A mere notion of the minimum wage is constantly criticized. Instead of providing financial security, the minimum wage is a way to unemployment for those who work in labor intensive industries. Its impact on relative poverty is really vague, as many businesses join the black market to avoid paying the minimal salary. Performance-based pay is the only reasonable alternative to the established standard, which is beneficial both for employees and their companies.
Businesses can choose their performance-based pay plan among several available options. Performance bonuses are effective when businesses want to evaluate their best employees. These bonuses are given for an exceptional performance and they stimulate employee’s motivation. Another effective payment technique is gain sharing. Similarly to the previous one, gain sharing means that employees responsible for the increased cash flow in the company shall be rewarded. One more type of stimulating performance is a skill-based reward. Employees have a compensation for the additional skills relevant to their job. Workers who complete additional training are eligible for a higher salary than those who do not.
The choice of an appropriate performance-based pay plan depends on every particular company. Businesses shall take into account the duration of the program and a realistic amount of money that can be invested in it. Expectations of managers are also important because some plans give an immediate motivation while the other are meant to work in prospect.
In general, all types of performance-based payments will work as expected if they were implemented wisely. It is quite fair to evaluate workers for the amount of job done instead of imposing a steady minimum for all.