Employee career on the beach, depending on their arrival position they will receive compensation

October 25, 2015

Rocío ValenzuelaRocío Valenzuela
Hrider Product Manager

Pay for Performance

People management professionals always like to talk about the importance of communication, professional development, employee happiness, etc... but should we avoid the fundamental aspect on which labor relations are based? Remuneration policies are the basis on which professional exchanges are articulated and we should not allow them to be the exclusive responsibility of financial departments. It is precisely HR managers who can lay the foundations so that remuneration in companies is also a path to achieve individual and collective development.

Pay for Performance is a system that bases part of the compensation on how well you develop your work. It is not an exclusive method of areas with commercial responsibility, but public or health systems have already implemented it with a considerable level of maturity in many countries.

Nor is it the exclusive method that ensures real motivation, as we already talked about in Do you help employees to give the best of themselves? , since there are other psycho-social aspects that are changing beliefs that we had on motivation and professional performance. But what is certain is that the employees of an organization that measures the real contribution of its members will be safe in the knowledge that their performance is evaluated objectively according to the level of their work rather than the whims of a supervisor, or in as opposed to one of those “experts in selling themselves”.

The contribution reward has amazing power when it has a comprehensive approach that addresses all aspects of the functions of a given position : objectives, current skills needed, individual development potential, knowledge, experience. It must not be forgotten that judging performance by only one aspect of the work (such as financial results, for example) is a mistake if what we are really after is boosting talent and motivation.

If, in addition, we manage to have a 360º vision, which provides us with a greater level of objectivity to the perception one has of a collaborator, their potential for decision-making and real reward for effort is extraordinary.

The latest reports on remuneration reveal that payment for meeting objectives is gaining prominence in total remuneration: in operators it has gone from 3.3% in 2010 to 3.8% this year, in management positions has grown from 23.7% to 28.6% in the same period.

Companies are beginning to react to a “cold war” environment for attracting and retaining talent, which is why they are betting on attractive initiatives where justice and recognition prevail. In this sense,transparency and meritocracy policies are imposed as a fundamental factor to achieve happier and less frustrated employees.

Organizations with higher ratios of satisfied employees not only incorporate regular tools and processes to estimate how effective and efficient people are in achieving results, but also help their employees find the path to achieve them.


Download a free template to Define Objectives