A Twist on Pay for Performance in a Down Economy

Most of us agree that Pay for Performance is a good thing – at least those of us who consider ourselves high performers. We like the idea that if we perform, we reap the rewards. We want to know that the employee who shops online during work hours and delivers mediocre results does not receive the same monetary rewards as those of us who regularly exceed expectations.

However, in our current down economy, many employers are holding off delivering bonuses and incentives to all employees, including high performers. In fact, if they are giving any monetary incentive at all, they are taking the “peanut butter” approach of offering the same incentive across the board. Even with salary cuts, many organizations are cutting equally across the organization. None of these approaches engage and motivate the high performers – the ones who are capable of navigating your business through these tough economic times to come out successful on the other side.

To this end, I heard a rather novel idea the other day I want to pass along for your reaction. Why not take the same organizational approach to salary reductions and performance incentives in good times and apply them in a down economy? In other words, if an organization is cutting salaries, low performers take more of a hit than high performers. This would send a powerful message throughout organizations – one the high performers would appreciate and which would still preserve an element of incentive for their effort. Your thoughts?

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