REWARDING PERFORMANCE
Few US firms involve employees in pay plan design
Over the past few years, HR and compensation practitioners have become accustomed to hearing that it is vital to involve employees in the design and implementation of any performance measures used to determine incentive payments. But new research from the USA suggests that employees still have little or no say in the formulation of performance measures.
The 164-company survey by researchers at the Institute of Management & Administration in New York found few employees below the managerial level have much — if any — involvement in the design of performance pay plans .
Top management leads the development effort — 81% participate in the design of performance measures — followed by managers other than the senior echelons (49%), with salaried and hourly staff in their wake (fewer than 10%).
It seems that many UK employers are not alone in failing to involve their employees in the design of reward systems, despite the widely noted benefits of such participation. For many leading exponents of reward management it is now accepted wisdom that employee involvement in the development of performance measures means that the odds of success of the incentive pay plan are greatly improved. Not only does it help to secure that elusive buy-in , but the performance measures are more likely to be attached to results employees can actually influence.
When employees do participate in the development of performance measures, it takes three main forms, according to IOMA:
setting performance measures/goals/objectives (for IOMA this is the most powerful means of participation an employee can have in an incentive plan)
participation in a measure development team/committee/task force
providing feedback via survey/intranet/focus group.
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Title: IOMA's Pay for Performance Report, December 1999.
Post: Institute of Management & Administration, 29 West 35th Street, 4th floor, New York NY 10001-2299, USA.
Tel: 001 413 529 2406
Fax: 001 413 529 2507
email: podolske@valinet.com
website: www.ioma.com