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Agree Derek it will be interesting how this plays out. Instead of trying to continue giving pay increases based on performance, Lear adjusts pay only according to changing local markets. In addition they pay a bonus annually to employees based on company profits. Other companies are using profit sharing plans too.

The solution demands correcting the mismanagement of supervisors. Undirected unguided untrained bosses who are both unable and unwilling to properly communicate honestly continually sabotages pay for performance. The concurrent failure of senior management to adopt and implement systems and procedures that truly treat people as their most valuable resource further undercuts the effectiveness of the few dedicated performance managers. Solutions are in http://www.amazon.com/Performance-Management-Workbook-James-Brennan/dp/0136586341.

This old issue is only currently hot because pay budgets have languished for so long. Almost all workers are dissatisfied with their tiny incremental income growth rather than the usual half unhappy with their performance reviews. Granting peanut-butter increases or using bonuses just evades the core issue: Supervisors don't manage performance effectively.

Distribution of wealth will remain an issue as long a people remain human. No matter what element is used (cash, base, prizes, perks, equity) or how it is divided (via P4P, totem poles, automatic, steps, profit-sharing, incentive plans, general, COLA, seniority, contracts, special KSA formulae, etc.), the "fairness" of every method will be challenged.

What else would you propose to reward besides "performance"? Even membership implies maintenance of an acceptable level of productivity.

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