The way we compensate employees is Victorian. That’s not hyperbole, it’s actually Victorian! The concepts of hourly wages and fixed annual salaries for white collar managers date back to the second Industrial Revolution of 1870-1914. With the addition of sales commissions, bonuses, and stock options, the way we pay and reward employees hasn’t significantly changed in more than a century.
But there is another kind of pay strategy that is starting to gain momentum in modern companies. With the advent of the gig economy, people are thinking differently about pay, specifically about how compensation and benefits can incorporate pay-for-performance – payment based on actual output and quality – into a robust and fair modern total rewards system.