The aim of this study is to investigate and identify perceptions, problems and challenges that may arise for wage-setting managers as well as individual employees when working with a performance-based payroll system. A letter of formal notice was sent to a recruitment company inviting them to participate in the study, which also included an explanation of the study’s purpose, approach and procedure. Data was collected through semi-structured interviews with nine participants, including the wage-setting manager. The study has given insight into how these participants perform in relation to the performance-based payroll system and the results of the study imply that their experiences vary to a great extent. The wage-setting manager believes that the payroll system is well-functioning. However, he finds challenges in creating a common interpretation of the salary criterias with his employees, as well as communicating the basis of his wage-setting decisions. For employees, results show that the payroll system contributes to experiences of increased motivation and development, as well as stress. Additionally, the study indicates that the results reflect a gender perspective as the women in the study are more prone to stress caused by the performance-based payroll system than men.