Linking Compensation and Performance Management

The overarching goal of the compensation strategy is to make sure an organization has the right amount of money necessary to motivate the types of performance needed to achieve the business strategy. To that end, compensation should tie into the overall performance management strategy. Your practices must therefore be understood by employees and based on hard, objective data. It is essential to maintain an approach in which equal pay is given for equal work. These critical objectives can be achieved by:

  • Standardizing pay practices and basing the compensation system on benchmarks
  • Achieving internal parity
  • Providing competitive hiring scales
  • Reformatting or rewriting job descriptions
  • Creating a meaningful performance management tool

Many companies find rewriting their job descriptions to include more results-oriented and measurable information is beneficial in their compensation planning activities. Instead of simply including the specific tasks or duties of the job description, consider including why the duty is performed (or which results it aims to achieve) and how the performance will be measured.

For example, for the role of marketing director in an assisted living facility, the roles and responsibilities might look like this:

  • Facilitate the move-in process to build relationships with new residents, which will be measured by new resident satisfaction
  • Ensure respite apartments are ready to show to ensure marketability, which will be measured by apartment turnover
  • Develop and maintain a detailed marketing plan to great market share, which will be measured through competitive market data

While rewriting job descriptions may require an investment of time, it can go a long way in providing clarity for both prospective and existing talent. When employees have a clear line of sight into how their contributions impact the company, as well as how they’re rewarded for those contributions, your compensation philosophy becomes more tangible for your workforce. This can help to communicate a compelling employee value proposition to support both recruitment and retention.


HRsoft is the trusted global leader in compensation management software whose COMPview solution is proven to control and simplify the full process and allocation of merit, bonus and equity awards to drive manager and employee engagement.

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