Performance Pay System – Contribution Pay – Part III

Continuing our series looking at performance management and performance related pay.

We’ve looked at the straightforward methods of linking salary to performance. These systems are all based on how much a worker produces. This week we add a system which also takes into account how the worker acts or behaves:

Principle 3 Behavioural Competencies

Should behavioural competencies be incorporated into the performance pay or contribution pay system? i.e. should employees be rewarded not just on what they achieve but how they achieved their objectives?

In a contribution pay system, or performance pay system, the development of behavioural competencies is assessed together with the development of technical competencies and other skills pertinent to the job.

Most companies trying to focus on development and performance, particularly in the areas of customer service and teamwork include these within their performance development framework. A Performance Pay System which rewards the development and demonstration of the right behaviours underpins not only the development framework but the challenges and aims detailed in their business objectives.

Options for competencies

  • Core competencies: 4 or 5 competencies used for everyone in the organisation. Companies normally choose competencies which are aligned to the business strategy and change them as the business strategy changes e.g. customer focus, teamwork.
  • Competency dictionary or framework: each job has a different set of competencies chosen from a list of competencies (varying between 12 and 25), each competence has the behaviour described at different levels.
  • Competencies for broad groups hierarchically: all jobs in the company are split into 3 or 4 levels hierarchically, each having it’s own set of competencies building on those of the lower level e.g. the lowest level has customer focus, teamwork, adaptation to change; the next level up has these 3 competencies plus leadership and developing others and so on.
  • Competencies for each job family/function split into levels: a different set of competencies is chosen for each job family or function. These competencies are relevant to the nature of the jobs within that particular function, and they are usually defined at varying levels to describe how employees in jobs at various grades within the family should behave.

Give our Pay and Reward Consultants a call on 01506 828767 to discuss the support we can give you to enhance the performance of your organisation through the design of a performance management system to increase employee engagement levels and company profitability.