Who's at fault when employees don't meet goals? If you receivedan allowance when you were a kid, you probably have astrong understanding of "pay for performance": Take out thegarbage, earn a dollar. When applied to the business world,the basics are the same:

  1. Set specific, measurable goals.
  2. Communicate with employees about the goals and how to achieve them.
  3. Recognize employees' achievements with specified recognition or rewards.

First, understand that pay-for-performance programs are notuniversally revered. Not everyone thinks such plans yieldtrue productivity and loyalty. For starters, many surveysshow that employees value recognition, learning, and aworthwhile job above pay.

But if you've promised goal-based compensation andhaven't clearly communicated roles, goals, and paths, youmay end up with disgruntled employees, reducedproductivity, low morale, and higher turnover of the best and brightest.