In today’s time where information and technology are the important drivers of change, only evident efforts which contribute to the organisations growth and result in the uplift of the company can expect to be rewarded, says Ritu Mehrotra
The present generation strongly believes that it is fair to be paid as per performance but also that there is no justification for non-performance. With an apparent drastic change in business and technology the manner in which organisations manage their compensations has also metamorphosed. Now no longer can an employee relax on his office chair with a certainty of getting handsomely paid without delivering expected results. We live in a world which is information and technology driven therefore paper performance management and merit systems are of reduced significance, only clearly evident efforts which contribute to organisations growth can expect to be rewarded.
A competitive organisation in today’s scenario wisely recognises that comprehensive alignment of rewards with employee performance will lead to a stronger and more productive workforce. The definition of performance differs with every individual; it isn’t only just results but the quality of results and also the efforts behind them. Organisations in India have been striving to align performance with pays for long in their attempt to make the employees, inclusive of the top management authorities more accountable for their contribution to company’s growth as the losses misaligned compensations can create are beyond repair.
Indian companies have been linking the performances to pay as a norm where in the salary packages which the employees are offered, there is a variable component or bonus which is directly linked to the employees as well as company’s performance. But the latest trend of pay for performance also includes the CEOs, CFOs, CXOs and all the higher members of the board in the same sphere of relating their pays to their performance.
Corporate Democracy
The need for corporate democracy was never more as public corporations today are like miniature governments having an overall effect in the social, political and economic scenarios. There has to be a fair play in the sense of compensation management be it for higher or lower officials.
In the face of economic uncertainties where salaries are being cut and employees laid off on the basis of non-performances the higher authorities cannot expect their incentives to shoot up.
The way in which corporate governance operates at present needs a review, because if an organisation is not delivering a good performance and still the authorities keep getting their fair amount of salaries it needs to be reviewed.
Justified measures while aligning the pays to performance like direct impact on the profits, team performance, client dealing, customer's views on service quality, success in developing talent must be taken into consideration out of the many more to avoid a biased and favouritism feeling at part of employees.
Pay for performance
Every practice has two sides to it, but pay for performance seems to be a fair deal to many as it has the power to motivate and encourage the employees to perform their best and get rewarded for the same. This also gives a clear way to evaluate an employee’s performance in an organisation. Pay for performance can work as a catalyst to make it a result driven organisation which can also work in the favour of the company by taking it to superior level of performances as every employee in an effort to work towards reward and appraisals will contribute to uplift the status of the organisation. The drive to be rewarded can take the employee as well as employer to success and works well in not only sales or production departments but also in support roles like that of Information Technology and Human Resources. This trend of getting paid for performance is a steer clear policy where either you perform or you are encouraged to leave. Standards are set straight by organisations. Employees are self motivated to reach his goal.
It is a sense of contentment for an employee that their performance has been evaluated on their standard of deliverables and not on the whimsical attitude of the team leader or supervisor. This excludes the hierarchy by shifting an employee’s focus from impressing the higher officials to concentrating on his own performance.
Money mattersIJ
For every employee the recognition of his efforts and being applauded for the same is a bigger motivation than money. This is also a factor which boosts the performance of an organisations employees and which is not based on the compensation they receive form the company. Companies other than financially acknowledging its employees efforts should also focus on actually acknowledging their efforts which will make them feel connected to the firm they work for. An employee’s loyalty towards the company is essential for its upliftment and growth. Getting a salary hike or incentives for delivering a brilliant performance does count a lot but at the end of the day a personal word of praise form authorities definitely counts much more. This is what the authorities include in practice. It is great at fostering a healthy and compatible scenario in the working environment. Every organisation has a different pay for performance strategy depending on the nature of results it desires. A compensation plan which motivates the employees to excel in their performances results in happier and committed staff. In the face of cut throat competition and sudden waves of political uncertainties companies must secure an exceptional talent pool while also safeguarding themselves form the unseen future wraths of economy decline. Therefore a balanced approach to this trend of pay for performance needs to be practiced.
The writer is VP Global HR and Talent Management, Bristlecone (A Mahindra Company)