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Pay-for-performance, also called incentive pay, ties at least part of the compensation to employee effort and performance through merit-based pay, bonuses, team incentives, gainsharing or profit sharing (Daft, 2016). With pay-for-performance, incentives are aligned with the behaviors needed to help the organization achieve its strategic goals. However, recent years have shown the potential dangers of misdirected pay-for-performance plans.
How would you go about deciding whether to use a job-based, skills-based, or pay-for-performance compensation plan for employees in a textile manufacturing plant? For wait staff in a restaurant? For salespeople in an insurance company?
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