Build Better Pay-for-Performance (PFP) Compensation Plans

Gordon Sayre (), Brice Corgnet (), Roberto Hernán-González and Simon Gaechter
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Gordon Sayre: EM - EMLyon Business School
Brice Corgnet: EM - EMLyon Business School
Simon Gaechter: UON - University of Nottingham, UK

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Abstract: Pay-for-performance compensation plans have a dual nature — increasing both productivity and financial insecurity among employees — so leaders may feel like they're walking a tightrope in trying to get the balance right. While the PFP model can motivate current employees and help attract high performers, the financial incentives inherent in PFP can also shape a cutthroat culture and contribute to employee burnout and turnover. Learn three ways to design pay-for-performance plans wisely.

Keywords: Employee Well-Being; Employee Motivation; Employee Performance; Employee Psychology; Compensation; Recovery from Work Stress (search for similar items in EconPapers)
Date: 2026-01-08
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Published in Mit Sloan Management Review, 2026, pp.11

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05499609

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