Implementing a performance-based pay system requires many decisions about the type of pay model, goals, employees to include, and the best metrics to produce. This compensation approach has pros and cons, and the pros are driven by transparency, equity, and fairness.-By Belinda Jones

A performance-based pay system is a compensation model where all or some employee pay is based on performance that meets pre-determined goals. There is usually a base salary range with additional financial rewards based on specific work outcomes, though some are commission-based. This pay model incentivizes employees to deliver their best performance by giving them control over the add....