Compensation based on output, rather than hours worked, is a system where employees are paid a specific amount for each unit they produce or action they complete. For instance, a seamstress might receive $5 for every garment sewn, or a data entry clerk could earn $0.10 for each record processed. The total earnings depend directly on the volume of work completed.
This method of remuneration can motivate increased productivity and efficiency, as earnings are directly tied to performance. Historically, it has been employed in manufacturing, agriculture, and various industries where output can be easily measured. Its appeal lies in aligning employee compensation with business outcomes and incentivizing workers to maximize their output. It can also offer flexibility to workers, allowing them to potentially increase their income by completing more work.
