How do individual-based systems primarily structure employee compensation?

Individual-based systems primarily structure employee compensation based on individual employee capabilities. This approach emphasizes recognizing and rewarding the unique skills, knowledge, and performance of each employee. By linking compensation directly to individual contributions, organizations can promote a culture of meritocracy where employees are incentivized to develop their capabilities and excel in their roles.

This method allows for tailored compensation packages that reflect the specific contributions and competencies of each employee, which can lead to increased motivation and job satisfaction. Furthermore, it encourages ongoing professional development, as employees may seek to improve their skill sets in hopes of achieving higher compensation and advancement opportunities.

While there are other ways to structure compensation—such as considering team outcomes, individual job roles, or overall company performance—these do not align as closely with the individual-based philosophy, which prioritizes personal achievement and capabilities as the defining factors in determining pay.