Performance Compensation Issues

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Fresh Inc. reader JHB suggested we discuss "Is Pay or Happiness More Important to Employees?" in a March 29 weblog. He recently brought to our attention one reader's comment to his initial blog: "My growth and the company's growth are intertwined, and not as separate as most imagine, in my view," and suggested we follow up on this topic.

JHB would like to know: How does one "intertwine" the company's growth and personal growth?

Is it a matter of rewarding personal performance with a raise when the company's bottom line improves? What happens when well-intentioned efforts do not result in bottom-line improvements?

Or, is it a matter of concentrating on a basic pay structure and using bonuses to vary the compensation based on personal and company performance?

Or, is it that each year a percentage range for raises is determined, regardless of how well the company has performed? How do employees figure that percentage should be calculated?

JHB has his own personal preference, but he's interested in knowing what others have come up with -- from both sides of the desk.