Pay-for-Performance: A Benefit or a Detriment?

Source: Accounting Today

In this article, consultants August Aquila and Coral Rice present the benefits and challenges of implementing a pay-for-performance system in your firm. They suggest that pay-for-performance clarifies expectations of everyone in the firm; eliminates subjective evaluations and favoritism; draws exemplary workers to your firm; and causes an organic departure of underachievers who would not thrive under such a set-up.

However, they also suggest that pay-for-performance measures can become too detailed or cumbersome, making them difficult to implement and enforce. Other challenges include unexpected outcomes that may look good on paper but don't actually benefit the firm; individuals may pursue their own achievements without concern for the firm as a whole; or the firm may not completely commit to the program, setting high expectations without adequately equipping employees to meet them.

For additional insights, read the complete article: “Is pay-for-performance worth it?”

From Accounting Today, August 16, 2010, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004, 800-221-1809.