Pay for Performance: Building the Foundation Through Job Competencies


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You say you have a pay-for-performance philosophy, but have you defined what great performance looks like across the jobs in your organization? Do managers throughout the company measure performance and allocate rewards consistently? Establishing a job-based information architecture across your people processes is the only way to consistently measure performance and lay the foundation for a true pay-for-performance program. Beyond simply writing job descriptions, defining what “good” and “great” look like and providing a framework that the organization understands and can evangelize is a challenge. But consistency and rigorous application are the only ways to meaningfully connect what you need people to do, how they do it, how to get them to do it better and what that’s worth, not just in pay, but in sales, customer satisfaction and employee engagement.

This webinar will discuss:

The information challenges of pay for performance.
How job-specific competency models set the foundation for defining and assessing performance.
Some best practices to establishing a job-based taxonomy.

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Pay for Performance: Building the Foundation Through Job Competencies

  1. 1. You can listen to today’s webinar using your computer’sspeakers or you may dial into the teleconference.If you would like to join the teleconference,please dial 1.650.479.3208 and enter access code: 922 286 403 #.You will be on hold until the seminar begins.#TMwebinar
  2. 2. Speakers: Gordon RitchieDirector, Competency SolutionsKenexa, an IBM CompanyModerator: Kellye WhitneyManaging EditorTalent Management magazine#TMwebinar
  3. 3. • Q&A– Click on the Q&A icon on your floating toolbar on the top of your screen.– Type in your question in the space at the bottom.– Click on “Send.”#TMwebinar
  4. 4. PollingPolling question will appear in the “Polling”panel. Select your response and click on “Submit.”#TMwebinar
  5. 5. #TMwebinarKellye WhitneyManaging EditorTalent Management magazine
  6. 6. #TMwebinarGordon RitchieDirector, Competency SolutionsKenexa, an IBM Company
  7. 7. Pay for Performance: Building the Foundation Through Job Competencies May 2013
  8. 8. Copyright Kenexa®, 2013 8AGENDA1. Kenexa, IBM and The “Smarter Workforce”2. What is pay for performance3. Why do we care about pay for performance4. What does the workforce want?5. How do we link Job Performance and Pay using competencies?6. Q & A
  9. 9. Copyright Kenexa®, 2013 9IBMSMARTER WORKFORCELeaders and employees transforming organizations for business advantage in three significant waysAttractAttract and recruit top talent and source the best people for your culture and business needs.Land the perfect job:Employee strengths, career aspirations, and personality are matched to the role and company culture.EmpowerEmpower employees to hit the ground running and to continually learn and develop their skills so that they can make the greatest impact.Hit the ground running:Employees are empowered with the right tools and easily connect to expertise across the organization to grow their skills and start contributing immediately.MotivateBuild a workforce of innovative leaders and teams that solve problems together—resulting in stronger engagement, increased productivity and higher profit.Make an impact:Employees are motivated to outperform, using tools to measure their progress, and transform the organization and their careers.A Smarter Workforce hasemployees who are:Motivated, Committed, Loyal,Productive, Creative, Proactive,and High Value
  10. 10. What is pay for performance? 
  11. 11. Copyright Kenexa®, 2013 11POLL:Does your organization have a “Pay forPerformance” philosophy? Yes/No
  12. 12. Copyright Kenexa®, 2013 12• People are our biggest asset• Biggest single expense = salary• Critical competency ‐ Teamwork • Individual results and reward • What is pay? Salary/Benefits/?• What is performance, good bad or otherwise?• Proficiency does not equal performance• Careers becoming assignments, that are shorter in time than the performance cycle.• HR Big Data; begets Big Data
  13. 13. Copyright Kenexa®, 2013 13WHAT IS PAY FOR PERFORMANCE?With your 3.0% increase budget … a couple of questionsHow can you give your averageperformers a 3.0% increase while atthe same time differentially rewardingyour top performers AND still onlyspend 3.0%?What does your average performingemployee expect to get as anincrease?
  14. 14. Copyright Kenexa®, 2013 14PAY FOR PERFORMANCE• 3.0% increase budget• 2 employees each “doing their job”• They each get a 3.0% increase
  15. 15. Copyright Kenexa®, 2013 15Apart from that Mrs Lincoln, how was the Performance?• What does good look like?• What numbers are on your performance form? How are they defined?• Do you, your manager and your manager’s manager agree on what the explicit difference between a 3 and 4, or a 2 and a 3?– Is that the same as your Compensation team?– Is that the same as your Org Dev team who built the performance process?
  16. 16. Copyright Kenexa®, 2013 16PAY FOR PERFORMANCE• A compensation philosophy that asserts that an individuals pay is a function of their performance• Performance demonstrated consistently over an extended period of time• Pay is achieved over time, not overnight• Performance is something that can change.• An organization: • must define its clear consistent expectations of performance levels for each job role• cannot avoid its responsibility to define what it expects, through individual empowermentPAY FOR PERFORMANCE
  17. 17. Why do we care about pay for performance? 
  18. 18. Copyright Kenexa®, 2013 18“THE RECESSION IS DECISIVELY OVER”
  19. 19. Copyright Kenexa®, 2013 19Cost Reducing MeasuresWhich cost reducing measurements did organizations take as a result of the economic downturn?
  20. 20. Copyright Kenexa®, 2013 20• Increase budgets in the U.S. bottomed out in 2009 and the rebound isyielding increased budgets but still below the pre-recession levels“For the first time since 1980, the U.S. rate of inflation is higherthan the average total salary budget increase”WorldatWork – August 2011PAY BUDGETS: Whats thefirst thing to change?2008 2009 2010 2011 2012 2013Kenexa Compensation 3.0% 3.0% 3.0%IPAS 3.9% 1.1% 2.5% 3.2% 3.2% 3.0%Aon/Hewitt 3.7% 1.8% 2.4% 2.7% 2.9% 3.0%Buck  2.9% 2.9% 2.7% 2.8% 3.0%Conference Board ‐ ‐ 2.5% 2.5% 3.0% 3.0%Culpepper 3.9% 1.7% 2.7% 2.9% 2.8% 3.0%Hay 3.0% 3.0%Mercer ‐ ‐ 2.7% 2.9% 2.9% 2.9%Towers Watson 3.4% 1.7% 2.8% 2.7% 2.8% 2.9%WorldatWork 3.8% 1.9% 2.8% 2.9% 3.0% 3.0%
  21. 21. Copyright Kenexa®, 2013 21• Certain HOT Jobs continue to outpace the market exceeding theoverall market average of 9% in the 5 years between 2007 and 2012Under or Over Paying: How do youknow it’s the same as your job?Job Title ChangeLong Term Care Executive 27.1%Certified Occupational Therapist Asst 25.7%Hardware Engineer III 20.3%Chemical Engineer III 19.4%Staff Nurse ‐ Surgical First Assistant 17.4%Nurse Practitioner 17.2%Certified Nursing Assistant 16.4%Network Administrator 15.1%Software Engineer III 14.7%• Others jobs aren’t so lucky significantly lagging the 9% average overthe last 5 years• Differences between HOT jobs NOT so HOT jobs underscores all themore the need for good dataJob Title ChangeAccounts Receivable Manager 2.9%Administrative Services Supervisor 1.5%Communications Representative III 2.1%Facilities Manager 2.3%Financial Analyst II 4.7%Mainframe Programmer II 2.9%PC Maintenance Technician II ‐6.5%
  22. 22. Copyright Kenexa®, 2013 22In the US, my pay is directly related to how well I perform.Source: 2011 Kenexa High Performance Institute WorkTrends survey52% DO NOT see a link19% uncertain 29% DO see a linkTHE LINK
  23. 23. Copyright Kenexa®, 2013 2336%17%0%10%20%30%40%50%60%70%Pay Unrelated toPerformancePay Related to PerformanceWorldwideWorldwide the percent of employees who areseriously considering leaving their organizationTHE LINK: WHY WE SHOULD CARESource: 2011 Kenexa High Performance Institute WorkTrends survey
  24. 24. Copyright Kenexa®, 2013 24What does it cost? **• EvaluatingTalent• RetainingTalent• EngagingTalent• AcquiringTalentCost of a poorhire:$300K-$500KOperationalefficiency ratedue to pooremployeeengagement:30%Cost of losing atalentedemployee:$250K-$500KValue of a topperformer: 2-4Xperformance ofaverageemployees** From Human Capital Institute
  25. 25. Copyright Kenexa®, 2013 25Reliance on “The Event”:• Once-a-year• Minimal communication• Reliance on manager’s memory• Little training• Employee empowermentSO WHAT HAPPENEDTO THE LINK?Assessment Forms Became:• Too long• Too complex• Often designed to measure thewrong things
  26. 26. What does the workforce need?
  27. 27. Copyright Kenexa®, 2013 27WHAT ARE ANALYSTS SAYING…“Best‐In‐Class organizations are more than twice as likely to identify competency data for each employee.”“If we can apply science to improving the selection, management, and alignment of people, the returns can be tremendous.”   Forbes Leadership Article February 2013“… companies realize they cannot solve their skills shortages externally. To achieve competitive advantage, they must commit to developing the right skills internally” Corporate Learning Factbook 2012SHRM recognized in their 2012 Employee survey, being recognized in using your skills is now the #1 employee job satisfaction issue, above pay, benefits etc.
  28. 28. Copyright Kenexa®, 2013 28GLOBAL RESULTS: WHAT EMPLOYEES REALLY WANTRESPECT10%Truth20%Recognition 7%ExcitingWork18%Security25%Pay9%Educationand CareerGrowth11%ConditionsSource: Kenexa High Performance Institute
  29. 29. Copyright Kenexa®, 2013 29RECOGNITIONA pat on the back from managers and the organization at‐large20%RecognitionI want to berespected andrecognized as avaluable teammemberRecognition when we do agood job - right now it is allabout getting chewedout when we mess upMore respectfrom seniormanagementSource: Kenexa High Performance Institute
  30. 30. Copyright Kenexa®, 2013 30PAYFair compensation for a day’s work25%PayCompensationthat is fair andrespect(ful)Good pay for agood day’s workUnfreeze paySource: Kenexa High Performance Institute
  31. 31. Copyright Kenexa®, 2013 31Executive                         Senior Management                           Management; Senior Level Consultant                                         First Line Management; Senior Professional                                                  Team Leadership; Technical Professional                                 Functions: Finance, Sales, HR, Marketing, Operations, Etc.Competency ImpactCore and Leadership : high impact, low frequency, indirectTechnical: Tactical impact with high frequency, directIndividual Contributor; Technician; Trainee                                                       Make many operational decisions that impact direct product/service/customer facing actions. Frequency * Value can mean big numbers depending on either multiplier i.e.1000 Customer Reps, directed with poor operational management can be as impactful as one core or leadership competency.
  32. 32. Copyright Kenexa®, 2013 32WHATS A DESCRIBING A JOB WORTH?$5, $50 OR $5,000Attracting wrong applicants = wasted time and cost for selection, assessment and processing. How many people do you interview and not hire?Improved onboarding effectiveness = Achieve initial goals quickerSales = more sales sooner/few lossesQuality = shorter role familiarization time = increased performanceFocused activity = greater productivityMore accurate marketing pricing = optimized salary budgets.Make it a tool that is used, and reused.
  33. 33. Copyright Kenexa®, 2013 33CHALLENGES DEFININGCOMPETENCIESCopyright Kenexa®, 2012Source: Competencies, Compensation andTechnology Luncheons.- 20120.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%ManualprocessBudgetConstraintsToo difficult todefinecompetenciesToo manyjobsLack ofexecutivesupportWhat prevents you from implementingcompetencies (or extending the competencies youhave) in your organization?
  34. 34. Copyright Kenexa®, 2013 34POLL:How many of you rate (as in 1=Bad, 5= Good) these types ofcompetencies in your annual performance and compensation planningprocess?1. Core/Foundational (same for everyone)2. Functional, aligned to the job family3. Technical job role specific
  35. 35. How to link job performance and pay using competencies 
  36. 36. Copyright Kenexa®, 2013 36Internal jobs and External SourcesYou need to analyse your benchmark jobs– Similar/Common job title– Job Description – Type/Level: IC, Lead, Manager, Professional, etc– Status (exempt/non‐exempt)– Common expectations on the jobCompensation is used to using data.But there is no common performance data.What we need is a clear consistent way to describe what it is that’srequired of a job, that defines what good looks like that can beused by employees, managers, and compensation analystsBig data needs consistent structure, solvable measures, andcommon definitions.
  37. 37. Copyright Kenexa®, 2013 37COMPETENCIES ARE THEFOUNDATIONUsing a Competency Frameworkprovides a common languagefor your Talent Managementstrategy .Used WITH technologysystems it integrates thosesystems.Functional Job &CompetencyFrameworkCareer &SuccessionPlanningLearningNeedsAnalysisRiskAnalysisRecruitment& SelectionResourcePlanningCompensationPerformanceManagement
  38. 38. Copyright Kenexa®, 2013 38The Pay for Performance Job Model• Job Description – Title– Summary– Primary Responsibilities– Compensation Market Data• Competencies (KSA’s)– Definition – Behavior Statements• Proficiency Target– Performance  Accelerators• Learning References• Development Statements• Coaching Tips• Writing Assistance– Interview QuestionsHierarchy and AlignmentJob Function, Job Level, Job Focus  
  39. 39. Copyright Kenexa®, 2013 39JOB SAMPLE:Job Title Benefits ManagerJob Band ID 3Job Family Compensation and BenefitsJob DefinitionManages the development and administration of employee benefits programs, policies,and procedures and ensures compliance with related regulations.Job Responsibility 1Provides leadership in the planning, design, and implementation of benefits programs(e.g. medical, dental, vision, disability insurance, life insurance, and employee assistanceprograms) and ensures all activities comply with legal requirements.Job Responsibility 2Oversees the collection and overall accuracy of benefits data located within theorganizations HRIS; evaluates current benefits programs and identifies and monitorscritical performance.Job Responsibility 3Manages vendor relationships to ensure adherence to required service levels foroutsourced benefits providers..Job Responsibility 4Monitors the employee benefits eligibility and enrollment process to ensure employeesmeet eligibility requirements.Job Scope DescriptionDesigns, plans, and implements corporate benefits programs, policies, and procedures.Responsible for ensuring programs meet employee needs, comply with legalrequirements, and are cost effective. Requires a bachelors degree in a related area and atleast 7 years of experience in the field or in a related area. Familiar with a variety of thefields concepts, practices, and procedures. Relies on extensive experience and judgmentto plan and accomplish goals. A wide degree of creativity and latitude is expected.Performs a variety of tasks. Leads and directs the work of others. Typically reports to ahead of a unit/department. Base:Percentiles: 25%, 50%, 75%TCC:
  40. 40. Copyright Kenexa®, 2013 40Compare Functional RolesJob Bands1 2 3 4 5 6Exec Mgmt Senior Mgmt Management;Senior LevelConsultingFirst LineManagement; SeniorProfessionalTeamLeadership;TechnicalProfessionalTechnician, Trainee,AdministratorTop Compensationand BenefitsExecutiveCompensationand BenefitsDirectorPayroll Manager Payroll Supervisor Benefits Analyst Payroll AdministratorTop CompensationExecutiveCompensationDirectorCorporate InsuranceManagerBenefits Analyst, Sr. Benefits Clerk, Sr. Benefits ClerkTop BenefitsExecutiveBenefitsDirectorBenefits ManagerCompensation Analyst,Sr.Stock PlanAdministrator, Sr.Stock PlanAdministratorCompensation andBenefits ManagerBenefits SupervisorBenefitsAdministratorCompensationAdministratorExecutiveCompensationManagerExecutiveCompensation AnalystCompensationSpecialistWorkersCompensationAdministratorWorkersCompensationManagerCompensation Analyst Payroll ClerkCompensationManagerPayroll Clerk, Sr.InternationalCompensation andBenefits Manager
  41. 41. Copyright Kenexa®, 2013 41COMPETENCY IMPACTFunctional CompetenciesCore, Leadership& Levels‐BasedCompetenciesReflects strategy and cultureSupports selection and hiringReflects the leadership pipelineApplicable to all rolesReflects functional strategy and key skillsApplies to all functional incumbents and candidates“A combination of knowledge, skills and abilities (KSA’s) describing the demonstrable indicators of proficiency.”Reflects job/role specific knowledge       and skillsWell suited for skills assessment, skills inventory analysis and developmentApplies to incumbents and candidates by positionTechnical and Domain Specific Competencies
  42. 42. Copyright Kenexa®, 2013 42SAMPLE: COMPETENCY PROFILEProfile Name: Job Title Benefits ManagerCompetencyCodeCompetency Name Proficiency ImportanceB0295 Business Orientation 3 - Extensive experience HighB0750 Budgeting 3 - Extensive experience HighB1020 Planning: Tactical, Strategic 2 - Working experience HighB1060 Effectiveness Measurement 3 - Extensive experience HighB1100 Standard Operating Procedures (SOP) 3 - Extensive experience HighI0480 Effective Communications 3 - Extensive experience MediumI0700 Decision Making and Critical Thinking 2 - Working experience HighI1000 Managing Multiple Priorities 3 - Extensive experience MediumI1010 Relationship Management 3 - Extensive experience MediumI1020 Analytical Thinking 3 - Extensive experience HighL0010 Accountability 3 - Extensive experience HighL0070 Goal Setting 2 - Working experience HighM0810 Outsourcing 3 - Extensive experience HighTHR000 HUMAN RESOURCES POLICIES, STRATEGIES AND ENVIRONMENT 3 - Extensive experience MediumTHR010 HR: Trends and Direction 3 - Extensive experience MediumTHR020 HR: Policies, Standards and Procedures 3 - Extensive experience HighTHR030 HR Legal and Regulatory Environment 3 - Extensive experience HighTHR110 Employee Counseling 3 - Extensive experience MediumTHR200 Compensation Management 2 - Working experience MediumTHR300 BENEFITS PROGRAMS 3 - Extensive experience HighTHRV- Specific Benefits Plan Development 3 - Extensive experience High
  43. 43. Copyright Kenexa®, 2013 43Competency ProficienciesCompetency Code THR200Competency Name Compensation ManagementCompetencyDescriptionKnowledge of and ability to design, implement and evaluate compensation programs, policies and processes within anorganization.Level 1 - BasicunderstandingDescribes key purposes (e.g. motivating employees) of compensation management.Cites organizational examples of compensation management.Lists government regulations and industry policies related to compensation.Lists major compensation programs (e.g. executive compensation) used in the organization.Level 2 - WorkingexperienceImplements compensation packages for an organizations employees.Assists in developing various compensation programs within an organization.Maintains good relationships with staff from HR and business units.Adheres to government and industry compensation regulations.Conducts job analysis and salary survey activities within the department.Level 3 - ExtensiveexperienceDetermines if compensation management objectives are in line with overall business objectives.Oversees the implementation of compensation programs within the organization.Advises the management team on compensation issues, such as pay structure.Evaluates the effectiveness and competitiveness of existing compensation programs.Improves implementation processes of different compensation programs, e.g. executive compensation.Adjusts the organizations compensation polices based on market trends and industry policies.Level 4 - Subjectmatter depthand breadthLeads in aligning compensation strategies with overall organizational strategies.Establishes organizational best practices for compensation program design.Develops standard compensation program implementation processes that are suitable for the whole industry.Monitors the market trends and industry directions of compensation management.Champions organizational adoption of new methodologies and technologies for compensation management.Elaborates on key issues of existing industry compensation policies; makes recommendations accordingly.
  44. 44. Copyright Kenexa®, 2013 44Proficiency vs Performance
  45. 45. Copyright Kenexa®, 2013 45Competency Code THR200Competency Name Compensation ManagementLearning References 15LR1 BK-0417: Business Ethics: A Global and Managerial PerspectiveLR2 BK-0833: Compensation and MotivationLR3 BK-3011: Rewarding Excellence: Pay Strategies for the New EconomyLR4 PUB-HRDR: Human Resource Development ReviewLR5 GOV-DOL: Department of LaborLR6 ORG-ACOM: American Compensation AssociationLR7 ORG-ECFC: Employers Council on Flexible CompensationLR8 ORG-IFEBP: International Foundation of Employee Benefit PlansLR9 ORG-SHRM: Society for Human Resource Mgmt. (SHRM)LR10 ORG-WAW: World at WorkLR11 TR-005: Strategic Issues in CompensationLR12 UNV-BOS: Boston UniversityLR13 VND-AHI: AHIs Employment Law Resource CenterLR14 VND-CPM: Compensation Venture Group, Inc.LR15 WEB-HRLAW: Human Resource Law IndexDevelopmentStatementsDevelopment StatementGroupDevelopment StatementNameDevelopment Statement DescriptionQuantitativeImplement CompensationPackagesImplement compensation packages for 2 businessunits each month next year.QuantitativeConduct Salary SurveyActivitiesConduct job analysis and salary survey activitiesfor 3 business units within the next month.QualitativeDesign a CompensationProgramDesign an organizational compensation program(e.g. executive compensation) in one month.QualitativeEvaluate a CompensationProgramEvaluate the effectiveness and competitiveness ofan existing compensation program in 3 weeks.
  46. 46. Copyright Kenexa®, 2013 46Competency Code THR200Competency Name Compensation ManagementCoaching TipsCoaching Tip Group Coaching Tip Name Coaching Tip DescriptionProfessional DevelopmentAttend CompensationPolicies TrainingAttend training sessions or conferences to learnabout the latest industry compensationpolicies.Career BuildingAssist in CompensationProgram DevelopmentAssist senior level colleagues in developing anorganizational executive compensationprogram.Improving OperationsConsult CompensationManagement ExpertsConsult experts on how to improve theorganizations productivity andcompetitiveness through compensationmanagement.Improving OperationsDocument CompensationIssues and SolutionsDocument common compensation issues that areraised by the organizations managementteam and their associated solutions.Relationship Building Organize HR SeminarsOrganize seminars for employees from HR andbusiness units to enhance theirrelationships.InterviewQuestionsInterview Question Group Interview Question Name Interview Question DescriptionFitExperience withCompensationProgramsWhat kinds of compensation programs have youdesigned?KnowledgeDescribe CompensationRegulationsDescribe the main industry and governmentregulations governing compensation.ProblemCompensation Issues fromManagementWhat are common compensation issues that areraised by the organizations managementteam?SolutionImprove the CompensationImplementation ProcessHow did you improve the organizationscompensation program implementationprocess?ResultsCompensation ProgramsImpactsWhat were the impacts of a compensationprogram you implemented on the businesssoverall performance?
  47. 47. Copyright Kenexa®, 2013 47IMPLEMENTATION – SHORTEN THEPROCESS REUSING CONTENTDevelop and use quickly and update over time.Focus on buy‐in and change management processes.Make sure you get to the applications; don’t get stuck in model developmentGet the “big things right”; “don’t dwell on the small stuff”.Apply existing materials and best practices in developing a rapid draft Focus on the overall architectureKey success criteria and themes.Position models  as prototypes for learning how to change behaviors                      (vs. a perfect output image).ApplicationIntegration IterationLaunch & CommunicationImplementationKenexa / IBM Competency Development80% of the effortRecommended Approach20% of the effortTypical Competency DevelopmentApplicationIntegration IterationLaunch & CommunicationImplementation20% of the effort                                 (if able to move out of development stage)Typical Approach 80% of the effort
  48. 48. Copyright Kenexa®, 2013 48SALARY MARKET DATAAggregated, employer reported salary surveys.Monthly data modeling and updatesINTEGRATE YOUR TALENTMGMT TOOLS AND PROCESSESTalent Management / LMS / HRISCAMD•Survey Mgmt•Aggregated Market Data•Salary StructuresCompetency Manager Tool * Edit existing,  * Create new,            * Assemble New,      * Compare Competencies/skills EXCEL ExportJOB COMPETENCY LIBRARY Industry specific  Job Functions  JOB PROFILES and COMPETENCIESTARGET PROFICIENCY level & BehaviorsInterview Questions, Learning Resources, SMART Goals, Coaching Tips 
  49. 49. Copyright Kenexa®, 2013 49COMPETENCY IMPLEMENTATION(BEST PRACTICES)Model Building•Ensure linkage between jobs, competencies and organization strategies•Keep models simple at launch•Add dimensional criteria and keep the momentum•Start with a library or Competency FrameworkApplications• Focus on assessment and development first, then evaluation and pay applications• Integrate of the competencies with all processes, even if tools aren’t• Ensure consistency of applications rather than allowing too many variationsChange Management• Clarify and communicate specific objectives of your applications up front• Ensure top management and line management buy-in and ongoing support• Be focused in implementation (i.e., one function, one pilot group first)• Provide training and communication more consistently and carefully (building in training atall stages of implementation)• Develop and consistently apply a measurement system used to evaluate the effectivenessof implementation over time
  50. 50. Copyright Kenexa®, 2013 50• Merit Pools:• We suggest that there betwo basic pools of moneyfor merit increases:• Management pool• Employee poolREPAIRING THE LINKEach of these pools should have two subsidiary pools. One for those in theperformance category and one for the balance of the organization’semployees addressing wage relevance to cost of living, etc.
  51. 51. Copyright Kenexa®, 2013 51• Employee motivation to become ahigh achiever is increased• The organization has a betterchance of retaining top performers• Lesser performers are motivated toincrease performance level or lookelsewhereIf pay increases are made contingent uponclear definitions of what good performancelooks like:PAY FOR PERFORMANCE
  52. 52. Copyright Kenexa®, 2013 52DON’T FORGET!!Pay for Performance,NOTIncrease forPerformance!REPAIRING THE LINK
  53. 53. Copyright Kenexa®, 2013 53Q & A
  54. 54. Join Our Next TM WebinarLearn the Secret to Driving PerformanceTuesday, May 28, 2013TM Webinars start at 2 p.m. Eastern / 11 a.m. PacificRegister for upcoming TM Webinars the Talent Management magazine Network