Performance Management: Putting Research into Action

Compensation System

The fifth organizational precursor is the compensation system. If behaviors that lead to effective results for the organization are rewarded, employees should be more likely to continue to strive for these achievements. Moreover, the compensation system is a way to link the behaviors of the individual to the values and success of the organization. By doing this, the organization demonstrates to the employees how important their behaviors are to the success of the organization.

A rating of a “1” on the organizational precursor of compensation system indicates that there is no or little connection from individual behaviors and results to the pay of employees. This means that employees do not see a connection from their behaviors ...