After reading this chapter, you should be able to:

• Explain the reasons to link and not to link pay to performance.
• Describe the factors that affect the design of incentive systems.
• Explain the reasons behind individual incentive systems and describe several of the most common methods.
• Explain the reasons behind group incentive systems and describe several of the most common methods.
• Analyze the various barriers to pay for performance success.
• Discuss components of executive compensation.