What is a characteristic of performance-related pay?

Performance-related pay is designed to incentivize individuals based on their performance. The characteristic that it is based on individual performance outcomes underscores the connection between the efforts and results of an employee and the compensation they receive. This kind of pay structure aims to motivate employees to enhance their productivity and contribute positively to the organization’s goals.

The approach emphasizes rewarding those who meet or exceed performance targets, which can lead to increased employee engagement and overall organizational efficiency. Performance-related pay schemes can vary across different roles and levels within a company but fundamentally rely on the assessment of individual contributions.

While other options suggest various traits or limitations of performance-related pay, focusing on its basis in individual performance outcomes captures the essence of what makes such compensation systems effective and relevant in motivating employees.