Definition of Pay For Performance

Pay for performance is a compensation plan highly used by organizations to pay off their employees for achieving goals or targets. Employees are offered a bonus, increase in base pay, or other benefits to appreciate their efforts. Harding working dedicated workers are retained by companies in this way. The company heavily relies on this goal-driven employee for their success. Company goals and individual goals are aligned perfectly together to achieve common goals.


While designing the pay for performance system, financial budget, company goals, and occurrence of the rewards (quarterly or yearly basis) are considered. An increase in merit pay, which is paid annually, is sometimes a factor people left the company as they don’t want to wait a complete year to receive their rewards.

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