Keys to Improving Your Pay for Performance System

by on June 15, 2009 · 0 Comment POSTED IN: HR Info Center

Improve Your Pay for Performance System By Improving Your Appraisal Process

So here is a list of improvements to make so your pay for performance system works. Virtually, every company can undertake these to make appraisals more effective and essentially increase your return on investment in this area. And none of this costs anything. It’s just improvements that you can make so your pay for performance system as effective as possible. Even if you don’t have a merit increase budget this year, you can still improve the performance appraisal process.

  • All the literature seems to indicate that you should keep track or make notes of performance examples throughout the year. And you should write down on a yellow sticky every time you talk to the employee about some sort of performance issue or planning or whatever happens to be during the course of the year. That way when you write the appraisal, it’s essentially a rehash of all those things that you’ve talked to the employee about.
  • Most managers don’t do this. But this is ideally what should be done. If you don’t do this, guess what happens. When you write the performance appraisal at the end of the year, the only thing the manager can remember is the last three months. So instead of evaluating a 12-month period of time, you’re evaluating a three-month period of time. Taking notes along the way allows your pay for performance system to be more accurate.
  • Emphasize mutual problem solving and future actions. This is not “me against you” or “us against them” or anything like this. We’re part of the same team. We need to work together. All we’re trying to do is improve the efficiency or productivity of our team and how can both of us take a role in making that happen. So try not to make this an adversarial meeting.
  • Balance the positive and the negative feedbacks. And generally, the rule of thumb is to have, for the average person is to have three positives for every negative that you have. Generally, your pay for performance system has to be more positive than negative.
  • You don’t want most of your employees to walk out your door feeling dissatisfied or kind of depressed about the conversation that they have. Most of them you think are good employees. You just want them to get better. And you have to use the right tact in order for that to happen.
  • Be specific about what the employee should do to improve. Be very specific about it. And you may even have to use the performance improvement plan. Be prepared to listen about 50% of the time. And that means you have to ask open questions.
  • You want to hear from the employee as much as you’re talking. But if you’re like most organizations, a supervisor will do 90% or 95% of the talking. Give your appraisal to the employee a little bit beforehand so they have a chance to read the thing before they get into it. You’ll have a better discussion if you’re able to do that. Again, be prepared to talk about the future 50% of the time. This is something that you really change to generate a positive impact on your pay for performance system today.
  • Concentrate on observable behaviors and results, not the person. So use words that describe what you saw or heard. Emphasize employee involvement in solving problems. “Gees, that didn’t work very well. What can we do better in the future?” And really listen to what the employee has to say.
  • Get in agreement with your employee on the objectives you want them to achieve – new things in the coming year. They should agree to it. Actually, most research indicates that employees actually set tougher goals than their bosses.
  • And finally, don’t argue even if you disagree, you’re just here to listen and you still have – the manager still has the final say. He who holds the pin has the most power. And that’s the way it should be in your pay for performance system.

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