What pay-for-performance actually is
Pay-for-performance is the deliberate design choice that pay outcomes — typically merit, bonus, or both — vary by performance signal in a defined way. It is a philosophy expressed through plan rules and matrices, not a setting that is switched on.
The strength of the linkage, the type of performance signal used, and the differentiation between high, expected, and below-expected performers are all design decisions the organisation makes — and revisits.
