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HRM CA | 16 Dec 2014, 09:00 AM Agree 0
Stop blindly rewarding high achievers and consider your company’s culture – employment lawyer Dan Peyton talks employee remuneration the right way.
  • David Cohen | 16 Dec 2014, 12:12 PM Agree 0
    While I would agree with the statement "Performance-related rewards must promote corporate values" I would go further. Regardless of the success of an individual if that person does not consistently, without exception, demonstrate the behaviours of the company values, the person is not entitled to any reward. If you reward a person who does not live the values you make the employees realize the values are aspirational. As a result no one takes them seriously and become cynical about the company and it's culture.

    However there is a bigger issue to be faced that should financial rewards be the way to go at all.

    Economists at the London School of Economics looked at 51 studies of pay-for-performance plans, inside of companies.

    They found: "... that financial incentives can result in a negative impact on overall performance.”

    There is much literature, of late, validating this statement. So the question if why should we give financial rewards. Plus if you give them year after year they are not a reward they become part of the expectation and base salary. So why not stop playing the games with employees and just give people from the start of the year what you intend to give them. If the person does not meet their commitments lower the salary for the coming year, put them on a performance improvement plan, and if they don't work out let them go. But make that clear when they start working with you.
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