Many years ago, I attended a conference in London about the link between employee pay and performance. In one session there was an employer representative arguing in favour of a link and a trade union representative arguing against.
In the questions and answers I asked the union rep, providing there was an objective and fair appraisal process, how he could argue that those who contributed more to the size of the “cake” should not receive a bigger slice? His answer, at best, was waffle. The lady who chaired the session came up to me in the break and said: “You ask very powerful questions!”.
Now, in the intervening years I have introduced many performance related pay schemes and believe passionately that performance should link to pay, for the reason I put to the union rep all those years ago.
In the last year or so there has been much focus on the wages squeeze and employers finding it difficult as a result to keep good staff. I have often thought that one part of the solution would be introducing performance related pay ie good performers would receive a bigger increase, while poor performers would receive less much less or may be even nothing.
Interesting then that the Willis Towers Watson Global Workforce Study, just published, shows that only a third (37 per cent) of employees see a clear link between their pay and performance. The study, which gathered responses from more than 36,000 employees across a range of industries, also reports that only two in five (40 per cent) employees felt their managers made fair decisions linking performance to pay.
So, next time you are thinking about how you can stop your best employees from leaving whilst wages remain squeezed, think about Marie Antoinette!
David Cawthorne, Cedar Human Resources