Does our pay for performance process deserve rewarding?

Pay for performance is a staple of any rewards model, but practitioners often take for granted that it is sound. In fact, a good pay for performance model needs intensive planning and careful design

- Clinton Wingrove

COVID has awakened employees to what they really want from their employment, forced companies to view employee wellbeing as a priority, and challenged many of our prior beliefs about what motivates employees. We must step back and rethink our total reward strategies. We need to identify all of the rewards and benefits that employees receive or to which they have access. We need to design these to work together to produce the maximum impact. Employees need to be sufficiently and frequently advised about them, take them up, and be reminded of their value.

One of the most contentious components is Pay For Performance - often viewed as an essential component. But, from my nearly 40 years of HR experience it is often the weakest component. Here are some recurring reasons:

1. Even in our current difficult financial times, an increasing percentage of the working population are not significantly motivated by pay;

2. Focus on individual reward is not positively received in some cultures in our now global commercial world, often being viewed as divisive;

3. An increasing percentage of the working population are more concerned about fairness than personal gain;

4. Processes for determining individual performance-related awards typically consume excessive resources (time that could be spent on strategic thinking, on addressing critical business issues, and on development) and emotional energy. They can last for weeks, often delaying planning for each upcoming period;

5. Most schemes are based on an unsubstantiated belief that because pay for performance feels right, that it must be effective. There is even evidence that some are destructive;