Performance and compensation management can engineer a transformation in your organization that is night and day from your previous productivity-enhancing schemes. Poorly deployed, however, these practices can leave your team in the dark. Without the right groundwork, performance-based compensation will likely fall flat. Employees may see little meaning in the program and (not) act accordingly. Done right, performance and compensation management drives efficiency and boosts morale. Laying the right groundwork is critical to putting the organization on the right path – and it starts at the top.
Management starts with the manager
While it may sound obvious, the manager’s approach is key to making or breaking the institution of performance-based compensation. A team leader has to understand his or her workforce in order to chart the best course for performance and compensation management. Raising performance levels – and sustaining new heights – can be expressed as addressing motivation and ability in equal parts, asserted Government Executive contributor Howard Risher.
“Psychologists concluded decades ago that employee performance depends on the interaction of two factors – motivation and abilities,” Risher wrote. “The formula is simple and straightforward. We know that well-qualified, motivated people can be expected to perform at higher levels. When motivation and/or abilities decline, performance suffers. Both are heavily influenced by an employee’s immediate manager.”
So what are some things managers can do to drive employee performance? It starts by getting involved. A system that places employees in a performance-based reward system but exempts managers likely won’t be as effective as one in which a manager’s compensation is also tied to his or her team’s performance. This lays a groundwork that is inherently more team focused, as personnel recognize that their leader’s compensation will be affected by the same success or hiccups as their own. This sense of camaraderie can give rise to a productive work environment.
Laid the groundwork? Start on the scaffolding
Once managers have laid the foundation, they can help build the organization’s performance and compensation program. To do this, managers need to cement some objectives – both for themselves and for their teams, wrote U.K.-based Call Centre Helper contributor Heather Foley. Managers can turn to the twin powers of motivation and ability to create a meaningful performance-based compensation system that puts employee’s strengths toward areas of business need. Targeted objectives, transparent compensation protocols and committed management build visibility into the initiative, which can create a 360 degree view for every stakeholder involved.