The "great recession" of 2008-2009 has resulted in unprecedented cost-cutting actions for most organizations — especially cuts related to compensation.

To help companies best align pay and performance so employers and employees benefit, this article explores the traditional way companies have paid for performance through salary budgets, why this will no longer be effective in the new economic reality and how to improve it.

This article was originally published in Workspan magazine and is made available here with permission of the publisher.