Performance Management: Putting Research into Action

Rewarding Performance

Performance management systems generally seek to link rewards (for example, money or recognition) to performance. Heneman and Gresham (1998) note that pay for performance plans can focus on individual performance (merit pay, skill-based pay, piece rates, sales commissions, employee suggestion systems), team performance (team incentives, team recognition), or organizational performance (gainsharing, profit sharing, stock ownership).

One potential downside of individual-level pay for performance is that employees might see little value in cooperating with co-workers (which can create problems when cooperation would benefit the group or organization as a whole). At the team level, team incentives can be used in situations ...