This is the fourth part of the series on designing effective pay-for-performance plans. This month, we will address the question of whether it is fair or economically reasonable to condition an employee’s pay on his performance even if performance is not determined solely by actions that he can control. In other words, what happens if performance outcomes are not purely a function of an employee’s effort, but are also affected by factors beyond the control of the employee? Would it still be fair to make the employee’s pay depend on her performance? And if so, how should the manager design such an incentive plan without alienating employees or causing them to quit? Read the full article at the link below: