Pay-For-Performance (CONT’D FROM PAGE 1)
Avoid Pitfalls As attractive as they are, P4P programs can be tricky to design well. Poorly implemented ones fail to reward good performers adequately, leading to costly morale issues. The biggest cause of failure is a lack of sufficient atten- tion to the critical task of carefully selecting performance goals, while presenting them in the moderating context of larger company values. “I think the biggest reason that performance-based compensation programs don't work is that the managers have not identified the possibility of unintended conse- quences,” said Chad Prinkey, Founder and CEO of Well Built Construction Consulting. “It’s great that people be- come focused on unlocking additional performance-based compensation. But what happens when they pursue the bonus at all costs, throwing other business priorities aside?” Prinkey gives an example: “It can be dangerous to have project managers and superintendents earn additional compensation solely on profitability. They have way more responsibilities than that, including quality and safety.” Too much emphasis on the bottom line, in other words, can backfire in the form of rising accidents, shoddy customer service, and defective goods. And how about the costly ramifications of salespeople who push too hard? “Employees too attached to outcomes can fall into the trap of pushing too aggressively for reve-
“A P4P program can really help companies weed out underperformers, reward the top players and identify those in the middle of the pack,” said Catherine Rymsha, Visiting Lecturer, Management at University of Massachu- setts Lowell.
Finally, compensation-based pay holds a special attrac- tion to the fastest-growing segment of the prospect pool: Gen Zers. “People in their 20s have very clear expecta- tions about how they want to control their careers,” said Daniel P. Moynihan, Managing Director at Pearl Meyer. “Giving them a modicum of compensation control does just that.”
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