Which term describes compensating employees based on outcomes and behaviors?

Which term describes compensating employees based on outcomes and behaviors?

• A. Pay range
• B. Peers
• C. Pay for performance
• D. Per diem

Answer: (C)

Compensating employees based on outcomes and behaviors is pay for performance. This approach ties pay, at least in part, to what the employee achieves (outcomes) and the actions or behaviors that drive those results. It often includes variable rewards like bonuses, merit increases, incentive pay, and commissions, all linked to clear performance targets and expected behaviors. The aim is to motivate achievement of goals and align individual rewards with what the organization needs to succeed. For these plans to work well, you need reliable, fair performance measures and safeguards to avoid encouraging only short-term gains or gaming the system. The other terms describe different ideas: a pay range is just the salary band for base pay; peers refer to benchmarking against coworkers; and per diem is a daily travel allowance.

Compensating employees based on outcomes and behaviors is pay for performance. This approach ties pay, at least in part, to what the employee achieves (outcomes) and the actions or behaviors that drive those results. It often includes variable rewards like bonuses, merit increases, incentive pay, and commissions, all linked to clear performance targets and expected behaviors. The aim is to motivate achievement of goals and align individual rewards with what the organization needs to succeed. For these plans to work well, you need reliable, fair performance measures and safeguards to avoid encouraging only short-term gains or gaming the system.

The other terms describe different ideas: a pay range is just the salary band for base pay; peers refer to benchmarking against coworkers; and per diem is a daily travel allowance.