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Are You Ready to Go “Naked”?

January 23, 2017  |   Performance Management,Uncategorized   |     |   Comments Off on Are You Ready to Go “Naked”?

BCR_WindsorWe’ve heard over the past year about companies moving from performance ratings to more meaningful conversations around performance.

Assuming you’ve had an annual performance review program in place, along with a salary increase matrix based on performance ratings and employees’ positions in a salary band/range, it would take a great deal of planning and thought to move from that system to one without those guidelines.

The benefits of moving to a rating-less annual salary review process definitely empower management’s decision-making capabilities. However, are they equipped to do the job?

Generally, even in a system where companies had a salary increase matrix to use as a guideline to make salary increase decisions, there were companies that allowed managers to deviate from that if they presented solid rationale for doing so.

Once you take away the guidelines, the data that needs to be in place are the following:

• A system that can provide management with data such as internal competitive data;
• Salary increase history on the employees being evaluated;
• Employee’s performance as whole given outcomes, day-to-day responsibilities, competencies, etc.;
• The market data for each role;
• Employees’ positions in their respective salary bands/ranges; and,
• The risk factor of losing an employee’s skills and experience.

While these factors should have been considered even where there was a salary increase matrix in place, it made it easier to just follow the guidelines.

With the shift to a rating-less system, an extremely important piece is performance management training that allows managers to understand how to utilize the compensation tools provided to them and conduct performance discussions with their employees.

Managers need to have ongoing access to their employees’ goal achievement and development progress as well as accurate compensation data and the impact it has on the relationship of pay within their departments/divisions, discriminatory practices, and their budget.

Managers also need to have performance discussions with employees throughout the year, and have the ability to access the content of these conversations to contribute to a more comprehensive look at each employee’s performance over the course of the year and not just what a manager recalls about what happened over the last month.

The feedback from employees in a study conducted by TriNet and Wakefield Research found that 62% of employees surveyed felt blindsided by annual performance reviews and 59% felt managers were ill-prepared to give meaningful performance feedback.

This rating-less approach definitely is worth pursuing, but not without a lot of planning before you go “Naked.”

Refer to our October 2016 blog for some additional perspectives on Performance Management.

Contact Us

BCR has a great deal of experience in working with organizations in improving their salary planning and performance management system. Reach out to us if you should want to explore how we can assist you further in enhancing your organization’s performance management and salary planning approaches.

Written by: Barbara Manny, BCR President and Consultant

BCR is a local, minority-owned firm with more than 25 years experience in serving non-profit, public, and privately held entities in the key areas of Benefits and Compensation Consulting, Performance Management, Human Resource Organization Development, and Human Resource Information Systems and Processes.

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