Lech Marcinkowski, a Senior Policy Advisor at the Organisation for Economic Co-operation and Development (OECD), has cautioned that poorly structured performance-based contracts may lead to biased assessments and unfair compensation.
On Thursday, June 18, Marcinkowski said the government should first put in place reliable and transparent systems for measuring performance before tying employee rewards to results.
A flawed structure, he said, encourages subjectivity, manipulation, and blanket payouts that weaken motivation, while speaking to stakeholders at the Performance and Productivity Conference held in Nairobi.
He said managers responsible for assessing employees must be properly trained and supported so their decisions are based on evidence rather than personal opinions.
Performance-related pay can improve motivation, but only when carefully designed. It should support, not replace, a strong basic salary and be built on a credible performance framework with clear and balanced indicators, he told stakeholders.
Marcinkowski also said strong human resource management systems are necessary to ensure consistency and fairness in how payments are allocated.
Managers need training, human resource support, and dependable data so decisions are evidence-based and consistent, he stated.
He further warned that performance-linked pay should not be used to replace workers’ basic salaries, arguing that incentives work best when offered as additional rewards for strong performance.
He said international experience shows that successful performance-pay systems usually allocate between three and five per cent of total wages to bonuses, rather than making incentives the main source of employee earnings.
His remarks came two days after the government announced plans to introduce performance-based contracts and real-time monitoring of payroll processing.
Speaking on Tuesday, June 16, Salaries and Remuneration Commission (SRC) Chairperson Sammy Chepkwony said the commission is drawing lessons from countries such as Singapore.
Chepkwony said the government is considering a model where an employee’s earnings are directly linked to performance, allowing more productive workers to earn more.
He said in Singapore, between 40 and 50 per cent of an employee’s total salary is based on variable pay, meaning workers who perform better earn more than those who only meet minimum requirements.