5 reasons you should pay employees for performance

5 Reasons You Should Pay Employees for Performance

bamboohr.com payscale.com



Ben PetersonCo-founder and CEO

BambooHR

Mykkah HernerHead of Professional Services

PayScale



What Is

Pay for Performance?

“Links pay (base and/or variable), in whole or in part, to

individual, group, and/or organizational performance.”

—The World at Work Handbook of Compensation, Benefits & Total Rewards



Types of

Pay for Performance

• Bonus

• Variable (commission)

• Yearly raises



5 Reasons

You Should Pay Employees

for Performance



Cost-Efficiency

1



Recruiting and Retention

The average raise is 3 percent of salary.

The cost to replace an employee is 30-400 percent of salary.

2



It’s the Right Thing To Do

3



Better Culture and

Happier Employees

“In large part, culture is a product of compensation.”

— Alec Haverstick

4



Drives Results

5



Who Does Compensation

Matter Most To?



Age

BABY

BOOMERS1946-1964

GEN X AND

BUSTERS1965-1983

GEN Y AND

MILLENNIALS1984-2002

COMMUNICATION

ABOUT COMP

AVERAGE TENURE

CAREER MINDSET

Mostly Private

15+ yrs

Retirement

Work/Life Balance

COMMUNICATION

ABOUT COMP

AVERAGE TENURE

CAREER MINDSET

Somewhat Private

5+ yrs

Management

Work/Life Balance

COMMUNICATION

ABOUT COMP

AVERAGE TENURE

CAREER MINDSET

Public

15 mos-2 yrs

Go-Getters

Advancement

Flexibility



Gender

MEN

• No. 5 reason they left their job

• 79 percent are annoyed by low salaries

• 74 percent are annoyed by unequal pay

WOMEN






MANAGERS




Manager Non-Managervs

NON-MANAGERS






• Individualized Rewards & Recognition

• Variable or Incentive Pay Plan

• Base Pay Plan

• Company Culture, Compensation

Philosophy & Compensation Strategy

The Compensation Mix



• Develop Clear Compensation Strategy

• Get Reliable Market Data

• Develop Clear and Aligned Goals

Strategy



How Should I Start Paying

for Performance?



Ben’s Tips

for What To Do Today:

Culture matters.

Define what should be measured.

Baby steps.

Don’t be a copy cat.

1.

2.

3.

4.



Mykkah’s Tips

for What To Do Today:

Gain executive buy-in.

Align with organization goals & culture.

Get the right systems in place.

Train managers properly.

Communicate clearly across the organization.

1.

2.

3.

4.

5.



Immediate Actions

Elementary

Intermediate

Advanced

1.

2.

3.



“Employees won’t believe there is a link between

pay and performance unless they can see it.”

—Margaret O’Hanlon, re:Think Consulting



Follow BambooHR and PayScale on social media:

bamboohr.com/blog | payscale.com/compensation-today

Thank you!



Questions?BambooHR

Receive a free job posting on our ATS and full HRIS for one week.

We will contact everyone within the next few days to set this up.

Get the free whitepaper on Pay and Performance

Visit http://www.payscale.com/hr/whitepapers

PayScale

5 reasons you should pay employees for performance

Business

variable pay

increased pay

employees performance

business goals

hr policies

hr topics

years of hr experience

certain types