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Like you, I am a fan for pay for performance. And I appreciate your attempted “teething” metaphor. But I have a different perspective, particularly on the relative ease with which these plans can be implemented. Particularly these two points:
1) “the work really begins at rollout.” No. The work begins in the planning stage, getting the input of all that will be involved in the P4P plan. By getting their input, they both feel appreciated and come to understand the program, consequently raising “buy in”
2) “Pay for Performance is painful and confusing.” If it is, you have already lost. That is why getting input from the troops up front is so important. You want to develop a plan from their perspective, not yours.
I do agree that “You can become complacent.” The P4P plan should be updated and refined each year as part of the annual planning process. It should be an integral part of the high involvement planning process, not a separate compensation activity. If done in this manner, I think you will find that pay for performance systems are relatively easy to implement and tend to be very well received.


Thanks so much for your excellent comments. Regarding your first point, I totally agree that if the diagnosis and design work is not properly executed then no amount of roll-out or support is likely to make a P4P plan work. In fact, we cover this requirement in our book "Everything You Do in Compensation is Communication" (www.everythingiscommunication.com)
Regarding your second point. Until a company has worked through both the compensation side and the stakeholder side of P4P, it can be very confusing. This confusion can be very painful. Once a company understands what drives success and how that aligns with individuals and team, the process becomes far easier.
I agree that P4P can be relatively easy to implement and very well received as long as the programs are well designed, well-constructed, well-communicated, well-executed and adjust to the results received and changes in strategy.

Thanks again for your insight and clarification!

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