What type of compensation directly rewards an employee's contributions to a company's goals based on KPIs?

Performance-based pay is a type of compensation directly linked to an employee's contributions to a company’s goals, which are often measured by Key Performance Indicators (KPIs). This approach incentivizes employees to meet and exceed specific performance targets that align with the organization’s objectives. By tying rewards to measurable outcomes, this method not only motivates employees to perform at their best but also fosters a results-oriented culture within the organization.

In contrast, commission typically refers to payments made to employees based on sales or a particular number of transactions, which may not encompass broader contributions to company goals. Salary is a fixed regular payment that does not usually fluctuate based on performance metrics. Profit sharing involves distributing a portion of the company's profits to employees, which may encourage teamwork but is not directly tied to individual performance metrics as precisely as performance-based pay.