Are you paying for performance or performing for pay?
Posted by Amy Wilson on December 17, 2008
There’s a religious war waging amongst our customers. Surprisingly, it has to do with money. There are two factions: the purists and the pragmatists.
The focus is on a healthy and timely performance process. Managers are coached on writing meaningful documents and giving useful feedback. Calibration sessions occur to target development, reach agreement on promotions, and set the groundwork for compensation decisions. The compensation round occurs afterward. Performance ratings are a major factor in the compensation decisions. Before signing off on the compensation allocation, business leaders check their graphs to make sure they have indeed paid for performance.
The compensation cycle is a known entity. The pool comes down. Decisions are made. Money is distributed. It happens at the same time and in the same way every year. Everyone knows performance calibration must be done. Doesn’t it make sense to do this after the pool is communicated? All the information is there to allocate the right pay and make sure the ratings correspond. Managers can now communicate the full message to the employee.
Is your organization a purist or a pragmatist? Is there any hope for peace?