If you’re an employee or a self-employed professional, it is likely your income based on the hours you work, or the input you give in to your work. So when you bill your clients, for instance, you bill according to the number of hours of service rendered. Or when you receive your paycheck, you are paid according to the required working hours (say, 40 hours in a week). But productivity experts may have a differing opinion on this.
For some, particularly more entrepreneurial individuals, compensation should be given on the value added. So when an employee, for instance, is able to think up better solutions to conducting business, and earning the company a bigger profit for the period, he should then be compensated accordingly (say, with a percentage of the added earnings). The same goes for entrepreneurs or consultants who are able to drastically improve on his clients’ incomes. This is called compensation for value creation.