HR Insight - How can HR practitioners ensure the effectivenes of pay-for-performance schemes?

Paul Sexton
HR Director
EMC South East Asia

How can HR practitioners ensure the efectivenes of pay -for-performance schemes?

For companies that take their responsibilities to shareholders seriously and are committed to growing alongside their customers and support their success, the pay-for- performance philosophy is the only option when rewarding and recognizing the talent that are making it happen.

An effective pay-for-performance culture is possible within an organisation. Besides HR practitioners, these schemes can only be as effective and successful as the various stakeholders that support them:

• Managers must be clear when setting expectations as early as during the interview process, and should be consistent and focused on the factual evidence when assessing performance. It is also critical that managers conduct regular open discussions with their employees to provide feedback on work progress so that employees have an objective view of their performance.

• Financial controllers must actively partner HR before budget cycles to ensure there are sufficient funds available to make any pay-for-performance meaningful.

• Leadership or management teams should take extra effort to ensure that performance at all levels of the organisation is being fairly rewarded.

• Employees should take pride in their contribution and feel comfortable to highlight their achievements and prepared to take all feedback positively. Understanding the expectations of their managers will provide them the opportunity to chart their goals according to the organisation’s pay-for performance philosophy.

HR practitioners can contribute to the success of pay-for-performance scheme in the following ways:

• Compensation and Benefits professionals can work closely with the management and Talent Acquisition team to understand the pulse of the business and harness the talent market accordingly. While surveys can provide a good information, it’s the interpretation and application of the company strategy applied across the data analysis that will make a difference.

• Pay-for-performance begins as early as the hiring process. It’s important to thoroughly screen candidates around their experience and beliefs on rewards and recognition. Candidates must understand what they will be measured on and how they are going to be rewarded in the company they’re joining. Gathering “live” data regarding compensation from all candidates during the interview process and sharing that in a structured way with the compensation and finance teams is also an important responsibility of the staffing function.

• It is absolutely essential that managers have regular open discussions with their employees on goal setting and achievements. There are always opportunities for improvement no matter how talented an employee may be. Having regular reviews of employees’ performance will reinforce accuracy of understanding and improve effectiveness of the pay-for-performance schemes.

• It is the responsibility of the HR department to make sure that all managers, regardless of experience, understand exactly how their organisation administer payfor- performance schemes. Role playing, coaching and education are pre-requisites that require the active participation of the senior management to ensure that everyone is aligned to the requirements.

• Mandating formal annual performance reviews is not enough to guarantee an effective pay-for-performance scheme. HR is responsible to make sure that both managers and employees are actively and fully engaged in the review process as well as understanding how the review process works. Equipping and preparing employees and managers to navigate through difficult discussions is a fundamental development that HR needs to incorporate into its people strategy.

EMC takes a serious view on its pay-for-performance scheme and our successful application of this philosophy has enabled us to attract and retain the best talent in the industry. In addition to focusing on the above areas, we have invested in a formal annual organisational talent review program to identify, develop, leverage and reward high performing talent.

HR has a material impact on the bottom line and culture of an organisation. Pay-for-performance, when implemented effectively, provides the opportunity to set up individuals, teams, business units and companies for success that will continue long after employees’ careers take off outside the company. At the end of the day, it’s gratifying to know that HR plays an important role in contributing to the greater good.

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