The myth of pay for performance

Performance is hard to measure precisely and objectively. Does it make sense to link pay to an amorphous concept?

IT'S that time of the year again. Employees being appraised and managers making recommendations about bonuses and salary increases. Pay for performance, which is a much repeated slogan, is a staggeringly banal statement. To say one pays for performance is like stating that the rain is wet. Besides stating the obvious, there is the deeper problem of elevating compensation as the central motivator of performance. And, in practice, do people really get paid for performance?

The relationship between performance and pay is tenuous, except for a few roles such as salespeople and traders. What employers mean by pay-for-performance and what employees expect are often two different things. It's a beguiling...

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