How Pay Really Helps Businesses Succeed
8 February 2007
Paying everyone competitively is not enough - nor is merely following best or prevailing practice. Competing for a 'Best Place to Work' or 'Employer of Preference' designation is more likely to reinforce an entitlement mentality than create a performance culture.
Most company leaders know paying for performance makes good business sense, but how can pay really facilitate and support business success?
In this interactive session, Jay Schuster and Pat Zingheim helped bridge the gap between believing something adds value and actually implementing it. Here is where your organisation has a significant opportunity to win in the competition for high-performing talent as well as in creating a high performance organisation.
Ignoring convention and considering practical business solutions will help attract and retain the best people and make your business a success. Calling on their January 2007 book, High-Performance Pay: Fast Forward to Business Success, Jay and Pat stretched our thinking with discussions about the following suggestions:
- Focus pay first on the top-performing 20% of the workforce that provides about 80% of the value to the business – if this talent pool is not 'engaged,' business will suffer;
- Examine how to keep the remaining 80% motivated;
- Put everyone in the organisation on variable pay with business metrics – this communicates values and directions and fights entitlement;
- Make performance management really work – go beyond form design and make it a tool of business excellence. Create a high performance place to work;
- Make business goals the centre of total reward – if a total reward component does not add business value, change it or reject it entirely;
- Examine how the impact of this approach be evaluated.
Pay is probably the largest opportunity expense your business must manage effectively-if your company isn't going to pay for performance, what will it pay for and why?