Pay For Performance Pay An Effective Compensation...

Overview Pay-for-performance pay is an increasingly popular compensation strategy in today’s business world. According to research conducted by consulting firm Aon Hewitt, 90% of the 1,100 employers polled use some form of variable, performance-based pay in their compensation strategy (Kelleher, 2013). There is also considerable evidence that employees, themselves, believe that their compensation should be tied in some way to their performance (Milkovich, Newman, Gerhart, 2016, p. 332). With such a significant number of organizations utilizing this type of pay, as well as the overwhelming support of employees, it would seem that pay-for-performance is an effective strategy. However, there is argument over whether pay-for-performance is truly an effective compensation strategy. Despite its prevalence and support, both managerial and employee alike, failures such as Hewlett-Packard’s in the 1990’s (Beer Cannon, 2004) demonstrate that the extent of pay-for-perfor mance’s effectiveness is questionable. This report sets out to examine the evidence in support of and in opposition against the efficacy of pay-for-performance to determine if this compensation strategy can truly motivate employee behavior and benefit an organization’s business strategy. Research Findings Pay-for-performance is an effective compensation method. Numerous studies evaluate the effectiveness of pay-for-performance and find that it successfully improves employee productivity and performance. A studyShow MoreRelatedCompensation1324 Words   |  6 PagesCompensation Philosophy Paper Name ________ Professor ______ Introduction Compensation is viewed differently, depending on the individual persons perspective (e.g. employee, manager, stockholders, etc.). 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