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Performance based compensation

Can you comment on below? Are you agree or disagree?

"I hold this as a rule of life: Too much of anything is bad." (Terence) I believe that this can be true in the debate about performance-based pay. Hypothetically, an employee works for an organization where his/her pay is based 50% on performance. She is leader of 1 of approximately 20, 4-6 person teams, fighting for accounts at a large marketing firm. If her team gets an account, they receive a 30% bonus. If they don't they will be earning much less that expected with the possibility of termination. Now this is an extreme situation but there are many negatives here. The work environment would have to be extremely cutthroat and hostile. Ideas wouldn't be shared decreasing creativity as a part of the company culture. Though the company would be highly productive, at what cost. The high turn-over rate would increase HR costs and the company reputation would make it even more difficult to rehire.

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I don't think this is a good example of the rule of life, that too much of anything is bad (although I agree with the rule).

The key here I believe is the comment: fighting for accounts. If teams believe that if they "get one" it means another team "didn't get one" you will have teams hiding information and ...

Solution Summary

The solution is is 227 words. This response does not agree with the rule in this situation and explains why.