Performance-Related Pay (PRP)
Compensation varying based on individual/team performance measures.
Formula
PRP Bonus = (Actual Performance − Target) × Rate per unit above target
Real World
Goldman Sachs awards annual bonuses to investment bankers based on deal revenue generated, meaning top performers can earn multiples of their base salary.
Exam Focus
Always weigh PRP's motivational benefit against the risk of reduced teamwork — examiners reward balanced evaluation.
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