Pay for Performance

“Pay for performance” (or performance-based pay) is a compensation and rewards approach companies use to pay employees based on how well they perform, individually and/or as a team. The performance process must reflect itself in pay, and while the pay discussion should not occur at the same time as the performance discussion (as it leads people to focus a lot on pay and not enough on development), the two processes should be interlinked. For pay for performance to work, relying on a multitude of goals and bonuses is not sufficient: cultivating a sense of fairness, transparency, and accountability are of paramount significance.