Question

please provide your thoughts on having a "Pay for Performance" clause or other controls that will help to ensure the pay is deserved. Also, do you feel a salary cap is needed

Answer 1

answer-

In a business, the management try to cut its workforce cost as well try to motivate its employees to improve their performance. The management implement many clauses like Pay for performance or merit based performance or put salary cap to put threshold on maximum compensation to given to an employee.

Pay for performance means The incentive plan gives an employee the opportunity to increase his annual pay based upon either company performance or individual performance. Incentive plans are a way for companies to keep employees motivated to perform to the best of their abilities, thus increasing company profit.

According to me, if Company has lower level of workforce and it can not afford losing employees and hiring employees again and again like hospitality industry of health care industry so, companies should go for merit based pay clause because this will help the company to retain employees in the company as well lower the employee turnover rate.

But if company is big and have thousands of workforce like Walmart or amazon where its workforce cost is affecting the business then Pay cap or salary cap is good decision because it would limit the compensation also company should put the cap to an amount on which employees do not leave the organization and company can have high retention of employees for long time.