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Most notably, performance-related pay plays an important role in economy downturn. Since companies generally have a smaller amount of capital to allocate for compensation during an economy slowdown, offering salary increases or bonuses in varying amounts to the best performers or the most essential employees would be better than giving everyone an equal but minimal increase to their base pay. By rewarding good workers, it can increase productivity and secure dominance in potentially lucrative markets (Bates, Mirza & Fox, 2003). Although these bonuses may be very small, it represents a promise to the employees that better performance results in better compensation...
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