(From Human Resource Executive Online) -- Despite its familiarity in the workplace, the phrase "pay for performance" likely means different things to different people. This lack of clarity and understanding can keep employers from meeting short- and long-term goals and employees from deriving satisfaction in their roles and careers.
For top management, performance has most often been defined by metrics commonly reported to public company shareholders or otherwise easily calculated, such as earnings per share or total shareholder return. This has afforded top management and shareholders a clear view of the linkage between pay and the final measure of performance.
But unfortunately, the means to achieving that end measure of performance were not typically included as performance measures. As for other employees, the metrics used for linking pay to performance were not always considered from a business-performance perspective.