A company can gain several benefits upon the implementation of pay-for-performance. 

Its workforce will for sure help the company to meet its business goals. Because pay-for-performance gives higher chances to earn higher incentives. This motivates the employees even more and they usually give their best work.

Establish Company Values

These programs are very effective at communicating the company’s objectives to the people that work there.  Rewards should be given when people perform the work that brings the most value to the company. This way the company makes it clear for people to understand the goal and why it matters. With this, aligning the pay program with company values is important. Especially if a company wants its workforce to give positive outputs and create innovative solutions to problems. Giving rewards to employees once they achieve a certain goal. When receiving such rewards people tend to have a sense of fulfillment. Which will encourage them to continue and do more to further gain more rewards.

Motivation and Morale Increases

There are many reasons why people have high motivation at work. And this may vary for different reasons. The best and usually what motivates most people is the financial rewards. Once a person realizes that performing well and meeting the company’s goal can result in higher chances of gaining more income. They will push themselves to work harder and better. People will also want to develop their skills to meet those goals. With pay-for-performance, peoples’ morale will be boosted. This also shows people that the organization wants them to succeed. And they are willing to pay and give rewards for their hard work.

Increase Productivity

The pay-for-performance increases productivity. As the company aligns the peoples’ contribution at work and company goals. Employees will produce more to receive more rewards. Once the company gives the outline of the goal. The employees will try to complete and make the task in the most effective and efficient way. Because the more tasks they complete the more reward they will receive. Which is a win-win for the employees and the company.

Employees Have More Control

This is one of the most powerful aspects of pay-for-performance.  Once we feel we have more control over our situations we look for ways to improve our situation.  It is important that owners, executives, and managers engage in conversations and dialogue with their people at this point.  

One big factor is the control people feel they have with their money. They now have the power to gain extra money. For example, during the holidays. They can complete more tasks and gain extra money for special occasions. With this, they learn to improve how they will do their work alone. Usually, employees within the pay-for-performance pay program seek less supervision from the higher-ups. As the pay program model relies on the employees’ performance reviews. With this pay program employees know that they have more chances. To improve to meet their targets.

Another aspect of more control is people realize they can adjust their schedules to better meet their own wants and needs as well as what is required for the company.  I was working at an office where we were starting at 3:00 AM as the work begin to be received.  However, a couple of months after starting the people in the office realized there was not enough work from 3:00 AM to 5:00 AM to justify having people in the office. For the first two hours.  They also realized everyone could make the same amount of money and not come to work until 5:00 AM.  So the start time was switched.

One other thing that happened was they started looking for better tools to help them get their work done more efficiently.  Staplers were a bit part of the finished work.  And the people in the office started experimenting with different types of staplers.  They found that the ones they could pick up and use with just one had been better.  It was also discovered there were two different types of staples.  Both are made by the same manufacturer and both cost exactly the same.  One type of staple could only go through 5 or 6 pieces of paper.  The other type could go through 30 or 40 pieces of paper.  Everyone made sure we were purchasing the right kind of staples. 

Toyota, the most profitable car manufacturer in the world, has built its culture around discovering ways to innovate and eliminate waste everywhere it can.  This is something the founder’s son of Toyota learned as they visited Henry Ford’s factory and learned this concept in the 1930s. Read about it A Brief History of Lean Manufacturing

Attract and Retain Top Employees

Retaining employees most especially the top employees is essential to any company. With the pay-for-performance companies create an environment where employees want to stay.  Not only will people stay, but they will also brag about it to their friends.  Many people in the United States are not satisfied with their jobs.  You can check out this article, Why 85% of people hate their jobs. A well-managed pay-for-performance strategy will overcome all the fears people have to change jobs. Once people realize they have the potential to work at a company that will listen, pay them more, and gives them more security they will take the leap of faith and move to the pay-for-performance company. 

Attracting and retaining good people will make the company stronger and more competitive. 

Always remember that before implementing a pay-for-performance program. To review the company’s human resource policies. And seek guidance from the company attorney. If the program is not well thought out and effectively explained to people they may see this program as unfair and resist the change before it even gets started.