If you’re trying to figure out the best way to motivate your employees and give your business a competitive edge, the possibility of performance bonuses has likely crossed your mind. But before you implement a pay-for-performance compensation scheme, you might want to look out the window and check out the competition. Pooyan Khashabi and a group of colleagues explored the effectiveness of performance pay in their recent research, finding that market competition plays an important role and that performance pay is most effective when there is moderate competition.
KHASHABI, P. (2021). Does Paying For Performance Pay Off? ESSEC Knowledge.