Pay for Performance: Implementation of Individual and Group Plans

A survey of over 1,000 companies conducted in 1990 indicated that two‐thirds will be giving merit‐only increases in 1991, which was a 60 per cent increase over two years ago. However, a current question is: Is pay for performance used effectively? Examines both individual and group incentive plans and explores all key factors utilized in determining the outcome (implementation) of these plans. Furthermore, outlines the structure of an effective pay‐for‐performance plan in light of the mission, strategy and objectives of the organization to determine how rigid or entrepreneurial the design can be. Concludes that pay for performance is fundamental for competitive organizations.