What is a common pitfall HR should beware in pay-for-performance plans?

What is a common pitfall HR should beware in pay-for-performance plans?

• A. Rewards linked to performance
• B. Lack of performance data
• C. Focusing on metrics, gaming, and inequity
• D. Too much emphasis on long-term development

Answer: (C)

Tying rewards to measured performance creates a major risk: metrics can drive unintended behavior and fairness issues. When pay is tied to specific numbers, people may game the system—tuning inputs, reporting data selectively, or focusing only on what’s measured—without delivering real, holistic value. This can also lead to inequity if the metrics are biased, poorly calibrated, or applied unevenly, so some employees feel they’re rewarded unfairly for comparable effort or outcomes. To minimize this, design balanced metrics, use multiple measures, calibrate fairly across roles and teams, and align incentives with both outcomes and the behaviors that support long-term success.

Tying rewards to measured performance creates a major risk: metrics can drive unintended behavior and fairness issues. When pay is tied to specific numbers, people may game the system—tuning inputs, reporting data selectively, or focusing only on what’s measured—without delivering real, holistic value. This can also lead to inequity if the metrics are biased, poorly calibrated, or applied unevenly, so some employees feel they’re rewarded unfairly for comparable effort or outcomes. To minimize this, design balanced metrics, use multiple measures, calibrate fairly across roles and teams, and align incentives with both outcomes and the behaviors that support long-term success.