Using Practical Examples Discuss the Assertion That Performance Bonuses Should Replace Entitlement of 13th Cheque.

Performance bonus is the holy grail of modern compensation administration, widely sought but hard to actually achieve (Wolf 1999). A performance bonus is a reward based on the employee’s performance and the performance of the business, whilst a 13th cheque is a bonus that the employee can expect with certainty if this is part of his/ her employment contract. A critical analysis supported the notion that performance bonuses should replace entitlement of the 13th cheque. This is supported by various arguments such as efficiency and effective job performance, retention and loyalty of employees, result based culture created, global economic recession, innovative and creativity by employees, motivation of employees, as well as improving workers’ attitude towards customers and clients. However, on the other hand, performance bonuses are open to attack compared to the entitlement 13th cheque as evidenced by unfairness, value of the reward, and subjectivity.

Performance bonus is a reward based on the employee’s performance and the performance of the business (Kessler 1995). The payment maybe daily, weekly, monthly or annualised depending on the agreement between the organization and the employee. Payment for any one period varies from that for any other period, depending on quantity or quality of work. The payment is made to individuals, group (team) or department, depending on the type of job. However, the entitlement 13th cheque is a bonus that the employee can expect with certainty if this is part of his or her contract. The criticism here is that whether the employee worked hard for the organisation or he made little contribution, he or she will eventually receive this form of bonus. This is the case with most civil service employees of Zimbabwe, leading to poor time management, poor commitment, no hard work, as they know that at the end of the year they will receive their bonus.

Efficiency and effective job performance is one of the arguments supporting the assertion that performance bonuses should replace entitlement of the 13th cheque. Wolf (1999) argues that through the use of the performance bonuses, employers can benefit from higher productivity. The idea is that every employee will be forced to exert all his or her skills, knowledge, and expertise in order to obtain a best result which in turn bears better or good payment. This is the case at Botton Armature Winding (BAW), an electric service company in Bulawayo and Harare. Their business is servicing of electric motors, transformers, generators and other high voltage electric machinery usually used in mines, farms and industries. Workshop employees at BAW are paid according to the number of kilowatts of motors serviced per month. They have some worksheets they fill in everyday by the line supervisor and brought to Quality Management and in turn given to Human Resource Management department where monetary value will be determined. Big motors such as the 15watts horsepower from clients such as Lafarge and Mimosa Mining Company will be paid upon completion of the work and usually targets are set, at least one week for a 15watts horsepower motor.

Retention or loyalty is evidence which support the replacement of entitlement of 13th cheque by the performance bonuses. Price (2009) asserted that the replacement of entitlement of 13th  cheque by performance bonuses will make the employees to stay with the organization for a long period due to higher pay to better performers. However, this will only work if the performance bonus amount is motivational. Isaac (2001) asserted that for the merit performance to be a motivator must be raised to a significantly motivating level such as 15%-25%. This is the case at Botton Armature Winding in Bulawayo, where most of their workshop workforces are old employees over the age of 50 years. They were employed by this organization since it was owned by the whites only until now it is in the hands of the indigenous people of Zimbabwe. For instance, if five employees manage to complete servicing a 15watt horsepower in a week, including running, winding, they share 20% of the amount paid for the service by the client. As a result, this is the reason the organization is still retaining its workforce.

Creation of a result-based culture is another factor which supports the assertion that performance bonuses should replace entitlement of 13th cheque. According to Milkovich et al (2001) properly directed payment of performance bonus can reinforce appropriate behaviours, focusing effort on organizational targets and encouraging a result-based culture. This is the case with Power Sales, the clothing shop with various branches in all parts of Zimbabwe. Their staffs has no basic salary, but are paid according to the sales made the organization each and every month. As a result, this is the reason why they are so friendly to their customers. The courtesy by the female employees one would end up thinking maybe she has some interests in you which are not only business. This is because their payment is determined by the performance in sales of the organization. Their reception will be opposite if they receive the entitlement 13th cheque every year as they knew they will eventually receiving their bonus.