Contenu connexe Similaire à Linking performance management and pay for performance - S Bardot 2010 (20) Plus de Sandrine Bardot (6) Linking performance management and pay for performance - S Bardot 20106. Agenda
6
Quick case study
Tips for implementing a Pay-for-Performance
system
Potential risks
Enablers
Bad PFP leads to disengagement
Drivers of employee commitment
Tips series 1 : technical aspects of system design
Tips series 2 : formal company communication
Tips series 3 : the role of managers
Additional resources
© 2013
8. Why did we do it ?
8
Old system was a mess :
Process not followed by managers
No impact on pay nor career management
Administrative nightmare
Our objectives :
Introduce a pay-for-performance culture
Encourage alignment between the different BUs
IPO plans
Share the wealth with employees
Develop accountability and on-going feedback and
dialogue between managers and employees
© 2013
9. The system
9
Goals catalogue, year-on-year maintenance and
sharing / cascading of objectives
Employee self-evaluation
Introduction of mid-year review
Guided performance distribution curve
Moderation sessions across groups
Variable pool funding
Direct link to individually differentiated payouts (bonus
and increases)
Integration with other HR systems (succession
management, learning and development, payroll...)
© 2013
10. Outcomes
10
93% of employee self-appraisals on time (were
not mandated in the first year)
90% of manager ratings on time
Thousands of employees in 14 countries reviewed
for moderation of ratings in less than a month
Salary increase budget was controlled
Bonus payments differentiated by performance
rating
Reduced lead-time to pay
© 2013
11. What worked... and what didn’t
11
Positive
Negative
Great employee participation
and feedback : some
managers talked performance
with them for the first time
Easy tool and user interface
made the move to technology
a breeze
Massive cost savings through
salary increase budget
control
Improved succession
planning and training plan
© 2013
Moderation sessions not very
well received by managers
Pay decisions not very
collaborative due to the pool
distribution
Not enough time for training
on how to give feedback
No communication on the
results of the appraisal round
Proper pay discussions not
held in many departments
13. Potential risks
13
A conflict between :
Employee
and manager working together to
improve performance (problem solving, on
going, collaborative approach with accountability
on both sides)
And opposing interests when discussing the pay
and reward impact of the performance appraisal
Potentially more arguments about the
appraisal results, as the financial impact
makes both parties more rigid in their
approach
© 2013
14. Enablers
14
Top leadership buy-in is a must
On-going dialogue with stakeholders for
design
IT systems and integration with other HR tools
Time... Trial and error... Continuous monitoring
Understand that each system is unique
Accept that there is no perfect way to assess
employee contributions accurately
© 2013
15. Bad PFP leads to disengagement
15
2/3 of employees are unhappy with how payfor-performance works at their organisation.
On average, 27% of dissatisfied employees
have actually reduced the amount of effort
they put in at work. It’s 35% for senior leaders
(self-declared) !
(Source : CLC)
© 2013
16. Influencers of employee commitment
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Formal plan communication
22%
How organisations pay
Incentive satisfaction
Manager communication
48%
How organisations communicate about pay
Process fairness
perception
Actual fairness of pay
distribution
64%
Employee commitment
57% higher vs effort of strongly not committed
Source : CLC
Discretionary effort - Impact on company results
© 2013
17. Tips 1 - Design aspects
17
Must :
Align
individual performance expectations with
organisational goals
Strong line of sight
Avoid giving too many objectives – focus on core
Recommend : a fuller assessment of
performance
Results
and behaviour-based (competencies)
360-degree reviews ? (be careful before deciding)
Consider an even number of ratings ?
© 2013
18. Tips 1 - PFP is a continuum
18
Ratings
No rating Uncontrolled ratings
Guided distribution
Forced distribution
High performers
No
differentiation
1.5 to 2 x
average
>2x, within salary
range
Position in SR
irrelevant
Low performers
Small payment No increase
© 2013
Small increase for 2d lowest
rating
19. Tips 1- Support distribution fairness
19
Budget or variable pool ?
Merit recommendations :
Based on performance rating only / also include
another factor like position in salary range ?
Discretionary / “range in the cell” ?
Aggressive / moderate differentiation between cells ?
Other data included ? (last increase, other
employees in team, bonus info...)
Training and HR support
How / Will you hold managers accountable ?
© 2013
20. Tips 2 – Communication of results
20
Go beyond regular communication on tool and system
Why ? For fairness, accountability and prevention of
abuse
Decide on reasonable level of transparency :
By grade, unit, job family, a combination ?
Average and/or minimum – maximum ?
Communicate overall results of performance appraisal
and pay decisions:
Performance rating
Pay increase
Bonus
© 2013
21. Tips 3 - The role of managers
21
Extract from the “10 manager drivers to improve
engagement list” from CLC study, 2009
1. Provide fair and accurate informal feedback
2. Emphasize employee strengths in performance reviews
3. Clarify performance expectations
6. Amplify positive employee performance traits and filter
negative effects
7. Connect employees with the organizations’ strategy and
its success
10. Demonstrate credible commitment to employee
development
© 2013
22. Tips 3 -What’s in it for me as manager
22
Outcomes of good performance
mgt
Benefits
Manager and employee problemsolve together
Non confrontational resolution of
issues
Identify which employees :
- can benefit from job training
- to develop for greater
responsibilities
Motivated employees with the right
skills to perform the job
If you’re not replaceable, you’re not
promotable
Help each employee to understand
his/her contribution to company
success
Increased motivation and
discretionary effort
Identify performance problems early
on
They don’t grow too large to be
handled
Remove barriers to performance that
are not under employee control
Better productivity
Documentation for disciplinary action
Protection from unjustified legal action
© 2013
23. Tips 3 - Beyond “the form”
23
Explain that you are developing management
tools, not an HR program and not just a tool :
Why and how to differentiate between employees
What to discuss at a moderation meeting
How to give constructive feedback
How to manage poor performers
How to develop individual development plans
How to communicate about pay
How to recognise performance (beyond pay)
© 2013
24. Additional resources
24
Linking pay to performance – HumanResourcesIQ
podcast
Pay for Performance does not always pay – HBR
article
Helping managers talk about pay – 3 tips from
Corporate Executive Board survey at Bloomberg
Why managers don’t manage pay – CMC
compensation Group blog post
The history of performance reviews (an infographic)
Why is "soft stuff” so hard really, at least to assess ?
© 2013
26. Thank you !
26
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Sandrine@Compensationinsider.com
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© 2013
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