Modern Pay for Performance

Mykkah Herner, MA, CCPModern Compensation Evangelist

Rita Patterson, CCPOnboarding Manager

A copy of the presentation and recertification credit will be sent out within a couple of business days

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15,000 Positions 3500 Customers 11 Countries

250 Compensable Factors54Million Salary Profiles

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Rita Patterson, CCPOnboarding Manager

Mykkah Herner, MA, CCPModern Comp Evangelisthttps://www.linkedin.com/in/mykkahherner

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Pay for Performance Trends

Defining Modern Pay for Performance• Upgrading performance management practices• Connecting performance with pay• Getting creative about total rewards

Where to start

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Less than 100 Employees100 - 1,000 EmployeesMore than 1,000 Employees

Nearly 7600 Respondents

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When asked what would shake up the HR world most in 2016…

44% of companies said

shifting from traditional performance reviews

in favor of real-time feedback

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Defining Modern Pay for Performance

Performance management aligned to business goals & cycles

Paying for results

Getting creative about both performance and pay

Modern Pay for Performance

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Upgrading performance management practices

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• 89% conduct performance reviews

• 65% conduct them annually

• 6% are moving to more real-time feedback

• 17% plan to eliminate traditional reviews

What are companies saying about performance reviews?

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• Stack ranking

•Annual review cycles

Motivate employees

• Encourage ownership thinking

• Provide frequent feedback

•Build skills

42% of millennials want feedback every weekSource: Ultimate Software & the Center for Generational Kinetics

Preferred Frequency by Generation

https://www.tinypulse.com/blog/difference-in-perception-between-generations

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• Time & efficiency

•Consistency

Involve Managers

• Focus on strengths; enable and coach

•Clarify expectations

•Build the relationship

95% of managers are unhappy with the way performance reviews are conducted.

90% of HR leaders question the accuracy of information received. Source: Lillian Cunningham

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Drive Business Results

•Results-based

• Speed of business

• Project cycles

•Build teams

“In today’s rapidly moving business world information given in an annual performance review is often outdated and obsolete...”

Source: Impraise

“The success of companies in this day and age hinges on the ability to execute. Ideas are important, but they are easy compared to execution.”

Measuring results through acronyms

Source: John Doerr

Source: BetterWorks

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Connecting performance with pay

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• 50.1% based increases on performance• 61.8%* give individual incentives• 25.7%* give team incentives

How are companies linking performance with pay?

*of those giving bonuses

“Employees won’t believe there is a link between pay and performance unless they can see it.”

Margaret O’Hanlonre: Think Consulting

Linking Pay to Performance

Culture and perks that reward high performers

Higher increases for top performers

Results-based incentive plan

Performance-based rewards & recognition

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Incentive Pay

•Bonus vs Incentive

•Match incentive cycle to work cycle

•Alignment: individual, team, organization

•Additional structure considerations

• Self-funding – variable costs

•Keep it simple

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Base PayBase pay increases are determined by performance and position in market-based range using a Merit Matrix

Exceeds

Meets

Does not Meet

What’s your deal?Employees and employers are in a relationship where they agree to things

• Exchange of value• Mental math – does it add up?

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Getting Creative

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Get CreativePasses to sporting eventsCatered lunches for winning teamsDays off after big deadlinesChoice of work assignmentDevelopment opportunities Lunch with the CEORemote work

It’s not a best practice if it’s not best for

your organization

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Need help getting started?

• Do a poll about performance management processes

• Evaluate your pay practices. Are you linking performance to pay?

• Create goals or KRs for your group; lead by example to train across the organization

• Evaluate your non-cash compensation. What perks motivate your employees?

• Identify business cycles and talk with managers about how to create better alignment

• Train your managers and employees in delivering effective feedback

PayScale Delivers Where Other Compensation Providers Fall Short

PayScale leads the world in compensation knowledge with the freshest and most detailed data from over 54 million salary profiles. More than 3500 organizations use PayScale’s software and intelligence to get the greatest return on their talent. Smart businesses use PayScale Insight to recruit, retain and motivate their people.

Visit our blog: www.payscale.com/compensation-todayJoin our Group on LinkedIn: Compensation Today: HR Best Practices

Mykkah Herner, MA, CCPModern Compensation Evangelist

Rita Patterson, CCPOnboarding Manager

www.payscale.com