When it comes to the way in which employees are rewarded, every company is different. That can make it hard for you to figure out how to earn more rewards for your hard work. What if managers in your company are required to rank employees on a bell curve? Will you be one of the select employees who receives a higher ranking and a bigger raise and bonus? If you feel you are a high performer and you get a middle or lower ranking, you might feel some resentment about this kind of forced ranking of employees and the corresponding compensation system.
On the other hand, what if you work in a company that does not differentiate between and among employees based on performance, where high performers and low performers are recognized and rewarded equally? What kind of resentment can this kind of “equality” cause?
Who can complain about a system where everyone is rewarded equally? You might be thinking: “High performers, that’s who!”
And you would have a point. The truth that everybody knows but nobody likes to acknowledge is that one high-performing employee is worth more to the business than three or four mediocre employees. If you are one of those high-performing employees, you already know that. If you are not one of those high-performing employees, you should learn that and become one! And if you want to earn more rewards, it helps to understand how your company makes decisions about when, how, and how much to reward its employees.
Current Trends in Performance Management
There are three leading trends in human capital management today that affect the way in which employees are rewarded:
- The new version of management by objective
- Forced ranking
- Pay for performance
All three can present obstacles to your attempts to earn more rewards from your hard work.
- The new version of “management by objective”: These days, managers at all levels are given performance objectives (referred to as “numbers” because they usually are articulated in numbers) for every dimension of their operations. The worthy intention is to place the focus on concrete, measurable outcomes. The problem is that, too often, the numbers serve as a trigger for cascading recrimination (or praise), even though what gets measured may not be tied directly to actions that are in the control of individual employees. Without step-by-step instructions communicated clearly at every level of the chain of command, these objectives can be little more than wishes.
- Forced ranking: Most leading organizations are moving to some form of “forced ranking,” a practice made famous by Jack Welch, the CEO of GE for some 20 years. This is the practice whereby managers are required to make candid evaluations of every employee according to a tight distribution of grades such as A, B, and C. Sadly, while evaluation and differentiation are key in this system, forced ranking is an exercise in guesswork unless managers monitor, measure, and document every employee’s performance on an ongoing basis. Once a year just doesn’t do the trick.
- Pay for performance: This is currently the biggest trend in compensation: decreasing the amount of employee pay that is fixed and increasing the amount that is contingent on performance. I applaud the notion of differential rewards based on differential performance. The problem is that pay for performance works only when managers spell out for each employee exactly what the employee needs to do (concrete actions within the control of the employee) to get paid more, as well as what he or she might do that would result in a decrease in pay. The manager then needs to monitor, measure, and document each employee’s actual performance (concrete actions) on an ongoing basis. But that doesn’t happen often, so the results of pay for performance can be surprising and unfair, despite the obvious fairness of the idea.
These three trends are central to the new high-pressure workplace in which high performance is the only option. The irony is that even though each of these strategies is intended to make up for the fact that managers don’t engage in more day-to-day performance management with employees, they each depend on a high level of engagement and fail miserably when managers are disengaged.
These trends have several important implications for what you need to do in order to earn more rewards:
- Make sure you know exactly where you fit in relation to your managers’ numbers. What role do you play? How does your work move the numbers? Talk with each boss to make sure your understanding is right.
- Don’t focus on the numbers. Instead, focus on your own performance of your own work in your own role.
- Keep close track in writing. Keep track of your concrete actions at work: the actual performance you control and your work in meeting your goals and deadlines. Keep score for yourself on your own contributions so you will be able to describe them to each boss.
- Make sure you know whether or not you will be ranked, and if so, when, how, and by whom? If your company uses a forced ranking system, how does it work? Exactly what aspects of your work will each boss consider when ranking you? Talk with each boss to make sure your understanding is right.
- Maintain an ongoing dialogue with each boss. Every step of the way, maintain an ongoing dialogue to make sure you understand that boss’s performance expectations of you for the year, for the month, for the week, and for today. Exactly what tasks, responsibilities, and projects should you focus on right now? Exactly what goals and deadlines should you focus on right now? Exactly what to-do items take priority? Exactly what are the opportunities to meet requirements, and what are the opportunities to go the extra mile?
- Try to get each boss involved in ongoing written tracking. Try to get each boss to document in writing how well your actual performance lines up with the expectations you set together every step of the way. And whether or not a particular boss keeps track in writing, you keep close track in writing as you accomplish every concrete action, every task, responsibility, or to-do item. Keep score for yourself, and show each boss your written tallies during your ongoing one-on-one dialogues about your work.
- Find out whether you will be subject to a pay-for-performance system. If so, make sure you understand how the pay-for-performance system works. Is there a formula? Who decides? When? How? How much money is at stake? What can you do to earn more? What would result in your earning less? Discuss the system with each of your bosses to make sure your understanding is right.
Bruce Tulgan is an adviser to business leaders all over the world and a keynote speaker and seminar leader. He is the founder and CEO of RainmakerThinking, Inc., a management research and training firm, as well as RainmakerThinking.Training, an online training company. Tulgan is the best-selling author of numerous books, including “Not Everyone Gets a Trophy” (revised and updated, 2016), “Bridging the Soft Skills Gap” (2015), “The 27 Challenges Managers Face” (2014), and “It’s Okay to be the Boss” (revised and updated, 2014). He has written for The New York Times, the Harvard Business Review, HR Magazine, Training magazine, and the Huffington Post. Tulgan can be reached by e-mail at brucet@rainmakerthinking.com; followed on Twitter @BruceTulgan; or via his Website, www.rainmakerthinking.com.
