paying for performance: a critical tool to fuel both individual and organizational success
TRANSCRIPT
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Victoria HodgkinsChief Marketing Officer
BambooHR
Cami DeFoorDirector of Sales Training
PayScale
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
What is Pay for Performance?
Links pay (base and/or variable), in
whole or in part, to individual, group,
and/or organizational performance.
—The World at Work Handbook of Compensation,
Benefits & Total Rewards
“
”
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
• Regular Bonus
• One-time Bonus
• Variable (commission)
• Yearly Raises
Types of Pay for Performance
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Cost Efficiency1
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Recruiting & Retention2
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
The Hidden Costs of Turnover
• Administrative Costs: separation pay, exit interviews
• Workload Costs: Extra hours, overtime pay, temp help
• Recruiting Costs: Advertising, referral bonuses, interview time
• Productivity Costs: Covering for missing employees
• Training Costs: Time to contribution, trainer’s hours
Turnover costs are, on average, between six and nine months’ of an employee’s salary.
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Epiphany Moments
• 6% increase on the anniversary of a hire date
• 9% increase on the anniversary of a promotion
• 12% increase after birthdays, especially milestone birthdays
• 16% increase after attending a high school reunion
Job-hunting activity jumps when employees make comparisons.
Research from CEB, as reported in Harvard Business Review
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Moral Responsibility3
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
A Culture of Trust4
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Three Keys to Building Trust
1. Repeat Interactions
2. Win-Win Situations
3. Effective Communication and Execution
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
• Two factors: hygiene factors and motivation factors
• Hygiene factors: salary, benefits, safety
• Motivation factors: expression, purpose, friendship
• Decreasing dissatisfaction with hygiene factors is the
foundation for increasing satisfaction through higher motivations
like an effective company culture and a fulfilling career path
Herzberg’s Theory
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Drives Results5
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Age
Baby Boomers · 1946 – 1964Communication About Comp: Mostly Private
Average Tenure: 15+ Years
Career Mindset: Retirement, Work/Life Balance
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Generation X & Busters · 1965 – 1983Communication About Comp: Somewhat Private
Average Tenure: 5+ Years
Career Mindset: Management, Work/Life Balance
Age
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Gen Y & Millennials · 1984 – 2002Communication About Comp: Public
Average Tenure: 15 mos-2 Years
Career Mindset: Go-Getters, Advancement, Flexibility
Age
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
AgeBaby Boomers · 1946 – 1964Communication About Comp: Mostly Private
Average Tenure: 15+ Years
Career Mindset: Retirement, Work/Life Balance
Generation X & Busters · 1965 – 1983Communication About Comp: Somewhat Private
Average Tenure: 5+ Years
Career Mindset: Management, Work/Life Balance
Gen Y & Millennials · 1984 – 2002Communication About Comp: Public
Average Tenure: 15 mos-2 Years
Career Mindset: Go-Getters, Advancement, Flexibility
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Pay and Performance Management
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Performance Management Challenges
FREQUENCY TIME ACCURACY PURPOSE
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Performance Management Challenges
FREQUENCY
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Performance Management Challenges
TIME
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Performance Management Challenges
ACCURACY
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Performance Management Challenges
PURPOSE
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
• Individualized Rewards & Recognition
• Variable or Incentive Pay Plan
• Base Pay Plan
• Company Culture, Compensation
Philosophy & Compensation Strategy
The Compensation Mix
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Strategy
• Develop Clear Compensation Strategy
• Get Reliable Market Data
• Develop Clear and Aligned Goals
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Performance Action Items
1. Measure Performance Accurately
2. Continue Clear Communication
3. Develop a Culture of Trust
4. Create Custom Solutions
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Compensation Action Items
1. Gain Executive Buy-In
2. Align with Organization Goals/Culture
3. Get the Right Systems in Place
4. Train Managers Properly
5. Communicate Clearly Across the Organization
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
“Employees won’t believe there is a link between pay
and performance unless they can see it.”
—Margaret O’Hanlon, re:Think Consulting
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
BambooHR
Download our new Definitive Guide to Performance Management
https://www.bamboohr.com/resources/ebooks/definitive-guide-to-performance-management
Get the free whitepaper on Pay and Performance
PayScale
Visit http://www.payscale.com/hr/whitepapers
Questions?
bamboohr.com payscale.com
Paying for Performance: A Critical Tool to Fuel Both Individual and Organizational Success
Thanks for joining us today. Don’t forget to check out other webinars and eBooks
that will help set you free to do great work!
MoreGreat Content
Managing Employee Turnover Comp Is Culture