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Rewarding for performance
Published: 14/07/2010 by Rodney de Villiers
It’s that time of the year when the rumor mill about salary increases start. You notice groups of employees in animated discussion; you are constantly reminded that the cost of living is skyrocketing. As a business owner or manager the question of salary increases plays large in your mind.
The biggest problem most business owners and managers face is how you reward employees in a manner which is consistent with their performance, in line with market and at the same time remain with budget. This is no easy task as employees have their own perception of their worth which may not necessarily correspond with your views.
The Implemenation of a performance appraisal system with measurable Key Performance Indicators, a well though out remuneration policy and incentive structure will go a long way in easing tension at this time of year.
USE APPRAISALS TO MANAGE PERFORMANCE
Rewarding good performance
A good appraisal system could be enough to motivate your employees. Motivated staff are more likely to work harder and more effectively. However, you could also link your appraisal system to decisions about pay, bonuses and other incentives schemes. Appraisals and rewards systems are invariably very closely linked, but consider carrying them out as separate interviews. Otherwise, the question of money can cloud the issue of performance.
Choosing a method of rewarding your staff
How you structure your reward reviews needs to tie in with your appraisal system.
One-off bonus payments - these are based on a combination of a percentage of salary and how far the employee has achieved their objectives over the year.
A pay increase - this could be based on overall performance rating - for example:
below average performance - no pay increase
average performance - CPI (Consumer Price Index)
above average performance - 3 % above CPI
excellent performance – 5 % CPI
Consistently good performance and a willingness to take on more responsibility might make you consider an employee for promotion.
THE PITFALLS OF FINANCIAL REWARD PROGRAMS
Offering financial rewards can be an excellent way to motivate employees, but be careful - they can also backfire if care is not taken. There may be cause for dispute if employees discover some are given greater rewards than others. You need to monitor rewards programmes carefully to make sure they are having the impact you hoped for.
They must be fair, and all employees should be treated equally. Take particular care that the rewards do not discriminate against particular employees.
Some companies find that the use of job evaluations helps to give a clearer pay structure by ranking each job in a league table and setting salary brackets accordingly.
For further information on implementing Performance Appraisals, Setting measurable Key Performance Indicators, Remuneration policies, Salary Surveys and Salary Structuring contact LifeSense.
