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Performance practices are changing, but are pay practices changing with it?

Companies are increasingly implementing new approaches to drive employee performance as traditional performance frameworks are falling short. This paper outlines key considerations for effectively linking employee performance and remuneration within feedback based performance approaches.

Recently a number of companies (including Deloitte) have reinvented their performance framework after realising that traditional approaches are not driving the desired employee performance and contribution outcomes. This new approach has an emphasis on transparency, simplicity, the end to end employee experience and the ‘how’ (i.e. contributions and behaviours) of achieving organisational outcomes. So, we know that performance frameworks are changing, but are we changing our approach to remuneration with it?

With this in mind, this paper provides a point of view to effectively link best practice performance frameworks and remuneration to drive workforce productivity. This is done through considerations that answer the following:

  • Performance reviews should not be linked to base salary increases and different approaches to base salary delivery should be considered
  • Variable incentives and a flexible remuneration framework can be used to reward and drive performance.

These considerations will help guide the delicate balance of extrinsic and intrinsic motivators within new performance practices and a remuneration strategy. The values and behaviours that will be rewarded will ultimately drive productivity and determine the effectiveness of remuneration practices. Being transparent around remuneration practices can also support the development of a trusting and engaged workforce.

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