Pay-for Performance Compensation

Pay-for Performance Compensation is the process of rewarding employees based on performance. It focuses on annual merit increases to base salary to ensure fairness and consistency across the organization, based on employee performance in relation to pre-determined objectives. It also includes the use of incentive plans to drive individual and organization-wide performance, based (again) on pre-determined objectives with a consistent basis or formula for determining payout, as opposed to arbitrary bonus payments.