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Getting Rewards Right

14/2/2013

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Here We Go Again

At this time of year, many companies are doing performance appraisals, and working out salary adjustments. Many managers are thinking that 90 minutes in a dentist’s chair sounds like a better bargain.

One common complaint is that with salary increase budgets running around 3%, there is no room to provide rewards and incentives that light a fire under employees.

Where is the reward?
 
A very good question. Where so many go wrong is focusing on the annual salary adjustment. This is seeking satisfaction in the wrong place. The reward for competent performance is a salary rate that is commensurate with the external market, equitable within the company, and an accurate reflection of the employee’s performance. This reward keeps on giving, with every pay deposit all through the year.
 
The annual adjustment assures that pay remains appropriate in the context of inflation, changes in knowledge and skills, and changes in level of performance. 
 
The reward is not the increase – the reward is appropriate pay on each pay deposit, year in and year out.
 
If you get this right, and communicate it effectively, there is a second important benefit. Pay ceases to be an issue and the annual increase is not a matter of high emotion. Employee relations and engagement improve.
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    Michael Hiles solves Human Resource problems with unique and tailor-made ideas for small to medium sized business.

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