For most employees, performance measurement is viewed, at best, as a necessary evil.
Instead of helping employees evaluate their performance against targets and improve, most employees view measurement at work as a means through which management watches and appraises them. It only takes a single snakebite to make someone afraid of snakes for the rest of their lives.
Unfortunately, many people have been bitten more than once by measurement at work. How performance measurement is used in the organisation will determine employee reaction to it. Measurement at work should provide managers with quality information to assist in learning and improvement. Contrary, if measurement is used to justify, judge, control or reward and people are made accountable for hitting or missing targets, this creates less focus on learning and improving but more compliance because of the command-and-control orientation.
When rewards and threats of punishment are added to the measurement system and are too great, people will do what it takes to obtain the reward or to avoid the punishment even if it means applying poor judgement and risk
The performance environment has a greater influence on how employees perceive and respond emotionally to measurement. If the environment does not empower or involve employees in measurement conversations and only measures people against goals imposed upon them, the result will be employee frustration and this negative use of measurement will deeply be ingrained in the organisation’s culture.
Instead of being instrumental to the success of the organisation, negative measurement becomes the keys to its downfall. Performance is a combination of multiple factors — an employee’s innate talent and abilities, their skills and knowledge, and the work they’re actually putting in.
A pay for performance plan would, ideally, provide financial incentives for all employees to gain new, relevant skills and knowledge, and to put in the work to get their jobs done well. However, the relationship between skills,knowledge and compensation is weak and inconsistent as organisations for years have struggled to identify and track their employees’ skill sets. The most obvious incentive to gain new skills is because it enables you to get a new position.
Unbiased performance reviews
Performance reviews can be biased in a variety of ways that make them less accurate and in ways that may potentially harm workplace equity. Employees often complain that performance reviews do not provide meaningful feedback and goals.
When done well, performance reviews need a significant amount of time from multiple stakeholders. If you do tie compensation to performance reviews, then your compensation program is only as good as your performance management program.
You should not discount this threat of a potential downstream impact from a biased process as you tie more employment processes together. It is a mistake to have them all operate in silos, but creating relationships between them needs good program design on the front-end and a real-time analysis of results to ensure you are achieving the desired outcome.
Come up with a transition plan to align pay for employees with the intentions of your pay program design. This process will likely take time and budget, but provides an opportunity to reinforce to your employees that you value them and want to treat them fairly. As pay becomes more transparent, this will go a long way to building “pay explainability” into your compensation program.
Pay design
Use innovative ways to make sure your organisation follows pay program guidelines for all pay decisions: new hires, promotions, transfers, or pay adjustments for people who gain new skills or experiences that they did not have before.
We developed Pay Finder specifically to enable companies to make fair and consistent pay decisions throughout their organisations. Compensation teams can be virtually present for every pay decision made by recruiters and hiring managers.
Consider using variable pay instead of base pay as the lever that can incentivise effort from employees, year in and year out. While the acquisition of new skills and knowledge should be rewarded through salary, short-term incentives and recognition can directly reward effort and specific types of behaviour. For this to work, it is critical that the performance review process is designed well and reflects goals that meaningfully motivate employees and remain relevant throughout the year. Being clear about how performance is defined and rewarded is critical in keeping your employees engaged, managing their expectations, and engendering their trust.
People resist measurement because they perceive it as too difficult, time-consuming and tedious and as someone else’s job. Lack of data understanding, lack of resources, bad experiences, lack of data accuracy and lack of senior leadership involvement also lead to measurement resistance.
Most people think that, without measurement, there is no failure. Actually, the opposite holds true. Lack of good measurement approach, systems and structures will definitely lead to bad measurement. To have positive attitudes towards measurement, the context must be right. People should feel that measurement is not being used against them, but rather, to learn and improve.
