Pay for performance systems are used by employers to motivate employees to work together to reach common goals. Pay for performance systems use bonus money as a motivating factor for employees to go above and beyond what's normally expected of them. In this type of system, bonus money is only released to employees if certain department or company-wide goals are met regarding production and quality. When pay for performance programs are in place, they create a cohesive atmosphere of team pride in most workplaces. They also allow employers to recognize outstanding groups of employees without spending more money on compensation than the current budget will allow.

Companies that are interested in implementing a pay for performance system often contact a professional compensation consulting firm to assist with the project. Compensation consultants work closely with company leaders to analyze the business's goals and budget. Comparable employee incentive and recognition programs in similar businesses are also examined and a list of possible solutions is usually drawn up. The ultimate solution that is established will depend a lot on the prevailing corporate culture, industry conditions and expectations for the future, as well as the preferences of company leaders.

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