Pay for Performance – Latest Survey Results

Submitted by  on August 29th, 2010

In their latest annual Kelly Global Workforce Index survey, Kelly Services provide a window into employee attitudes towards performance-based pay.

Their 2010 report shows that 30 per cent of employees are currently included in a pay for performance scheme. Interestingly, Gen X and Gen Y workers are much more likely to be included in such a scheme.

Of those employees not currently in a pay for performance arrangement, 37 per cent indicated that their productivity would increase if their pay was linked to performance results.

Before you rush out to implement a pay for performance scheme in your organization, consider these points:

  1. The majority of respondents not currently on performance-based pay did not believe that including them within such a scheme would boost their performance.
  2. Of the minority that did believe that their productivity would increase, take care to separate a belief from actuality. Implementing a pay for performance scheme may turn out to be an expensive way of finding out that many people are not in fact motivated by more money.
  3. Make sure that your pay for performance scheme balances team rewards with individual rewards. Incentive schemes weighted towards individual rewards can be counterproductive in encouraging selfish, maverick behavior.
  4. Ensure that your incentive scheme fires up only once a minimum trigger point is reached. Handing out bonus payments when the company is suffering a loss for that year is a sure fire way to go broke.
  5. With your scheme, make sure there is a line of sight between the individual’s and team’s results and the actual reward. If employees cannot see the connection between what they do and the rise and fall of the performance results being paid on, any supposed incentive is diminished.
  6. One year’s bonus may become next year’s entitlement. Be mindful that after implementing a pay for performance scheme, employee expectations may increase as their sense of obligation wanes.

Pay for performance may work well in some industries and for some job role types. Conduct thorough research before committing to performance-based pay. Once you commit, design the scheme very carefully, considering all of the different permutations and combinations possible.

Implementing a poorly thought out scheme will markedly increase your organization’s payroll liabilities with no or a marginal increase in productivity. In such cases, when the magnitude of the disaster has set in, withdrawing the bonus scheme will only make matters worse as morale and productivity plummet.

References

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