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Has Pay for Performance Had Its Day?
Pay for performance has become one of the mantras of modern management, yet most rewards are based on current business, not exploration. To ensure profitability in the future, companies should balance their incentives so that they reward both success at the moment and innovation for the future, as well as group or company rather than individual achievement. In addition, employers should foster a culture of commitment to reassure employees that their long-term interests are aligned with those of the companies they serve.
The take-away: Companies that offer lower incentives for current performance and balance them with incentives for work on long-term projects do better at both.
Articles provided by The McKinsey Quarterly
© 1992-2003 McKinsey & Company, Inc
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