Richmond Housing Partnership (RHP) is a housing association that offers performance-related pay (PRP) to all of its staff.

Alison Henderson, RHP's human resources manager, says: "The aim of the PRP scheme is to reward individual performance and actively engage employees in achieving goals."

Everyone at the South-West London social housing association has an annual pay review in May to assess their performance over the previous financial year. Line managers award each employee a rating ranging from one (under-achievers) to five (top performers).

Top performers - those scoring four and over - receive a cash bonus and an extra pay rise on top of a standard pay increase. Those with a one rating, however, stay on the same salary and are earmarked for extra training. Six months later, they are appraised again. "The outcome would either be that an employee was now effective and would be entitled to receive the standard pay award for the remaining six months of the year or would be rated as unacceptable [and not be eligible for a pay increase]."

Henderson adds that the rules should be very clear or employees are likely to feel aggrieved. "For the scheme to be successful it is important that it is simple and easy for employees to understand," she says.

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