I did some research about reward and compensation KPIs. According to this research four levels of reward practices can be defined.

On the 1st level a reward is linked to a performance KPI of an individual.

On the 2nd level a reward is linked to important business outcomes (not just to an individual’s performance). This is logically supposed to work better, but in practice it is not a long term solution to a motivational problem.

Most companies are on the 3rd level where a reward is paid in a form of stocks and investments in a retention plan. For example, Apple today is definitely at that level.

There is a 4th level, where a company doesn’t pay a reward at all. That’s what Henry Mintzberg was writing about in the Wall Street Journal back in 2009.

The conclusion of my research is that:

- A company should choose a reward scheme (be on one of the four levels) according to its current business objectives;

- It is important to understand to change the reward type when the business objectives change

Learn more details:

Compensation and Reward HR KPIs Best Practices

From Spain, Rubí

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