Board Converting News, January 17, 2022

Retaining Employees (CONT’D FROM PAGE 26)

dening customers with unwanted accounts, as a textbook illustration of a performance-based pay scheme gone bad. “You have to make sure the objectives you set are not just based on sales or revenue, but also on the way customers and colleagues are treated.” The sales person who is making a great number of sales may also have a rushed, impatient manner that ir- ritates your customers. Gear your bonus plan to reward employees for quality service. Use the telephone, a mailed survey or the Internet to assess customer satisfaction. On the other side of that coin, performance-based pay won’t work if employees are unclear about how their ac- tions directly contribute to the organization’s bottom line, or lack sufficient know-how to perform to their maximum potential. “You need to make sure employees have a suf- ficient measure of control over meeting the described ob- jectives,” says Cutting. “And they must be given the proper tools to do so.” Include Everyone One more hazard for performance-based pay: Employ- ees left out of the program may resent their inability to earn bonus compensation. That’s why it’s important to in- clude everyone, even those for whom it’s difficult to mea- sure quantifiable workplace results. “For people who are solely responsible for their work, and where their activities can be readily quantified, pay for performance plans are more straightforward,” says Dye.

Besides its direct financial component, such pay serves to highlight the connection between employee actions and organizational success. “It’s important that people un- derstand their overall part in the success of a business,” says Cutting. “Performance-based pay does that.” At some companies performance compensation represents 20 percent or more of take home pay.

Valuable as it is as a retention tool, performance-based pay carries the hazard of unwittingly rewarding the wrong behavior. “You need to be careful that the performance objectives you set are in alignment with your business val- ues,” warns Cutting. She points to the recent experience at Wells Fargo, a bank that rewarded its employees for bur-


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January 17, 2022

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