Compensation Planning to Incentivize Top Talent
Company management, and human resource departments in particular, are often guilty of treating talent management solutions as five or more separate processes used to build a strong employee base. However, it is the integration and flow between all these applications, that when correctly used allows exceptional organizations to leave their competition in the dust. Consider how compensation planning and management factors into every facet of an individual business.
Let’s consider performance management. How does one properly incentivize top talent to achieve targeted business goals? According Towers Watson, “61% of workers don’t see a clear link between pay and performance.” That’s because performance management processes are rooted in forty year old methodologies. Consider these three points in re-engineering your pay for performance model.
Unleashing Top Performers
If you follow college basketball you will likely know that Michael Jordan’s college coach was Dean Smith. It was often said that Smith was the only person in basketball who could hold Jordan to less than 20 points per game, because he forced him to play in a system.
It’s often the case with high performers that you don’t need to control them, you need to unleash them. Give them ultimate target goals, with high compensation rewards, rather than micromanage them to do things the company way. Aligning a top performer’s self-interest with your company’s goals is a win/win formula.
Focus on Future Potential
Intelligent people tend to get bored easily. So when reconsidering your performance management process, it must encompass future opportunities and developing potential. Not all high performers are necessarily high potentials, but being able to show your top talent that there are advancement opportunities with compensatory pay increases, is another key to keeping them onboard and productive.
Multiple Source Evaluation
How many other people in the company do your employees interact with in the doing and successful execution of their job. According to McKinsey and Company, social technologies will increase the productivity of interaction by workers by as much as 25 percent. Thus with more people knowing the value of your employees, it’s important to get their perspective on how much you should compensate them to stay around.
Don’t get trapped in yesteryear’s approach to measuring and rewarding talent. It will cost you those you have on board, and when the word gets out, limit those you are trying to bring onboard. There is still a place for smart, and relevant performance. If you use modern processes and technology with today’s talent, the rewards you provide in both compensation and potential will keep your company growing.
For more compensation planning best practices, view the resources in our Compensation Planning Learning Center.