Performance related pay is an emotive topic. It is sometimes argued that if you want to make performance appraisals really difficult then you should link them to pay. But many people feel that linking pay to performance is just plain fair. We often contribute to our client’s discussion on these topics but we have to be very pragmatic here and work with our clients on their goals.
So, I started to draw up 4 outcomes that we could judge a performance related pay (PRP) implementation against. That way, when we are working on a performance review implementation with a client – we at least have some objective measure. This is what we came up with
- The PRP should lead to individuals motivated to achieve targets that will improve the organisation and meet the organisation strategy (it should deliver)
- The correct people should get the correct rewards (it should be fair)
- The PRP process should be efficient and deliver the benefits without using up those benefits in increased administrative burdern (it should be cost effective)
- The process should be robust and stand scrutiny from external parties particularly on equality (it should be legally sound)
I believe this is a great checklist for anyone looking at PRP. It has become part of soon-to-be-published performance appraisal white paper. If you want to receive a copy of that white paper please contact us via the blog our our website and simply subscribe to the newsletter.