Why You Really Shouldn’t Over Rely on Pay-For-Performance

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Recently over on Compensation Cafe,  I shared the story of one team of highly skilled professionals in one very large organization and how a sole focus (poorly implemented) on compensation as a substitute for true recognition affects their daily motivation and engagement.

Specifically, I focused on three (3) lessons learned from these bad practices:

  1. Moving the merit target.
  2. Hitting the pay range ceiling.
  3. “Promoting” to salary but reducing earnings.

A practice that leads to employee resentment

All three instances led to one result – growing employee resentment. Of course, these examples speak to poor management practices and poor implementation of how pay-for-performance is intended in the organization.

The obvious solution is better management training. But a first step should be an honest, direct conversation with the entire team on their value to the organization and how that is compensated.

An even better result?  Stop relying solely on compensation and pay for performance as a means of communicating to employees the worth of their contributions to the organization.

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Yes, managers should better implement the program as intended, but additional levers should be added – primarily, a frequent, timely and specific social recognition approach.

Every day, encourage all employees to notice and appreciate the good work of their colleagues and recognize them for it. Make it possible for celebration and acknowledgement of success to happen in line with the daily work, stop killing employee desire to do the work, and see motivation grow.

You can find more from Derek Irvine on his Recognize This! blog.

Derek Irvine is one of the world’s foremost experts on employee recognition and engagement, helping business leaders set a higher vision and ambition for their company culture. As the Vice President of Client Strategy and Consulting at Globoforce, Derek helps clients — including some of world’s most admired companies such as Proctor and Gamble, Intuit, KPMG, and Thomson Reuters — leverage recognition strategies and best practices to better manage company culture, elevate employee engagement, increase retention, and improve the bottom line. He's also a renowned speaker and co-author of Winning with a Culture of Recognition. Contact him at irvine@globoforce.com.

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