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Dear Workforce How Could I Help Our Top Execs Make the Connection Between Suitable Rewards and Employee Performance

Dear I Hate Discretion:

There is much academic research, as well as many workplace studies, that shows a connection between rewards and performance—when performance expectations are clearly defined upfront and the rewards have a direct relationship to them.

To get your organization’s leadership to see that connection, you need to design and build an effective system for managing people’s performance.

The keys are as follows:

  • Define goals that your reward program will support.
  • Determine the desired employee performance that will help reach those goals.
  • Identify how performance will be measured.
  • Determine appropriate rewards.
  • Communicate rewards and how they relate to performance.
  • Keep good records—contributions, problems, progress.
  • Develop and implement a coaching and improvement plan.

A successful system obviously must identify goals to be reached, as well as the performance needed to achieve them. Yet companies frequently make the mistake of rewarding behaviors either that fail to further business goals or actually sabotage them.

For example, if teamwork is a goal, rewarding employees who improve their productivity at the expense of a co-worker does not help the company as a whole.

Properly measuring performance indicates areas in which improvements are made, and helps your top executives see a clearer connection between rewards and employee achievement. Performance measures in a rewards program have to be linked to your overall business strategy, and may include such variables as improved financial performance along with improved customer service and fewer errors.

Match the reward to the benefit the company derives from the employees’ performance. In other words, performance that contributes to goals with higher monetary value to the organization should be rewarded with more money.

Clear communication of expected performance and the reward for that performance is critical, as is the consistent delivery of the stated reward for performance. Reinforce the message in meetings and at other opportunities during the year. When employees fall short of expected performance, immediately implement your coaching and improvement plan to make it easier for them to succeed in the future.

SOURCE: Deborah Millhouse, CEO Inc., Charlotte, North Carolina, April 9, 2008.

LEARN MORE: A recent study indicates cash bonuses are still the preferred method of reward for high-performing employees.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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