Transition Management Consulting, Inc.

Decoupling Compensation & Performance (4 of 5)

by Jackie Eder-Van Hook, PhD

Decoupling Compensation from Performance Ratings

There is a small, but growing number of organizations and HR professionals advocating for decoupling performance feedback or ratings from compensation decisions. The options that organizations are considering is not yet well documented.

One approach is to institute a flat percentage increase across board, whereby bonuses will be based purely on the results of the company, division, department, and/or team. Industry benchmarks or compensation studies could be used to compare what employees receive compared to the market. In the recent past, we have seen organizations promote pay for performance, for both merit increases and bonuses. In the executive ranks, we see more CEOs will to go “at risk” for some of their compensation.  

Given the size of most associations and the challenge in keeping or attracting high performing staff, a decision to decouple performance and pay might be a difficult sell. On the other hand, an organization’s culture will greatly impact its success or failure.  

Links to the other parts of this series.

 

Cutting Edge Approaches in Performance Management (1 of 5)

Current State of Performance Management in Associations (2 of 5)

Changes in Performance Management (3 of 5)

Decoupling Compensation from Performance Ratings (4 of 5)

Performance Management Systems – A Conclusion (5 of 5)

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