The trick is to link XP to monsters, but then associate them not with killing the monster, but with reaching a certain location. This is similar to the technique of placing treasure with value relative to the monsters you might meet on the way, and has a lot of benefits.
Unlike XP-for-treasure-only, it rewards doing other things than finding treasure. Climbing a mighty mountain, clearing a fortress of ghouls, or riding with a caravan to a far-off city now can have their own rewards.
Unlike XP-for-monsters, it:
- Completely sidesteps the question of whether you should get XP for defeating the monster this way, or driving it off that way, or what you do if you drive it off but it comes back.
- Avoids the fiddly adjustment of XP relative to party level that sometimes is felt to be necessary. Instead, you make a general assessment of the toughness of the situation and adjust the monster XP accordingly. If you have 100 orcs but they're forced to come at you one at a time, you can drop the difficulty to 50% or even 25%.
- I'll say it again, the tactical situation comes into play. If you estimate a 50% chance of making the right choices and sneaking the party past a monster, you can reduce the XP award by 50%.
- Does not reward kill-farming or worse yet (hello 2nd edition D&D) kill-stealing.
- Calculating and dividing XP is easier - it happens less often and the DM can even fudge the numbers a little so they're evenly divisible for the party.
- Rewards avoiding random or irrelevant monsters.
- Has some consideration of traps, tricks and obstacles.
- Clearly rewards seeking danger.
- Gives a benchmark for how many XP should be associated with a given goal.
- Allows for a variety of scenarios; if someone is willing to pay the party to kill a random monster, then the pay counts as XP.