What is Pay For Performance

Many companies today are turning toward pay for performance programs to encourage their employees to meet production and quality goals. In this type of incentive structure, an employee's pay is gradually increased each time his team, department or the company as a whole meets certain production and quality benchmarks. This encourages all employees to work together to achieve excellence and prompt each other to higher standards of work. Knowing that a pay increase is dependent on the performance of not just the employee, but an entire group, can turn even solitary workers into team players.

The attractiveness of pay for performance programs for companies is that these programs are friendlier to corporate budgets than some other methods of compensation. Because pay increases are only given out at designated times during the year, the money for these increases can be more easily budgeted for in advance. If production and quality goals are not met, the money goes back into the budget for the next possible increase. Pay for performance changes corporate culture from an "every man for himself" atmosphere to one of teamwork and cooperation.

Pay for Performance Programs and Other Methods of Compensation

In addition to pay for performance programs, companies can reward employees in a number of different ways, including:

• Bonus programs
• Commission programs
• Executive pay programs
• Individual incentives

Many companies have heard of compensation consulting and wonder what it is and what it can do for them. Compensation consulting is an intricate process of determining the best salary and incentive options for each business. Contact Fox Lawson & Associates, a division of Gallagher Benefit Services, Inc at jfox@foxlawson.com for more information.