Abstract

The issue of employees’ performance in furtherance of organisational objectives has occupied management
attention for long. Differences in levels of performance have been attributed to differences in skills and abilities
on the one hand, and to different theories of money on the other. This study examined the issue of
performance-based pay as a motivational tool for achieving organisational performance, using the situation in a
manufacturing company in Ghana as a case study. The main objective of the study was to assess the impact of
performance-related pay on the motivation of employees and, subsequently, on the achievement of
organisational goals. In all, one hundred and fifty respondents took part in the survey. The sample comprised 20
managerial staff and 60 non-managerial staff. The main research instrument was the questionnaire. A two-way
ANOVA table was used to test the main hypotheses. The result of the study revealed that the effect of
performance-based pay on employee performance is minimal; and the motivational effect of merit pay is often
blunted by biased performance appraisal. The main limitation of the study is that it could not cover all
manufacturing companies 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.

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