PRP Is Not Bad: In Its Present Form in CPSEs It Needs Calibration

By : Dipak Kumar Bhattacharyya

Page No: 295-301

Abstract
Like many other countries of the world, India has also embraced the system of performance-related-pay (PRP) for employees of Central Public Sector Enterprises (CPSEs) with effect from 2007. The idea behind was to transform CPSEs institutionalizing performance-driven work culture. However, in CPSEs PRP depends on the mandated memorandum of understanding (MOU) parameters of the Department of Public Enterprises (DPEs). Many of these parameters also give credit for contributions of the organizations to several areas, other than performance, productivity and profitability. Since the year 2007, most of the CPSEs became eligible for PRP payment to their employees, and all cross-sections of employees are regularly getting the PRP payment as incentives. Operationally, PRP in CPSEs therefore become a process of doling out incentives, irrespective of performance and productivity, both at the individual and organization level. This, however, does not discredit the PRP as a system. The paper suggests use of more inclusive models like; Omni-factor and Surrogate. These two models in its pure form help organization in measuring the productivity trend and accordingly decide the incentive payment.

Author : 
Dipak Kumar Bhattacharyya : Professor, Xavier Institute of Management, Bhubaneswar.