Chapter 2

Why is this a concern?

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Most organ­i­sa­tions who use per­for­mance relat­ed pay, either for their base pay, or for bonus­es, have tra­di­tion­al­ly based their deci­sions on rat­ings tak­en from their annu­al appraisals. But if you remove the annu­al per­for­mance appraisal and replace it with ongo­ing dis­cus­sions and feed­back through­out the year, how do you make your per­for­mance relat­ed pay decisions?

The short answer

The answer is sur­pris­ing­ly sim­ple. When it’s time to make deci­sions about pay, you sim­ply ask your man­agers to tell you how each of their team mem­bers has per­formed over the peri­od in ques­tion, and use that data to inform your per­for­mance relat­ed pay. This of course brings up fur­ther ques­tions such as how should your man­agers mea­sure their team mem­bers per­for­mance and how do you ensure fair­ness and objec­tiv­i­ty? I’ll be answer­ing these ques­tions over the course of this guide.