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Performance measurement is a systematic process for evaluating the effectiveness and efficiency of projects, programs, and initiatives. It can also be used to motivate managers to make decisions that benefit the company and themselves.
Performance measurement is used to evaluate employee performance. This evaluation is then used to determine the amount of variable monetary compensation an employee will receive and for making career decisions. When managers are compensated based on performance measures, they will need to be compensated for taking on extra risk. Performance-based incentives are generally more costly to the owner. Some compensation policies might include: Salary levels, Benefits, and Bonuses and profit-sharing. Multinational entities in the US may face income tax issues with stock-based compensation for employees outside the US. This is because each country has its own income tax laws, which may allow for different tax deductions than US tax law.
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