How paying for performance keeps your employees happier, engaged and accountable

The 20th century was time for the social work environment.  People were going to work and ensuring some results, they get their monthly salaries,  had their monthly quarterly and annual bonuses. Most of the employees were pretty sure that even if they can’t reach some KPI’s they will still get the bonus at the end,  counting on others higher performance.  Companies tried not to cut bonuses and incentives, except if an emergency came on the horizon. In the 1990s came the first big crisis and companies reformed their views.  They cut a big number of their personnel and stated pushing the leftovers to work more and take the dismissed colleagues responsibilities. But the payments were frozen. Then came the dot com balloon, after that we had the crisis with the real estate crisis,  etc, etc.  In all these years companies were trying to find the right formula of paying people.  Some of them, in a growing industry, started paying more and increasing base salary and bonuses, no matter the results and called it winning the war for talents. Those companies were pointing on the market, making the excuse that there are not enough professionals on the market and you need to pay the highest price to attract those who are there.  Other companies were disclaimed as second-hand players, paying lower salaries, cutting bonuses and pushing people to challenge themselves every day.  Those two approaches made it impossible for companies to establish a gold standard, ensuring that people are correctly evaluated and compensated.  The new managers growing from expert positions were not trained on how to evaluate people and give them honest and developing feedback and that led to another turn in the payments systems. 

Still, at the door of and ending the second decade of the 21st century, companies are not ready to implement honest compensation systems, rewarding high performance and punishing low performance.  It is even worse because high performers tend to live employers, searching for the one who will evaluate and reward them according to the level of performance and ROI they generate for those companies.  And when those high performers see that a particular company does not have the courage to move forward and change the old structure they start feeling unappreciated,  become less accountable, demotivate and disengage themselves and leave.

Then these same companies,  complaining about lack of exceptional talent on the market, begin the process of attracting, trying to retain and losing again high performers.

I know it looks like a sad story and the story that happens to other companies and not our, but still, every leader is responsible to deliver results and finding how to deliver results effectively without delays or excuses is an essential part of the leader’s role in the organization.  Unfortunately,  no matter how we want to present ourselves we as humans are always comparing one to each other.  Some of us delegate this to a higher level responsible like team managers and business leaders,  but still, we want to have feedback where we stay at the ladder in the organization.  One of the measurements we all make is our performance and compensation. If you are a leader,  responsible for delivering results, you will have to deal with this issue every day and learn how to manage it to keep higher results and engaged and accountable employees.   One of the most precise measures is performance results.  People are different, but still, we need to finish a particular job or task,  and if we are successful we want a good reward or compensation for our efforts. To be able, as a leader, to keep employees on the high track you will need to think on the rewards part every day. Here are several  principles to  help  you  with  building your successful  performance tracking and rewarding system:

Plan for the person, not the business
You know,  one of the most neglected areas in planning for success is the employee. Managers and leaders plan for success without taking into consideration what are employees strengths and how they can help them achieve the planned results. Planning and cascading to lower levels is not enough. There is no meaning in that to set a goal that is unachievable,  believing that you will give the employee a chance to struggle when achieving I and feel challenged to the wall to achieve it. This is not good planning and creation of development opportunities, but a test of employees wellbeing status.

Set achievable KPI’s
Many leaders plan by taking into consideration only what they will be achieved.   They set KPI’s they want to see as end results. There is nothing wrong with that except that you will need to re-think that strategy,  except if you don’t think that all of your employees are just the same as you. People are different. If you understand that what is a 6-month goal for you may be a 1-year goal for your employees you will be able to plan and measure results more effectively. Setting achievable KPI’s means to look at your employees and set achievable parameters according to where they stay,  how they react,  the speed they work and finish tasks wit, etc. Here also you will need to think of time and speed.  Don’t set your end date and speed of fulfilling tasks and projects,  measure with  the speed, time, and skills your employees use to  achieve results measured through  the KPI’s

Set a rewards model based on the KPI’s and communicate it.
People want to see something against the efforts they invest in the work. But most importantly they want to see the fair reward, based on strong measurement. This all comes from the win over other culture people live. If you want to make them happy and engaged with what you need them to finish then make it clear from the beginning what have people in your team to finish, how exactly will they be measured and what will every milestone in the measurement process bring to them.  It doesn’t matter if what you offer is equal to money or status, but you need to share this information in advance.  If keeping it to the end with you bring uncertainty in the room and make people doubt what is in for them and how this will be compared to the efforts they invest.

Measure and communicate progress periodically
Once communicated, the rewards scheme is will be the one thing that employees will remember.  Why that? Because this is how they will change their current status. What you really need to focus on is ensuring that employees remember also how will you measure the success and how the periodical results connect with the end goal and the rewards milestones set in the beginning.

Be unyielding when the time for rewarding comes
Some leaders don’t want to look bad in their employees’ times and when the time comes to calculate bonuses or other incentives for the performance they start searching for excuses to break the rules they have established in the beginning.  From those leaders, you can hear words like: “Results are not what I expected, but still, he/she has done what he/she can. Let’s pay the bonus in full”. If you do that you will generate a double negative impact: First you will show that you tolerate lower accountability to tasks and projects and don’t pay attention to low performance.  And second: These actions will make other employees, putting more effort into tasks or projects fulfilling to feel screwed up. That feeling can easily impact their accountability, motivation, and engagement to future work you expect them to do.

Don’t let employees learn about what they  get as reward from their salary  slips
After you have decided how will you reward different employees, you own them the information. There are leaders who say: “You will see it in your salary slip”. This is a totally wrong approach. We are humans and work with humans.  We need to talk about everything.  Not giving enough clear information on why is your decision made in a particular way will make you look as you don’t care enough about performance and employee personality.  Even if you have a well-structured communication process of how results look like you still need to invest time in talking about them with employees.  That conversation will help you to boost accountability and engagement, by pointing once again on what you really appreciate in employees’ work,  how much you care about results and fair rewarding and how you really stand up against the standard you have communicated for work results measurement.

IN CONCLUSION:
The theme for fair rewarding is scaling up in the last 2 decades.  Companies and leaders are searching for ways to boost accountability and engagement and create conditions for developing internal motivation within employees to ensure business growth and sustainability.  In a fast-paced and demanding world like the one we live,  the only way to ensure great results is by setting standards and plan and communicate according to them and each employee potential for reaching those standards.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s