Recently, there has been much debate about the extent to which performance related pay (PRP) is an effective method of improving the productivity of a company. PRP is based on the theory that the success of a company depends on the efficiency and commitment of its executives, and that bonuses help to optimise an individual’s motivation, initiative and consequently performance (Greener, 2006). However, the role that PRP has played in the recent collapse of the banking industry has raised questions about its effectiveness as a method of improving productivity. While it cannot be denied that PRP has had detrimental consequences, this essay will argue that PRP is a viable method of improving a company’s performance. In order to demonstrate this, this essay will first outline and explain the weaknesses in two of the main arguments against PRP, namely the problems of short-termism and risk-taking. It will then illustrate the benefits of PRP using its application in Finland during the 1990’s as a case study. One unjustified argument against PRP is that it only focuses employees on the short-term success of the company. Dragas (2008,79) claims that bonus schemes can place too much importance on increasing immediate sales and reducing costs. Consequently, the long-term factors such as investment in capital projects, research and development, and training can be neglected.” However, what this argument fails to recognise is that modifying the targets for which bonuses are awarded can help to solve the problem. The targets for which bonuses are awarded should focus on the long term success of the company in order to encourage employees to consider the future success of the company. For example, rather than rewarding bankers for the number of loans they approve, their bonuses should be delayed until the borrower has established a sound payment record. Bonuses should still be paid annually but based on the average performance over several years. The effect would be to promote responsible lending which acts in the interest of both the banks and the economy as a whole (Edwards, 2009). Therefore, by ensuring that performance is measured in the long-term rather than solely in the short-term, PRP can help to improve the productivity of a company. • Introduction • Essay purpose: Argue that PRP can help to secure the long-term success of a company • Main body • Argument 1 against PRP • Short-termism • Weaknesses in this argument • Argument 2 against PRP • Excessive risk-taking • Weaknesses in this argument • Arguments for PRP • Use of PRP in Finland in the 1990s • Conclusion • PRP can help to secure the long-term success of a company Act. 2.4

10. Recently, there has been much debate about the extent to which performance related pay (PRP) is an effective method of improving the productivity of a company. PRP is based on the theory that the success of a company depends on the efficiency and commitment of its executives, and that bonuses help to optimise an individual’s motivation, initiative and consequently performance (Greener, 2006). However, the role that PRP has played in the recent collapse of the banking industry has raised questions about its effectiveness as a method of improving productivity. While it cannot be denied that PRP has had detrimental consequences, this essay will argue that PRP is a viable method of improving a company’s performance. In order to demonstrate this, this essay will first outline and explain the weaknesses in two of the main arguments against PRP, namely the problems of short-termism and risk-taking. It will then illustrate the benefits of PRP using its application in Finland during the 1990’s as a case study. One unjustified argument against PRP is that it only focuses employees on the short-term success of the company. Dragas (2008,79) claims that bonus schemes can place too much importance on increasing immediate sales and reducing costs. Consequently, the long-term factors such as investment in capital projects, research and development, and training can be neglected.” However, what this argument fails to recognise is that modifying the targets for which bonuses are awarded can help to solve the problem. The targets for which bonuses are awarded should focus on the long term success of the company in order to encourage employees to consider the future success of the company. For example, rather than rewarding bankers for the number of loans they approve, their bonuses should be delayed until the borrower has established a sound payment record. Bonuses should still be paid annually but based on the average performance over several years. The effect would be to promote responsible lending which acts in the interest of both the banks and the economy as a whole (Edwards, 2009). Therefore, by ensuring that performance is measured in the long-term rather than solely in the short-term, PRP can help to improve the productivity of a company. It has been claimed that the most serious danger of PRP is that it leads to employees taking greater risks in order to achieve bonuses. Such risk taking is thought to have been instrumental in causing the banking industry’s downfall. With the opportunity to earn huge annual bonuses, many bankers little reason to consider the risks associated with the loans that they were approving. “Even some of the industry’s leaders, such as Lloyd Blankfein, the head of Goldman Sachs, have publicly acknowledged that these bonuses schemes caused the demise of the industry” (Kendal, 2009: 121). While risk taking to the degree where it compromises the stability of the company is clearly undesirable, the argument that PRP always has this consequence is not fully justified. Managing the remuneration of employees to ensure a realistic balance between base salaries and PRP can help to avoid the problem of excessive risk taking. Executives often receive a reduced base-salary on the understanding that it will be compensated for once targets have been met. Such a situation can result in an increased need to reach targets and consequently an increased need to take excessive risks (Kirk, 2009). Consequently, reducing the size of bonuses but increasing base salaries can reduce the need to take risks. ING is one company which is readdressing the role that PRP plays in remuneration. In 2010, it was announced that its executive bonuses would be limited to one year’s fixed salary. Further examples include Lloyds Banking Group and Goldman Sachs (The Economist, 2010). These changes the way in which PRP is managed can reduce risk taking, thereby improving its effectiveness as a method of improving the productivity of a company. • Introduction • Essay purpose: Argue that PRP can help to secure the long-term success of a company • Main body • Argument 1 against PRP • Short-termism • Weaknesses in this argument • Argument 2 against PRP • Excessive risk-taking • Weaknesses in this argument • Arguments for PRP • Use of PRP in Finland in the 1990s • Conclusion • PRP can improve the productivity of a company Act. 2.4

11. Recently, there has been much debate about the extent to which performance related pay (PRP) is an effective method of improving the productivity of a company. PRP is based on the theory that the success of a company depends on the efficiency and commitment of its executives, and that bonuses help to optimise an individual’s motivation, initiative and consequently performance (Greener, 2006). However, the role that PRP has played in the recent collapse of the banking industry has raised questions about its effectiveness as a method of improving productivity. While it cannot be denied that PRP has had detrimental consequences, this essay will argue that PRP is a viable method of improving a company’s performance. In order to demonstrate this, this essay will first outline and explain the weaknesses in two of the main arguments against PRP, namely the problems of short-termism and risk-taking. It will then illustrate the benefits of PRP using its application in Finland during the 1990’s as a case study. One unjustified argument against PRP is that it only focuses employees on the short-term success of the company. Dragas (2008,79) claims that bonus schemes can place too much importance on increasing immediate sales and reducing costs. Consequently, the long-term factors such as investment in capital projects, research and development, and training can be neglected.” However, what this argument fails to recognise is that modifying the targets for which bonuses are awarded can help to solve the problem. The targets for which bonuses are awarded should focus on the long term success of the company in order to encourage employees to consider the future success of the company. For example, rather than rewarding bankers for the number of loans they approve, their bonuses should be delayed until the borrower has established a sound payment record. Bonuses should still be paid annually but based on the average performance over several years. The effect would be to promote responsible lending which acts in the interest of both the banks and the economy as a whole (Edwards, 2009). Therefore, by ensuring that performance is measured in the long-term rather than solely in the short-term, PRP can help to improve the productivity of a company. It has been claimed that the most serious danger of PRP is that it leads to employees taking greater risks in order to achieve bonuses. Such risk taking is thought to have been instrumental in causing the banking industry’s downfall. With the opportunity to earn huge annual bonuses, many bankers little reason to consider the risks associated with the loans that they were approving. “Even some of the industry’s leaders, such as Lloyd Blankfein, the head of Goldman Sachs, have publicly acknowledged that these bonuses schemes caused the demise of the industry” (Kendal, 2009: 121). While risk taking to the degree where it compromises the stability of the company is clearly undesirable, the argument that PRP always has this consequence is not fully justified. Managing the remuneration of employees to ensure a realistic balance between base salaries and PRP can help to avoid the problem of excessive risk taking. Executives often receive a reduced base-salary on the understanding that it will be compensated for once targets have been met. Such a situation can result in an increased need to reach targets and consequently an increased need to take excessive risks (Kirk, 2009). Consequently, reducing the size of bonuses but increasing base salaries can reduce the need to take risks. ING is one company which is readdressing the role that PRP plays in remuneration. In 2010, it was announced that its executive bonuses would be limited to one year’s fixed salary. Further examples include Lloyds Banking Group and Goldman Sachs (The Economist, 2010). These changes the way in which PRP is managed can reduce risk taking, thereby improving its effectiveness as a method of improving the productivity of a company. Having examined and refuted two common arguments against PRP, it is now necessary to illustrate how PRP can, in fact, improve the productivity of a company. The successful application of PRP by many Finnish companies in the early 1990’s provides a clear example of how PRP can be beneficial to the productivity of a company. In 1985, fewer than 5% of employees at managerial level received PRP. However, by 1995 the figure was almost 30% and by 2000 it had risen to 50%. The result of this change was clearly positive. Specifically, the average value added to firms that used PRP was found to be €12.5 million compared to €2 million in firms without PRP. Additionally, the average value added per employee in firms with PRP was €62,000 in contrast to €39,000 firms without PRP (Hartley, 2008). These strategies exemplify how the use of PRP can improve the productivity of a company. • Introduction • Essay purpose: Argue that PRP can help to secure the long-term success of a company • Main body • Argument 1 against PRP • Short-termism • Weaknesses in this argument • Argument 2 against PRP • Excessive risk-taking • Weaknesses in this argument • Arguments for PRP • Use of PRP in Finland in the 1990s • Conclusion • PRP can help to secure the long-term success of a company Act. 2.4

12. Recently, there has been much debate about the extent to which performance related pay (PRP) is an effective method of improving the productivity of a company. PRP is based on the theory that the success of a company depends on the efficiency and commitment of its executives, and that bonuses help to optimise an individual’s motivation, initiative and consequently performance (Greener, 2006). However, the role that PRP has played in the recent collapse of the banking industry has raised questions about its effectiveness as a method of improving productivity. While it cannot be denied that PRP has had detrimental consequences, this essay will argue that PRP is a viable method of improving a company’s performance. In order to demonstrate this, this essay will first outline and explain the weaknesses in two of the main arguments against PRP, namely the problems of short-termism and risk-taking. It will then illustrate the benefits of PRP using its application in Finland during the 1990’s as a case study. One unjustified argument against PRP is that it only focuses employees on the short-term success of the company. Dragas (2008,79) claims that bonus schemes can place too much importance on increasing immediate sales and reducing costs. Consequently, the long-term factors such as investment in capital projects, research and development, and training can be neglected.” However, what this argument fails to recognise is that modifying the targets for which bonuses are awarded can help to solve the problem. The targets for which bonuses are awarded should focus on the long term success of the company in order to encourage employees to consider the future success of the company. For example, rather than rewarding bankers for the number of loans they approve, their bonuses should be delayed until the borrower has established a sound payment record. Bonuses should still be paid annually but based on the average performance over several years. The effect would be to promote responsible lending which acts in the interest of both the banks and the economy as a whole (Edwards, 2009). Therefore, by ensuring that performance is measured in the long-term rather than solely in the short-term, PRP can help to improve the productivity of a company. It has been claimed that the most serious danger of PRP is that it leads to employees taking greater risks in order to achieve bonuses. Such risk taking is thought to have been instrumental in causing the banking industry’s downfall. With the opportunity to earn huge annual bonuses, many bankers little reason to consider the risks associated with the loans that they were approving. “Even some of the industry’s leaders, such as Lloyd Blankfein, the head of Goldman Sachs, have publicly acknowledged that these bonuses schemes caused the demise of the industry” (Kendal, 2009: 121). While risk taking to the degree where it compromises the stability of the company is clearly undesirable, the argument that PRP always has this consequence is not fully justified. Managing the remuneration of employees to ensure a realistic balance between base salaries and PRP can help to avoid the problem of excessive risk taking. Executives often receive a reduced base-salary on the understanding that it will be compensated for once targets have been met. Such a situation can result in an increased need to reach targets and consequently an increased need to take excessive risks (Kirk, 2009). Consequently, reducing the size of bonuses but increasing base salaries can reduce the need to take risks. ING is one company which is readdressing the role that PRP plays in remuneration. In 2010, it was announced that its executive bonuses would be limited to one year’s fixed salary. Further examples include Lloyds Banking Group and Goldman Sachs (The Economist, 2010). These changes the way in which PRP is managed can reduce risk taking, thereby improving its effectiveness as a method of improving the productivity of a company. Having examined and refuted two common arguments against PRP, it is now necessary to illustrate how PRP can, in fact, improve the productivity of a company. The successful application of PRP by many Finnish companies in the early 1990’s provides a clear example of how PRP can be beneficial to the productivity of a company. In 1985, fewer than 5% of employees at managerial level received PRP. However, by 1995 the figure was almost 30% and by 2000 it had risen to 50%. The result of this change was clearly positive. Specifically, the average value added to firms that used PRP was found to be €12.5 million compared to €2 million in firms without PRP. Additionally, the average value added per employee in firms with PRP was €62,000 in contrast to €39,000 firms without PRP (Hartley, 2008). These strategies exemplify how the use of PRP can improve the productivity of a company. In conclusion, this essay has attempted to demonstrate that PRP is a viable method of improving the productivity of a company, though caution and regulation are crucial. The problem of short-termism can be reduced by focusing on targets that are in the long-term interest of the company. Additionally, excessive risk taking can be discouraged by ensuring that executives’ receive a satisfactory base-salary. In order to secure economic stability in the future, lessons need to be learnt and the methods by which PRP is managed need to be reassessed. Act. 2.4 • Introduction • Essay purpose: Argue that PRP can help to secure the long-term success of a company • Main body • Argument 1 against PRP • Short-termism • Weaknesses in this argument • Argument 2 against PRP • Excessive risk-taking • Weaknesses in this argument • Arguments for PRP • Use of PRP in Finland in the 1990s’s • Conclusion • PRP can help to secure the long-term success of a company

13. Recently, there has been much debate about the extent to which performance related pay (PRP) is an effective method of improving the productivity of a company. PRP is based on the theory that the success of a company depends on the efficiency and commitment of its executives, and that bonuses help to optimise an individual’s motivation, initiative and consequently performance (Greener, 2006). However, the role that PRP has played in the recent collapse of the banking industry has raised questions about its effectiveness as a method of improving productivity. While it cannot be denied that PRP has had detrimental consequences, this essay will argue that PRP is a viable method of improving a company’s performance. In order to demonstrate this, this essay will first outline and explain the weaknesses in two of the main arguments against PRP, namely the problems of short-termism and risk-taking. It will then illustrate the benefits of PRP using its application in Finland during the 1990’s as a case study. One unjustified argument against PRP is that it only focuses employees on the short-term success of the company. Dragas (2008,79) claims that bonus schemes can place too much importance on increasing immediate sales and reducing costs. Consequently, the long-term factors such as investment in capital projects, research and development, and training can be neglected.” However, what this argument fails to recognise is that modifying the targets for which bonuses are awarded can help to solve the problem. The targets for which bonuses are awarded should focus on the long term success of the company in order to encourage employees to consider the future success of the company. For example, rather than rewarding bankers for the number of loans they approve, their bonuses should be delayed until the borrower has established a sound payment record. Bonuses should still be paid annually but based on the average performance over several years. The effect would be to promote responsible lending which acts in the interest of both the banks and the economy as a whole (Edwards, 2009). Therefore, by ensuring that performance is measured in the long-term rather than solely in the short-term, PRP can help to improve the productivity of a company. It has been claimed that the most serious danger of PRP is that it leads to employees taking greater risks in order to achieve bonuses. Such risk taking is thought to have been instrumental in causing the banking industry’s downfall. With the opportunity to earn huge annual bonuses, many bankers little reason to consider the risks associated with the loans that they were approving. “Even some of the industry’s leaders, such as Lloyd Blankfein, the head of Goldman Sachs, have publicly acknowledged that these bonuses schemes caused the demise of the industry” (Kendal, 2009: 121). While risk taking to the degree where it compromises the stability of the company is clearly undesirable, the argument that PRP always has this consequence is not fully justified. Managing the remuneration of employees to ensure a realistic balance between base salaries and PRP can help to avoid the problem of excessive risk taking. Executives often receive a reduced base-salary on the understanding that it will be compensated for once targets have been met. Such a situation can result in an increased need to reach targets and consequently an increased need to take excessive risks (Kirk, 2009). Consequently, reducing the size of bonuses but increasing base salaries can reduce the need to take risks. ING is one company which is readdressing the role that PRP plays in remuneration. In 2010, it was announced that its executive bonuses would be limited to one year’s fixed salary. Further examples include Lloyds Banking Group and Goldman Sachs (The Economist, 2010). These changes the way in which PRP is managed can reduce risk taking, thereby improving its effectiveness as a method of improving the productivity of a company. Having examined and refuted two common arguments against PRP, it is now necessary to illustrate how PRP can, in fact, improve the productivity of a company. The successful application of PRP by many Finnish companies in the early 1990’s provides a clear example of how PRP can be beneficial to the productivity of a company. In 1985, fewer than 5% of employees at managerial level received PRP. However, by 1995 the figure was almost 30% and by 2000 it had risen to 50%. The result of this change was clearly positive. Specifically, the average value added to firms that used PRP was found to be €12.5 million compared to €2 million in firms without PRP. Additionally, the average value added per employee in firms with PRP was €62,000 in contrast to €39,000 firms without PRP (Hartley, 2008). These strategies exemplify how the use of PRP can improve the productivity of a company. In conclusion, this essay has attempted to demonstrate that PRP is a viable method of improving the productivity of a company, though caution and regulation are crucial. The problem of short-termism can be reduced by focusing on targets that are in the long-term interest of the company. Additionally, excessive risk taking can be discouraged by ensuring that executives’ receive a satisfactory base-salary. In order to secure economic stability in the future, lessons need to be learnt and the methods by which PRP is managed need to be reassessed. Can you write your essay in different colours to show the reader where each section starts and finishes? Activity 2.5

14. Recently, there has been much debate about the extent to which performance related pay (PRP) is an effective method of improving the productivity of a company. PRP is based on the theory that the success of a company depends on the efficiency and commitment of its executives, and that bonuses help to optimise an individual’s motivation, initiative and consequently performance (Greener, 2006). However, the role that PRP has played in the recent collapse of the banking industry has raised questions about its effectiveness as a method of improving productivity. While it cannot be denied that PRP has had detrimental consequences, this essay will argue that PRP is a viable method of improving a company’s performance. In order to demonstrate this, this essay will first outline and explain the weaknesses in two of the main arguments against PRP, namely the problems of short-termism and risk-taking. It will then illustrate the benefits of PRP using its application in Finland during the 1990’s as a case study. One unjustified argument against PRP is that it only focuses employees on the short-term success of the company. Dragas (2008,79) claims that bonus schemes can place too much importance on increasing immediate sales and reducing costs. Consequently, the long-term factors such as investment in capital projects, research and development, and training can be neglected.” However, what this argument fails to recognise is that modifying the targets for which bonuses are awarded can help to solve the problem. The targets for which bonuses are awarded should focus on the long term success of the company in order to encourage employees to consider the future success of the company. For example, rather than rewarding bankers for the number of loans they approve, their bonuses should be delayed until the borrower has established a sound payment record. Bonuses should still be paid annually but based on the average performance over several years. The effect would be to promote responsible lending which acts in the interest of both the banks and the economy as a whole (Edwards, 2009). Therefore, by ensuring that performance is measured in the long-term rather than solely in the short-term, PRP can help to improve the productivity of a company. It has been claimed that the most serious danger of PRP is that it leads to employees taking greater risks in order to achieve bonuses. Such risk taking is thought to have been instrumental in causing the banking industry’s downfall. With the opportunity to earn huge annual bonuses, many bankers little reason to consider the risks associated with the loans that they were approving. “Even some of the industry’s leaders, such as Lloyd Blankfein, the head of Goldman Sachs, have publicly acknowledged that these bonuses schemes caused the demise of the industry” (Kendal, 2009: 121). While risk taking to the degree where it compromises the stability of the company is clearly undesirable, the argument that PRP always has this consequence is not fully justified. Managing the remuneration of employees to ensure a realistic balance between base salaries and PRP can help to avoid the problem of excessive risk taking. Executives often receive a reduced base-salary on the understanding that it will be compensated for once targets have been met. Such a situation can result in an increased need to reach targets and consequently an increased need to take excessive risks (Kirk, 2009). Consequently, reducing the size of bonuses but increasing base salaries can reduce the need to take risks. ING is one company which is readdressing the role that PRP plays in remuneration. In 2010, it was announced that its executive bonuses would be limited to one year’s fixed salary. Further examples include Lloyds Banking Group and Goldman Sachs (The Economist, 2010). These changes the way in which PRP is managed can reduce risk taking, thereby improving its effectiveness as a method of improving the productivity of a company. Having examined and refuted two common arguments against PRP, it is now necessary to illustrate how PRP can, in fact, improve the productivity of a company. The successful application of PRP by many Finnish companies in the early 1990’s provides a clear example of how PRP can be beneficial to the productivity of a company. In 1985, fewer than 5% of employees at managerial level received PRP. However, by 1995 the figure was almost 30% and by 2000 it had risen to 50%. The result of this change was clearly positive. Specifically, the average value added to firms that used PRP was found to be €12.5 million compared to €2 million in firms without PRP. Additionally, the average value added per employee in firms with PRP was €62,000 in contrast to €39,000 firms without PRP (Hartley, 2008). These strategies exemplify how the use of PRP can improve the productivity of a company. In conclusion, this essay has attempted to demonstrate that PRP is a viable method of improving the productivity of a company, though caution and regulation are crucial. The problem of short-termism can be reduced by focusing on targets that are in the long-term interest of the company. Additionally, excessive risk taking can be discouraged by ensuring that executives’ receive a satisfactory base-salary. In order to secure economic stability in the future, lessons need to be learnt and the methods by which PRP is managed need to be reassessed. Can you write your essay in different colours to show the reader where each section starts and finishes? No! - What do you use instead? • Paragraphs • Topic sentences • Concluding sentences Activity 2.5