Cafe Classic: Rewarding The Right Employee

Editor's Note:  Chuck Csizmar's Classic post and question about who you are directing your reward dollars to.

This question may sound like a no-brainer, but when you think of your organization's pay-for performance compensation program, do you feel that you are recognizing and rewarding the right employees?

And who exactly is that, you may ask?

• It is not everyone

• It is not those employees who managers feel need the increased pay

• It is not the employee who has been busy all year

• It is not the employees with the greatest length of service

• It is not the employee that everyone likes

What your definition should be, is that the right employee is whomever has performed well above the crowd of other employees during your rating period.  Those who you can rightly call high achievers.  Those whose resignation would cause you to lose sleep at night.  Everyone else can be an afterthought.

Now that was easy, wasn't it?  Like I said, a no-brainer.

It Doesn't Work That Way

But what's that, you say?  That's not exactly how things work in your organization?  There are other considerations besides performance?  So that perhaps the right employee doesn't always get rewarded?  Or whatever they receive isn't much more than that given to Joe Average?

Why do you do that?  Let's consider the likely culprits:

• Not much money to go around:  This is a common argument when merit budgets are tight; that when you can't make much of a distinction when granting reward percentages, you don't make much of a distinction with your rewards.  Proponents would say, "Let's just push the EASY button and give everyone the same raise."

• Everyone deserves something:  The "It's not my money" tactic, where emotion overrules business sense.  If an employee hasn't seen fired then they should get something for sitting around for twelve months.  Hasn't inflation increased for everyone?

• Performance ratings are overblown:  Here is the current new age thinking, where performance shortcomings are the fault of the system.  That somehow monetary rewards have little to do with future performance, so why should we discriminate amongst employees?  The system is rigged.

• Somebody might quit:  This is every manager's fear, of course,  but in our case this trepidation can lead to greater interest in providing pay increases that would retain the staff.  If an employee quits it's likely going to mean more work for the manager, and potential criticism from their bosses.

• I want to be liked:  An attitude especially prevalent among new managers, who want to build a collaborative team environment ("We're all in this together").  They can be reluctant to play the judge and jury about performance assessments and pay increases for their "team."  Many would rather blame Human Resources.  They don't want to be disliked by anyone.

Making The Hard Decisions

Rewarding the right employee becomes essentially about the manager being willing and able to make discriminatory decisions about an employee's job performance and effectiveness as an employee with the organization.  That is, if you presume that pay increases are not "owed" on the basis of tenure ("It's been twelve months.  Where's my pay increase?").

Because the budget for pay increases is always going to be tight  There will never be enough money for everyone, so an effective manager has to choose how best to spend their available reward dollars in a way that generates the best return for the organization.  Yes, that's right - for the organization.

In some cases this means that Joe Average may not receive an annual merit increase this year, even if their performance has been ok / satisfactory / meets expectation, etc.

Making these decisions is not easy.  But it's not supposed to be.  That's why (tongue in cheek) the managers make the big bucks.  Then again, perhaps if it was the manager's own money being spent the answers might not be so hard to find. 

You know who the right employees are.  Put your money there.

Chuck Csizmar CCP is the founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad-based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.

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