Methods for paying employees on the basis of their output or perform- ance are usually referred to as incentive compensation or pay-for--performance programs. incentive compensation can be paid individually, to the work group, or on an enterprisewide basis. Incentive compensation ties performance directly to pay. Hence, the incentive pay is variable because the amount that is given out is contingent upon the employees' performance level or the company's financial performance. At higher levels of performance, the employee receives more incentive pay. Exhibit 11-1 highlights the factors most important to pay-for-performance issues.