What the implications of implementing incentive pay plans and pay for performance plans?
Incentive pay and pay for performance usually refer to linking an employee’s pay directly to job performance instead of the traditional seniority pay. With unemployment low, this is one option public employers are considering to retain top performing employees. It can have many advantages including motivating employees and getting rid of poor performers. However, it can have drawbacks, such as discouraging team behavior. If the plan is not well thought out, it may be too subjective and undermine morale.
