There is an ongoing debate about whether compensation based on performance (pay-for-performance) works. Advocates claim that employees who work under a pay-for-performance system are more motivated, productive, strategically aligned and accountable. The overall goal is, of course, to improve work quality and performance.
According to the International Public Management Review, as of 2005, three-quarters of U.S. companies link at least a portion of their employees’ pay to performance measures. It is a system that is well entrenched in the American workplace. But results seem to vary.
As training measurement specialists, we have learned that the key to a pay-for-performance program’s success is in what you measure, how clearly you communicate your expectations as an employer, and in the consistency of your evaluation. For your pay-for-performance program to succeed, you need to:
- Specificity: Be specific about the success metrics so employees understand the performance standards they must reach to be rewarded
- Consistency: Apply the measures fairly, transparently and objectively.
- Impactful: Be sure that you measure behaviors and results that have a direct impact on business success
Learn more at: http://www.lsaglobal.com/training-measurement/
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