What 'new pay' means to you Increasingly, tech companies are trading traditional salaries for pay based on performance. In an effort to boost productivity and reward top performers, companies are moving away from traditional yearly salaries and paying workers based on how well they do their job. But not everyone is singing its praises.
Critics say it creates too many compensation disparities, pitting workers against one another.
On the rise The new method of pay is based on individual performance plans rather than seniority and rank, and it's a concept that's on the rise. A study by benefits and human resources consulting firm Hewitt Associates found that more than 40 percent of companies now use the method, a significant leap from the 17 percent who relied on new pay in 1996. Bosses praise the new pay method as a tool that better enables them to motivate employees and bring about desired results, but not everyone is convinced. Some employees say it spurs pay envy because income is no longer based on years of service. Others say employers are tying pay to goals that workers have scant control over, such as the performance of a team or managers' abilities to retain workers in today's taut labor market.