One of the sure-fire ways to engage your top performing employees is to offer them rewards for achieving certain performance goals and milestones. Cultivating a pay for performance culture within the organization holds the key to aligning your employees with company directions, attracting and retaining top talent, as well as motivating them to strive for greater heights.
Besides, studies have shown that rewarding your top performers makes them three times productive than the average employee. This means that when used correctly, pay for performance plans can reward the organization handsomely.
Challenges of Pay for Performance
Despite the obvious benefits of pay for performance plans, they are not always easy to implement correctly and successfully. Here are a couple of reasons why:
- Wrong Tools: Not all companies are equipped with the appropriate tools to assess the performance of every employee.
- Poor Tracking: In many organizations, goals are set, and then forgotten. There is no accountability between the goal setter (manager) and goal achiever (employee). This drastically reduces the effectiveness of pay for performance plans.
Having the wrong tools and wrong approach to pay for performance not only wastes precious hours and resources of the people, but also creates the illusion among employees that pay for performance plans are ineffective.
The Guide to Successful Pay for Performance Plans
A successful pay for performance plan requires consistent engagement with the employees to let them know that their performance has a direct impact on the compensation they will be receiving. In other words, the communication and education to them needs to be clear and effective. Besides these, here are some more elements to that constitute a successful pay for performance plan:
- Easy to use
- Automated workflow
- Real time visibility to improve decision-making
- Clear communication of goals and objectives
- Integration with other databases and software suites