Quite understandably, these people were in search for a formula or the prominent factors, which can affect these above mentioned variables. This search led these experts to many new concepts and approaches and out of them “pay for performance” is one of the most debated, and discussed ones. This paper, therefore, focuses on the same concept and is an attempt to analyze and explore different dimensions to this concept.
It is important to understand that this system cannot come under study in isolation with the other systems of fixed pay systems. This is because that actually shortcomings and problems within the existing systems led to the discovery and creation of pay for performance. In fact, pay for performance was an attempt by organizational experts to rectify the problems with the fixed pay plans. One of the biggest problems with fixed pay plans was their inability to motivate employees to put in the extra effort. Employees were asking themselves that why should they put in extra effort into their jobs when they are not getting any rewards for the same. Tangible or intangible rewards are quite understandably the biggest motivational factors of the employees most of the times, and without their presence, life became miserable for the mangers who want extra quality work from their employees. Moreover, this was the time in the history when the market was increasingly becoming a ruthless and aggressive place, when their bosses asked managers and company heads to continue a two-fold goal of cutting the costs and increasing the productivity of the organization and both at the same time. This eventually meant that the managers would have to motivate the employees to put in more effort with the same rewards, pay, or remuneration. As mentioned above, this was certainly not possible.
This situation was problematic from two sides of the picture. The first side of