What is Pay-for-Performance?
Pay-for-performance means paying incentives and awarding merit increases based on performance. The intent is to motivate superior performance.

Why is it important for your organization?

• People are motivated to perform better when rewarded for superior performance.
• Clear performance objectives and rewards, based on achieving these objectives, result in high productivity and performance.
• Companies need reward systems that recognize performance to attract and retain high caliber employees.

Pay-for-Performance Base Salary Plan:
The base salary plan covers practical aspects of:

• Awarding annual merit increases based on performance, including the performance evaluation and related documentation
• Administering the compensation structure, including promotion increases, lateral changes or demotions
• Addressing outliers below the range minimum or above the maximum

For the PSG approach to integrating pay-for-performance with your compensation structure, please see our webpage Building your Compensation Structure.

Pay-for-Performance Incentive Plan:
The incentive plan is the vehicle for handsome rewards based on superior performance without affecting the compensation structure. The following principles are addressed:

• Mix of incentive to base salary, based on position responsibility, risk, impact of decisions etc.;
• Payout formula, recognizing the threshold at which payout commences and payout levels after targets are achieved;
• Relationship between individual, team and organization-wide performance.

PSG will convert commission plans to incentive plans to manage performance more effectively. We'll also develop sets of performance objectives at department head level to cascade down the organization.

Contact Performance-Solutions-Group, Inc.
If you need assistance in reviewing your compensation program, please contact us at
(203) 987-3338; info@performance-solutions-group.com