Skilled employees are hard to find—and keep. Little wonder employers are taking a fresh look at so-called “pay-for-performance” (P4P) arrangements that link part of employee compensation to workplace achievement. Such programs attract “A players” and keep them from seeking greener pastures. At the same time, their higher productivity can boost the company’s bottom line.

“Pay for performance programs are powerful motivators,” said Mae Lon Ding, president of Personnel Systems Associates. “They guide employees by highlighting what is really important in their job positions. And they demonstrate that working at the peak of an individual’s abilities will be worth the effort.” ...