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Performance and Reward Management
Capabilities | Performance and Reward Management
Performance management is concerned with measuring individuals' effectiveness in their roles, understanding their aspirations and determining which development actions would be most appropriate. Reward management is about understanding individuals' motivating factors, and determining the level of pay, bonus and other rewards they receive. In some organisations the links between the two are strong and explicit, while in others they are kept deliberately separate. Work in these areas can be prompted by evidence of employee dissatisfaction, such as high turnover or poor morale, or by the desire to drive a change in some aspect of employees' behaviour.
Work in this area usually includes
- Understanding the overall objectives and structure of the organisation, and the factors that have prompted the review of performance and reward
- Understanding how the current performance and reward management systems work, how they are perceived, and what effect they are having
- Agreeing what behaviours and capabilities should be rewarded, and what reward elements and approaches should be used, for which employees
- Defining and agreeing new systems, any effect on roles and responsibilities, and the implementation timing and approach
- Implementation, including communication and training, and any necessary changes to business processes and information systems
The effectiveness of an organisation's performance and reward management can have a major impact not only on morale and productivity but also its ability to attract and retain staff. Many companies have found that far from complementing the stated aims of the business, their performance and reward systems were actually driving counter-productive behaviour.
Two case studies deal specifically with this area: 'Establishing a new performance management system' and 'A review of an existing rewards and motivation system'.
