Pay for Performance can be a great motivator, as long as the program is respectfully administered. Performance pay in business is often one of two models. One: The individual worker is paid according to individual output. Thus a slow and/or ineffective worker earns less than a fast and/or effective worker. Two: Teams, departments or the company as a whole receive raises dependent upon " production and quality benchmarks" encouraging employees to work together and to "prompt" each other to "excellence" and "high standards" of work.
When good performance results in more money it has a positive effect, making people want to work harder and giving them feelings of good will toward the company.
Commission programs are another kind of pay for performance, but they can make life difficult for an employee. Employees might be plush one month and then hurting the next, leading them to a constant life of stress. Thus a commission program should be part of an employee’s pay, with a base salary as well. Pay for performance methods that act as additional incentives work best.