Final answer:
To link compensation to organizational performance and boost employee commitment, a blend of base pay with performance-related bonuses, stock options, or profit-sharing, along with non-financial incentives such as personal growth and career development opportunities, should be considered.
Step-by-step explanation:
An organization looking to link compensation to organizational performance while encouraging employee commitment might consider a mix of base pay with performance-related bonuses, stock options, or profit-sharing plans. These additional forms of compensation can align the interests of the employees with those of the organization, motivating them to work towards common goals. Performance appraisals, such as the 360-degree feedback system, serve as a mechanism for assessing employee performance and are instrumental in determining the payout of performance-related compensation elements. Correctly implemented, this appraisal system can provide comprehensive feedback by involving various stakeholders, which can enhance motivation and commitment. Finally, non-financial incentives like career development opportunities, training, and a positive work environment play a crucial role. Despite the weak correlation between pay level and job satisfaction, factors such as personal growth, career advancement opportunities, and supportive supervision are significant contributors to job satisfaction and employee commitment.