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THE TOP FIVE THINGS YOU CAN DO TO MAKE COMPENSATION A DEMOTIVATOR
| Guest post by: G.J. Miller |
Article Overview: Is pay a motivator? The simple answer is yes and no. It is a motivator only if your strategy is solid and applied consistently. It is a de-motivator if organization practice is described in one or more of the list above. But the reality is much more complex.
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Free Download - Achieving Organization Effectiveness By G.J. Miller |
THE TOP FIVE THINGS YOU CAN DO TO MAKE COMPENSATION A DEMOTIVATOR
DON’T ADDRESS POOR PERFORMERS; when managers within
an organization don’t address poor performers they need to understand that the
only possible result is an organization full of moderate to poor performers. People
that care and do great work will get the message loud and clear and begin to
understand that they don’t have to work as hard – it doesn’t matter and in fact
is a waste of their time. They will either move on to another organization – or
“quit and stay”, getting increases for doing less.
PAY LESS THAN THE JOB DEMANDS IN THE MARKET;
purposely or by default, it doesn’t really matter, it’s never a good practice.
Organizations should definitely never over pay against the market but undervaluing
a job will cause turnover, foster low productivity or prevent you from hiring
the best people possible.
IGNORE THE VALUE OF A FORMAL COMPENSATION STRATEGY; the
positions in your organization are not as unique as you might think. Your
employees will eventually run into someone or find some information that will
suggest they are not paid fairly. A formal compensation strategy serves to
guide the organization in a competitive market when it comes to ‘how to pay
people’. And when published, should give employees some confidence that this is
an overall plan, accountability and intent.
DON’T TRAIN YOUR MANAGERS TO DELIVER PERFORMANCE AND SALARY
REVIEWS; if you are going to give people salary increases, aside from
making sure it reflects their level of performance, it’s important that the
coinciding message is delivered clearly – “good job” or “improvement required”
and possibly “you are on a performance improvement plan”. In order for managers
to do this with confidence, they need some specific tools and methodologies. In
particular, they need to understand that this is an opportunity to motivate
people. It’s all in how the message is delivered. Give them training and then
follow up with some refresher courses. People represent 65 to 80% of controllable
expenses – make sure managers are getting the most out of their groups.
DON’T EDUCATE YOUR MANAGERS ON THE VALUE OF PAY FOR PERFORMANCE; it’s
definitely easier to give everybody the same salary increase, but I don’t know
anyone who says it is easy to be a good manager. Every performance management
training program should include a module on compensation practices. This should
include an overview of how the company is doing relative to the market, how pay
for performance relates to market pay and how differentiating top performers
from those who contribute less impacts the manager’s effectiveness. How they
use this knowledge could well mean the difference between their own success and
failure.
SET INCENTIVE PLANS THAT ARE AT CROSS PURPOSES OR DON’T INCLUDE CLEAR
METRICS; All goals should roll up to or contribute to an annual set of
3-5 business goals. These can be categories such as revenue, expense, process
improvement, or sales, for example. If you have a job that is not contributing
to business goals such as these – it should not exist. It is possible to find
an objective for a receptionist that contributes to each of these – it has been
done! When goals are set appropriately and metrics are clear incentive plans
drive and reward the behaviours that contribute to annual goals – it is a
beautiful thing. But, having separate departmental or division goals only
serves to divide and conquer. I have actually worked in an environment where
divisions were competing for resources and not supporting one another, to the
detriment of the organization…all because of the incentive plans.
SO IS PAY REALLY A MOTIVATOR?
The
simple answer is yes and no. It is a motivator only if your strategy is solid
and applied consistently. It is a de-motivator if organization practice is
described in one or more of the list above. But the reality is much more
complex. The PartnerFirm has worked through a range of scenarios. We have seen
CEO’s, in large organizations, throw cash around as if it were their own,
believing that it would reap benefits. Scenarios range from there, all the way
to small organizations with only so much to go around. In the former situation,
those in receipt of the money sometimes had the CEO’s “ear” as opposed to
contributing in any real way. In the latter case, CEO’s believe, for example,
that since they only have 2% it is not possible to differentiate, so the
solution is to give everyone the same % salary increase. Unfortunately, this
does not reinforce the importance of performance and contribution.
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About the Author: G.J. Miller RSS for G.J.'s articles - Visit G.J.'s website The PartnerFirm's Human Resources Consulting Group has a unique business perspective, which combines leading edge HR concepts and bottom line business requirements. We believe leadership has the single largest impact on the success of a any company. The unique programs and tools designed or delivered by The PartnerFirm, are always focused on strengthening leadership and organization capabilities. The PartnerFirm has developed a unique Leadership multi-rater feedback assessment as well as Early Career and Senior Leader Development Series. Our comopany supports small organizations without HR and in larger organizations we partner with the Executive and HR Teams to develop and deliver programs. From policy development to strategic planning, succession planning and leadership development - we have the experience. Gay Miller is the founder of The PartnerFirm Inc. She is a professional speaker and has had several articles published on topics related to Human Resources, Leadership and Values. During her career, she built HR departments from the ground up both nationally and internationally. At the Corporate level she managed 11 HR professionals in 9 countries. Easily transitioning the divide between strategic and tactical levels she is known for her ability to quickly assimilate information and provide business oriented solutions. www.thepartnerfirm.com info@thepartnerfirm.com 905-543-0681Click here to visit G.J.'s website   Reference Check Form Exit Interview Document Human Resources Checklist Performance Improvement Plan |
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