Wednesday, February 07, 2007

Pay for performance, yeah -right!

Pay for Performance! The words carry such hope for the managers and HR drones among us. Even the "little guy" gets a glimmer of hope that under such a meritocracy, even they have a chance to cash in..... and then reality slams you in the face like a two-by-four when you read about the case of the Home Depot CEO who managed to cut a deal for himself that ensures he gets paid over $200 Million USD, no matter how badly he screwed the pooch! Gee, maybe I ought to ditch this HR gig of mine and take on that job - after all, I have probably spent enough there in the past few years to cover whatever salary I want.

I don't raise the issue to boil your blood (though that's probably happening now too), but I want to use it as an object lesson to get you to lead up. You cant directly control what wacky pay practice your Board will employ for your next CEO, but you can ensure that you apply a pay for performance process on your people.

The payoff for a real, honest and objective pay for performance plan will pay dividend well beyond the initial sweat investment needed to implement it - but only if you do it right. Now, the secret here is that doing it right isn't really all that hard. All you have to do is understand what good performance looks like, gain agreement from all concerned on that point, communicate the hell out of of it - then make everyone live or die by that standard.

See - now wasn't that simple? Maybe I should bottle this stuff up in a consulting package and sell it to the Board over at Home Depot.

If you don't have a pay for performance plan, talk with your leadership or HR about how your organization can benefit from one. If you have one, USE IT to differentiate rewards.

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