PERFORMANCE BASED PAY: PART 2

pay-results

pay-performance

In adopting a performance based pay philosophy, every organization has to:

1)    Determine the right balance between guaranteed compensation (base pay) & variable compensation (incentive/bonus compensation), including:

➡ If not all employees, which employee groups’ compensation should include a variable  portion.

➡ Which who are part of a short-term incentive plan should also participate in a long-term incentive plan.

2)    Identify certain performance objectives it wants to achieve & the outcomes that will result if the objectives are attained.

3)    Translate those objectives into Key Performance Indicators (KPIs)

4)    Establish its rewards for KPI achievement at varying degrees of success

Good KPIs: 

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  • Are valid, to ensure proper measurement
  • Allow measurement of accomplishments, not just of the work that is performed
  • Are verifiable, to ensure data collection accuracy
  • Focus employees’ attention on what matters most to success
  • Provide a common language for ongoing performance-related communication
  • Serve as the link between performance & rewards

HOW TRINITY CAN HELP?

Trinity’s Team has extensive experience in helping organizations to create highly effective compensation programs, including incentive compensation plans.

For more information:

You have HR questions…Trinity has answers!

Posted in Compensation & Performance Management