Having an efficient strategy is one of the key factors that defines organizational success. It should facilitate the fulfillment of strategic objectives, by ensuring that plans are implemented within the required timeline and are meeting their goals. A variable pay system should be implemented in order to ensure that employees are paid adequately based on their capabilities and to provide its staff with a clear message regarding what the company deems important.
Motivational. Rewarding. Engaging. Performance driver. These are just a few of the words that are usually used to describe performance based pay systems. To this point, nothing wrong, you could say. Indeed, from the employees’ point of view, performance based pay could be nothing but beneficial. But realistically, how much would the company benefit from this type of system? Can it become harmful for the organization’s overall performance?
