Performance Based Pay System

please give me a brief description of performance based pay system.
tnx

hi abi
Performance based pay is a form of pay which is being linked with the performance of the employee and not based on the experience of him. Such performance based pay has some advantages like
1. Pay will be based on skills and knowledge what he possess and not on the experience.
2. performance based pay helps in improving the knowledge of the employee and facilitates/insists him to improve his/her knowledge.
3. the pay will differ from person to person and will not have any linkage to the Organizational structure.
may be my answer would have helped a little

hi abi,
just to elaborate on what jayavelka has mentioned :
Performance based pay are based on your performance on the job and are generally not firxed , variable in nature.
As rightly pointed out they are solely based on your performance and your potential for performance rather than on your expereince.
To introduce a performance based pay system in your organisation , it si very important to have a robust system to capture performance.
I hope i have helped you.

Hi
Adding to Shweta's comments.
Performance linked pay is the result of your Performance Apprisal process. The Objectives set are measured against the results achieved. In an Organization where the individual KRAs are linked to the Business Objectives this will very clearly entaill understanding the individual contribution of the employee to the organization's plans and success
As pointed out by all, this is not fixed in nature.
In India, the senior management team's Variable pay is accounted for around 20-25% of their CTC as per my knowledge. This % goes down with levels going down
As very rightly pointed out by Shweta, the quality of Performance based Pay is directly linked to the PMS adopted by the organization.
The transparency and objectivity of measuring the performance will be deciding factors for a successful performance related pay