Projected use of Pay for Performance strategies will increase this year. Are you ready?
If you have responsibility for compensation in your organization, you know it’s that crazy time of year! For many companies, annual performance reviews are coupled with salary planning and increases. While comp budgets are reported to be flat for merit increases this year, the most recent WorldAtWork Salary Budget Survey 2015-16 states that the use of Pay for Performance strategies continues to increase.
While Pay for Performance models vary, according to Alison Avalos, CCP, Senior Manager, Research and Certification, WorldatWork, “Merit increase use is high.” When there is “differentiation between levels of performance, high performers are seeing significantly higher increases.” Alvalos also highlights the “high use of variable pay programs, targeting those employees that are delivering the most for the organization.”
You can view her survey summary interview here.
Additionally, when reviewing promotional salary increase data she notes the “uptick in the percentage of employees receiving a promotional increase as well as the size of the increase they receive, which is now up to 8.4%”.
Alvalos cites a “general improved efficiency in both the use of your pay increase budgets as well as variable pay plans and promotional increases,” when reviewing pay for performance strategies that are working.
So how can you get to that successful point in your strategies? Do you have the tools in place to efficiently maximize the compensation dollars you have this year, and ensure you reward and retain your top performers?
To implement and sustain an effective pay for performance program you need to “see the flow of funds” from beginning to end, and you need to be alerted when funds are allocated outside organizational guidelines. Today, talent solutions offer integrated Performance and Compensation tools that allow everyone to view performance reviews in the context of compensation allocations.
Technology plays a critical role when it comes to assisting organizations in building and implementing the pay structures and performance measures they need to attract and retain the desired employees. Today’s compensation environment includes things like regular pay or salaries, performance-based pay, recognition bonuses, marketplace adjustments, and the value of other provided benefits.
Couple that with either an annual performance review rating or a regular check-in to assess how employees are doing in certain areas and you have yourself an outstanding pay for performance solution. Having the right technology
in place is key to helping you plan, design and administer the compensation and performance plans and measure them in real-time.
PeopleFluent’s Compensation Command Center (pictured above)within the PeopleFluent Compensation Management solution allows administrators to:
- Monitor the quality of decisions and recommendations made throughout a reward cycle.
- Evaluate how funds are spent or how a population moves through the process.
- View the overall progress of a performance and compensation plan.
- Filter data to view specific populations with each reward cycle.
- Identify potential issues with performance and compensation decisions made by key stakeholders.
To learn more, take the PeopleFluent Compensation Guided Tour: