Compensation and performance

Summary

In their paper Compensation and performance: A review and recommendations for the future (2023), Fulmer, Gerhart, and Kim explore the intricacies of employee compensation and its effect on their performance, with a strong focus on pay-for-performance (PFP) dynamics. They highlight an evolution in the methodology and understanding of PFP over three decades of research and academic literature, emphasizing the importance of aligning compensation with performance beyond top executive levels. 

The authors argue that conventional PFP research and utility estimation may not account for non-normally distributed performance, particularly among high achievers who may deliver exceptional value not fully captured by most current models. They discuss the challenge of ensuring