Briefly explain different types of performance related payment schemes

The types of schemes which fall within the description of performance pay are varied. Broadly speaking, they consist of schemes designed to share or distribute the financial results of enterprise performance with or to employees. In essence, performance pay is based on paying the worker for his or her value, rather than the value of the job. Such schemes fall into four broad categories:

• •       individual-based or based on individual performance, such as incentive schemes and sales commissions
• •       Profit-sharing, which applies to all or most of the employees
• •       Gain-sharing measured by a pre-determined performance formula, applicable to all or groups of employees. The performance measure may be profit or some other objective such as productivity
• •       Employee share ownership schemes.