Incentivizing employees based on performance makes a ton of sense. High performing employees should get a bigger piece of the pie, while low performers may not get a raise. In fact, according to PayScale's 2017 Compensation Best Practices Report, performance was the number one reason for giving increases last year. Organizations are moving away from using COLA as a reason for across the board raises. Join PayScale's Mykkah Herner and Chris Estes to learn how to do pay-for-performance well and why paying for performance remains a strong compensation best practice. Register for this webinar and you'll learn about: -The right frequency of performance reviews -How you can recognize performance with pay -Monetary or non-monetary and which works best?

1. Best Practices in
Pay-for-
Performance
Chris Estes, PHR, CCP
Compensation Professional
Mykkah Herner, MA, CCP
Modern Compensation Evangelist

2. www.payscale.com #CBPR17
54 Million Salary Profiles
250 Compensable Factors
15,000 Positions 6,000 Customers 2,300 Skills
Hi, We’re PayScale!
www.payscale.com/cbpr

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Chris Estes, PHR, CCP
Compensation Professional
Mykkah Herner, MA, CCP
Modern Compensation Evangelist
https://www.linkedin.com/in/mykkahherner

4. www.payscale.com #CBPR17
Agenda
Current State of Performance
Linking Performance with Pay
Exploring the Full Range of Rewards
Things to do right now

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Ways to Reward Performance
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Performance Was the Top Reason for Raises

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Performance Evaluation
Today

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Motivate Employees
42% of millennials want feedback every week
Source: Ultimate Software & the Center for Generational Kinetics
• Stack ranking
• Annual review
cycles
• Emphasis on
Ratings
• Encourage ownership
thinking
• Provide frequent
feedback
• Build skills

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Frequency of Reviews

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Manager Involvement
95% of managers are unhappy with the way performance
reviews are conducted.
90% of HR leaders question the accuracy of information
received. Source: Lillian Cunningham
• Time & efficiency
• Consistency
• Focus on strengths;
enable and coach
• Clarify expectations
• Build the relationship

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Drive Business Results
“In today’s rapidly moving business world information given
in an annual performance review is often outdated and
obsolete...” Source: Impraise
• Results-based
• Speed of business
• Project cycles
• Build teams

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Measuring Results Through Acronyms
“The success of companies in this day and age
hinges on the ability to execute. Ideas are important,
but they are easy compared to execution.”
Source: BetterWorks
Source: John Doerr

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Connecting Performance
with Pay

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“Employees won’t believe there is a
link between pay and performance
unless they can see it.”
Margaret O’Hanlon
re: Think Consulting

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Linking Performance with Pay
Culture and perks that reward
high performers
Higher increases for top
performers
Results-based incentive plan
Performance-based rewards
& recognition

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Incentive Pay
• Bonus vs Incentive
• Match incentive cycle to work cycle
• Alignment: individual, team, organization
• Additional structure considerations
• Self-funding – variable costs
• Keep it simple

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Bonuses – Tied to Performance or Not
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Variable Pay Influencers by Level
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Base Pay
Base pay increases are determined by performance and
position in market-based range using a Merit Matrix
Exceeds
Meets
Does not Meet

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0% 5% 10% 15% 20% 25% 30% 35%
Highest
Average
Budgeted
3% Increase
Is it enough to differentiate?
resources.payscale.com/cbpr

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Exploring the Full Range of
Rewards

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What’s your deal?
Employees and employers are in a relationship
where they agree on an exchange of value

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EqualFair
A note on fairness:
Fair doesn’t
necessarily mean
equal
Differentiate* Pay by
Performance
Results
Experience
Skills
Education
Market
*Be aware of legal restrictions

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• 40 hours of volunteer time
• Annual company trip: volunteering, going somewhere tropical and relaxing
• Free food: bagels, lunches, etc
• Commuting allowance
• Wellness: allowance per year, yoga, free on-site massage, free gym membership
• Dog-friendly office
• Mondays off in the summer and the 1 week extra off (with pay) over holidays
• Recognition program gives employees money to award to other employees
• Pet insurance
• Tuition exchange program
Employees’ Favorite Benefit or Perk

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Don’t underestimate the value of recognition
With a positive employee experience…
of employees are less likely to leave
are more likely to go above and beyond
who received recognition
believe they had a positive
employee experience
Globoforce
And…

26. It’s not a best practice if
it’s not best for
your organization

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Immediate Actions
• Inquire about performance management processes
• Evaluate pay practices. Are you linking performance to pay?
• Evaluate your non-cash compensation. What perks motivate your
employees?
• Identify business cycles and talk with managers about how to create
better alignment
• Train your managers and employees to deliver effective feedback

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PayScale offers modern compensation software and real-time, data driven
insights for employees and employers alike. More than 6,000 customers, from
small businesses to Fortune 500 companies, use PayScale to power pay
decisions for more than 13 million employees.
Visit our blog: www.payscale.com/compensation-today
Join our Group on LinkedIn: Compensation Today: HR Best Practices
Chris Estes, PHR, CCP
Compensation Professional
Mykkah Herner, MA, CCP
Modern Compensation Evangelist