Performance pay

Performance Pay

Who hasn’t heard of people who have been doing their best in their organization for a long time, yet have a very low salary? And the other way around? Precisely to avoid this type of injustice, compensation models such as performance-based compensation, also known as pay for performance, are gaining strength.

Nowadays, many companies are using this system to encourage their employees to make a greater effort, increase their performance and awaken their personal commitment.

However, like everything else, this model also has its disadvantages and it is important to be aware of them first. Once we are aware of what is involved, we can decide whether this type of compensation could be a good fit for our organization.

Potential advantages of pay-for-performance systems:

  1. Boosts motivation and productivity.

  2. Aligns the employee’s work with the company’s success.

  3. Helps attract and retain talent.

Potential disadvantages of pay for performance

  1. Rivalry among employees and lack of cooperation.

  2. Difficulties in measuring performance objectively.

  3. Financial rewards can overshadow other important things(the downside of target-based incentives is that these targets are strictly adhered to).

And you: What type of compensation do you have in your organization? Does it work well for you?

Try TalentFY in a Live Demo

Try our recruiting platform without compromise.
And if it doesn’t work for you, YOU DON’T PAY No small print.

Join our News

Subscribe and receive our most exclusive content and news every month
directly in your inbox.