I know the current trend is to decouple performance management from compensation, but I hate that trend so much. I want to stab it in the face.
Ongoing communication is important.
I’m not here to advocate for an annual performance review and compensation discussion with no contact in the middle. I’m just on the side of science that says you probably don’t understand your team’s performance. You bring your bias to every discussion. So let’s not pretend that more manager-to-worker communication is the solution to creating a robust and satisfying employee experience. Yes, okay, talk to your employees regularly. But then speak to them in a formal, documented, considered way when the time comes for a raise (or not). Stop acting like there’s a false choice between being Tony Robbins and doing nothing but having an informal discussion about cash.
Performance and compensation are linked, and your workers should understand how and why.
Most professional employees get an annual lift in pay. You get one shot at it, and all of your hard work comes down to one decision. If you’re the average worker and don’t fight to earn the best raise possible, your future earnings suffer. Employees know that performance is the bedrock of compensation, and to decouple the performance discussion from the compensation process is disingenuous and alarming. Do you award raises and RSUs based on something other than performance? If so, be ready to tell everybody what the hell your compensation program is all about. And maybe call in some lawyers.
Performance informs pay.
I know you hate to link performance and pay because that seems heartless. Of course, employees work to receive benefits and professional development opportunities. They get to hang out with fun people. They might even reprioritize money if you give them a mission and vision. But if you take away money, it’s not a job. It’s volunteerism, and they won’t show up. Mature people agree that it’s not sacrilegious to talk about compensation and performance in the same breath. If a corporation is here to make money and do good work, let’s improve our communication skills and find a mature way to talk about performance and wages with our employees.
So, in short, stop lying to your employees and saying that performance management is a sacrosanct process that is reliable, valid, and done for the sake of personal and professional development. Performance management might lead us down the path of greater personal awareness, but for most of us, it should lead down a path to a raise and maybe a bonus. Let’s make the process of giving feedback and awarding equal pay for equal work a little more transparent, logical and mature.
Performance has decoupled itself from reward because the difference between “godlike” and “garbage” is usually something like 2%. And the process for even assessing that is so shot full of bias and guesswork that you might as well admit that any spare cash is going to be spread around to avoid awkwardness and conflict amongst the troops. Not sure what the solution to any of that could be, but I am somewhat reassured that you don’t seem to know either. Maybe base consolidated rises on company performance, with a bonus used to reward individual performance? Don’t know…