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Every paycheck is a payment in advance. After the first performance increase, it transforms into a reward for past output as well as an expectation of continued future achievement. There is more than one way to compensate. As many modes should be used as prove effective either alone or in combination.

Thanks Jim, but I am not sure I agree with you. If what you say is true and Paychecks are payment in advance, then every person hired at a fast food restaurant would get a check the day they started. This simply doesn't happen. Paychecks are always for something you did in the past. (unless of course you are a big wig who gets a signing bonus)

Guess I an used to firms that offer signing bonuses. And it does seem to me that most people make very little productive contribution in their first month or three during which they receive the same salary that they would more properly deserve after some months of familiarization. But you are right in your detailed observation.

In scenario 2 the employee gets a reward beforehand and may just do enough to get by. I doubt the manager would ask for the money back. The way you describe it, it's not an option. But even if performance is mediocre he gets the upfront reward. Maybe he thinks "hey I got something for doing a little work". He may not want to bust his ___ to get the extra money for great performance.

I think scenario 1 is best. It's the American way ---- work hard and you get your reward. I just don't think management would be in favor of scenario 2.
P4P is always "you get pay if you perform". Scenario 2 is counter to that.

Also I don't see ESPP as an example of scenario 2. You have $ deducted from your paycheck and purchase stock so you are really paying for it. For 15% deduction in stock price. Hmmm . . . .not enough for me.

Sign-on bonuses are a crap-shoot. Risky. Many times for an executive they are given to make up for the money the exec is leaving on the table at his last employer. So that just makes him "whole".

Bottom line the company takes a risk/spends money with scenario 2 for maybe nothing. No P4P here if you ask me.

My vote is scenario 1!!!!

Signing bonuses are only one iteration of a "push" payment. I have seen this work with some as small as a box of cupcakes and something as large as several thousand dollars. The keys are in design, timing and communication.

We often create work cultures where skepticism is a key component. Whether your use a push, pull or combined strategy pay will never manage people. The payment programs should simply make management easier.

I have seen people react very positively to push payments. Rather than "Hey I got something, now I can relax." I have seen: "WOW I got something, that's great, They value me and I will show them that I deserve it.

P4P is just that. What I pay you to perform, pay you because you performed, Pay you to want to perform, P4P is intact. The keys are Pay and Performance. This process is not for every instance, but it a useful tool for many companies.

I've had a personal experience with a similar 'push' event.

My husband was assigned to a big project that was critical to the organization. It was a great career opportunity, but everyone knew that it would be time-consuming and difficult. Just prior to starting the project, the manager took each employee aside and gave him/her a personalized (hand-written) card from the company president, affirming the company's decision to bring them onboard the project. Included in the card was a lump-sum award AND a restaurant gift card. The president asked the participant to share a nice meal with the family (or friend), to thank them in advance for the employee's efforts.

Really nice touch. It's (the memory--not the cash) stayed with us a long, long time.

Thanks for sharing this story Shawn. This is exactly the kind of thing I meant. It is surprising how a reward done right, can mean less money but more passion. I think that compensation pros get so tied up in the dollars that they can forget how important the delivery mechanism and timing is.

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