The compensation planning involves mitigating the risks which might surface . A fear of backlash from the 'performance-based' compensation have always topped the chart . The forced ranking and bell-curve have shown over the years , how it dissatisfies the employees .
Contrary to this conventional wisdom here's a research paper, which proves why and how performance based compensation works better !Ian Larkin (Harvard University) and Stephen Leider (University of Michigan) , emphasised that over-confident employees with an high self-image would opt for bonus plans where they can decide on the amount through performance. This adds on to the self -efficacy, hence is always the preferred plan for them. The sales and marketing are the two verticals, who opt for this.
My view, It all depends on the job and the motivation out of it ! When an employee is aware of an unlimited target which is achievable the employee would go for performance -based compensation. Whereas, the employee who have a limited work area or an unachievable target would opt for higher fixed components.
Please share your views
Leaving Money on the Table
From India, Mumbai
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1872Contrary to this conventional wisdom here's a research paper, which proves why and how performance based compensation works better !Ian Larkin (Harvard University) and Stephen Leider (University of Michigan) , emphasised that over-confident employees with an high self-image would opt for bonus plans where they can decide on the amount through performance. This adds on to the self -efficacy, hence is always the preferred plan for them. The sales and marketing are the two verticals, who opt for this.
My view, It all depends on the job and the motivation out of it ! When an employee is aware of an unlimited target which is achievable the employee would go for performance -based compensation. Whereas, the employee who have a limited work area or an unachievable target would opt for higher fixed components.
Please share your views
Leaving Money on the Table
From India, Mumbai
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Hi,
I partially agree with the point given... You may implement it for the sales team as their outcome is visible, but what about the backend people, like HR, Finance, Admin, and Security? These departments can be measured but not on the basis of data as they are not figure-oriented departments. If you want to evaluate performance, there would be some other tools.
I tried a lot in my last organization to implement performance-linked bonuses, but every time I was stuck at the back office. To motivate individuals, money is not the only factor; there are other non-monetary factors as well through which individuals can be highly motivated.
What do you say about it?
Thanks!
Deepak
From India, New+Delhi
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I partially agree with the point given... You may implement it for the sales team as their outcome is visible, but what about the backend people, like HR, Finance, Admin, and Security? These departments can be measured but not on the basis of data as they are not figure-oriented departments. If you want to evaluate performance, there would be some other tools.
I tried a lot in my last organization to implement performance-linked bonuses, but every time I was stuck at the back office. To motivate individuals, money is not the only factor; there are other non-monetary factors as well through which individuals can be highly motivated.
What do you say about it?
Thanks!
Deepak
From India, New+Delhi
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