Professional Documents
Culture Documents
Evolve Pay For Performance: Sample
Evolve Pay For Performance: Sample
Evolve Pay For Performance: Sample
Performance
Shift from a one-size-fits-all to a tailored approach to base pay increases and
bonuses.
DIY GUIDED
WORKSHOP CONSULTING
TOOLKIT IMPLEMENTATION
“Our team has “Our team knows “We need to hit the “Our team does not
already made this that we need to fix a ground running and have the time or the
critical project a process, but we get this project knowledge to take
priority, and we have need assistance to kicked off this project on. We
the time and determine where to immediately. Our need assistance
capability, but some focus. Some check- team has the ability through the entirety
guidance along the ins along the way to take this over of this project.”
way would be would help keep us once we get a
helpful.” on track.” framework and
strategy in place.”
Develop
3 Implementation Plan
Design Base Pay
Increase and Bonus New Objectives
2 Approach
Annual Base
Pay Increase New Objectives
Annual
Bonus
Although
Although only
only 10%
10% of
of organizations
organizations report
report being
being fully
fully Agile,
Agile, 31%
31% have
have incorporated
incorporated some
some aspects
aspects of
of
Agile
Agile performance
performance management
management andand 33%
33% are
are in
in the
the early
early stages
stages of
of determining
determining what
what to
to incorporate.
incorporate.
(Human
(Human Resource
Resource Executive,
Executive, 2016)
2016)
This blueprint is for organizations that have moved to a modern or Agile approach to performance
management, or at least are looking to. For more information on these approaches, explore McLean &
Company’s Modernize the Performance Appraisal and
Abolish the Annual Performance Appraisal and Move to an Agile System blueprints.
Both Sales and Executive compensation are out of scope for this blueprint, as they require separate
structures and a separate design process.
McLean & Company 6
Satisfaction with pay for performance is
underwhelming
It’s evident that across the board, pay for performance receives a failing grade.
of organizations find that base pay
40% increases are effective at driving higher
Only 45% of employees reported
levels of employee performance.
that there is a clear link between
their performance and their pay.
of managers believe that base pay
48% increases drive improved performance What’s worse is that 26% of
among their direct reports. organizations reported that they pay
bonuses even to poor performers
of managers find that base pay (Willis Towers Watson, 2016).
49% increases adequately differentiate
performance among their direct reports.
Redefine
Redefine why
why you’re
pay
you’re providing
pay increases
providing annual
increases and
annual base
and bonuses.
bonuses.
base
“ Clearly, a few percent difference in the
amount of a pay increase is unlikely to
prove to be a powerful retention
”
• Find a new approach that will better suit
device or motivator of performance.
your organization, its goals, and – Edward Lawler
performance drivers.
• Be honest and specific with what you’re • 63% of departing employees stated that
trying to drive and how programs are they were receiving a pay increase in their
new role (McLean & Company Exit Survey
carried out in practice. Are you paying for Database, N=2,737).
retention? Attraction? Recognition?
• 42% of departing employees stated that
• Don’t focus on trends. Look at what you base pay had a moderate effect, major
want to pay for and why. effect, or was the primary reason for leaving
(McLean & Company Exit Survey Database, N=3,363).
• Have the courage to look for alternatives
• 29% of departing employees stated that
that challenge the conventional ways of variable pay had a moderate effect, major
doing things. effect, or was the primary reason for leaving
(McLean & Company Exit Survey Database, N=2,982).
Over 50% of employers have already taken action or are planning on taking action to
change the criteria for base pay increases (Willis Towers Watson, 2016).
Empower management to
apply HR best practices
Maintain a progressive set of
HR policies & procedures “
Now, more than ever,
HR leaders need to help
their organizations
maximize the value of
their people.
Develop effective talent McLean & Company
Demonstrate the business
acquisition & retention
strategies
impact of HR offers the tools,
diagnostics, and “
programs to drive
measurable results.
Stay abreast of HR trends &
Build a high performance
culture technologies – Jennifer Rozon,
Vice President,
McLean & Company