(MIT Sloan: Cambridge, MA) -- A new study released by MIT Sloan Management Review argues that compensation systems that do not link sales target achievement to individual incentives bolster intrinsic motivation, satisfaction with pay, and ultimately, employee performance, while pay-for-performance (PFP) compensation systems can undermine the performance of modern, collaborative work teams.

“Organizations may have more to lose by failing to move beyond pay-for-performance (PFP) compensation systems,” says co-author Jonas Solbach, market reach strategy manager at Hilti Group. “After conducting a large-scale experiment with a target-independent compensation system, the results point to a strong case for leaving PFP behind.”

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