Compensating your employees in the above manner will boost their satisfaction levels and keep them loyal to your organization. Furthermore, your company will attract better talent and inspire intrinsic motivation in all employees.
Ensure internal and external fairness.
This means that your employees should be paid commensurate with their colleagues, as well as with others in similar lines of work and organizations.
Pay your employees more than the average wage.
Use wide-ranging, relevant, and hard-to-game performance metrics.
For example, instead of basing your sales employees’ pay solely on their sales in the current quarter, base it on their sales in the current year, their ideas for new products, co-worker evaluations, etc. in addition to their sales in the current quarter.