Pay-for-performance: Behavior-based recommendations from research and practice

ABSTRACT

The use of pay-for-performance has the potential to greatly increase the productivity of the workforce by incentivizing the act or result of performance itself rather than time spent performing. In this paper, monetary incentive approaches are examined through the lens of behavioral research and practice. Important criteria to protect both the financial health of the organization and the physical and emotional health of the workers are outlined, along with considerations for an organization to prepare for the transition to a different form of financial compensation. This paper offers best practices, as well as suggestions for future research and considerations to help overcome potential concerns from organizational and individual perspectives.

KEYWORDS:

• Pay-for-performance
• monetary incentives
• piece rate
• variable pay
• incentive pay

Disclosure statement

No potential conflict of interest was reported by the author(s).