Pay-for-Performance Strategies

Some organizations have a pay-for-performance strategy, which means that we are rewarded for meeting

preset objectives within the organization. For example, in a merit-based pay system, we might be

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rewarded for meeting or exceeding performance during a given time period. Rather than a set pay

increase every year, the increase is based on performance. Some organizations offer bonuses to employees

for meeting objectives, while some organizations offer team incentive pay if a team achieves a specific,

predetermined outcome. For example, each player on the winning team of the 2010 NFL Super Bowl

earned a team bonus of $83,000, [5] while the losing team of the Super Bowl took home $42,000. Players

also earn money for each wild card game and playoff game. Some organizations also offer profit sharing,

which is tied to a company’s overall performance. Gain sharing, different from profit sharing, focuses on

improvement of productivity within the organization. For example, the city of Loveland in Colorado

implemented a gain-sharing program that defined three criteria that needed to be met for employees to be

given extra compensation. The city revenues had to exceed expenses, expenses had to be equal to or less

than the previous year’s expenses, and a citizen satisfaction survey had to meet minimum requirements.



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