Here’s a ‘Q’ from today’s edition of the "Dear Workforce" email newsletter:

We are a health care system employing
nearly 5,000 people. Our philosophy on salary changes no longer fits our
business. Up to now, we have boosted employees’ pay when the market dictated it.
The current practice greatly increases costs and may reward employees whose
performance does not merit an increase. What best practices are other health
care organizations following in this regard?

The ‘A’?

• Establish compensation levels that eliminate
  unwanted turnover
  and position your organization as a sought-after
  employer.

• Focus on variable compensation, incentives and
  bonuses that motivate employees to boost quality and productivity.

• Redesign your benefits programs so employees can
  customize packages to their specific needs.

• Develop employee recruitment and development
  programs that improve your competency levels.

• Adopt aggressive performance management policies
  that identify and reward high
  performers, even while stimulating personal and professional growth.

The Lowdown:

Basically, the answer encompasses some aspects of comprehensive Performance Management. In this sense, I agree with the author – Thomas Flannery of Buck Consultants in NY. The problem is, of course, that the question submitted is really about Pay for Performance. The challenge of paying for performance is one that’s getting quit a bit of exposure these days and the truth is that there’s no easy ‘A’.

The only way to truly pay for performance is to 1. Align the efforts of your workforce with the overarching goals of your organization. 2. Systematically and quantitatively Evaluate performance against those goals through a comprehensive review and assessment process. 3. Adjust all types of compensation (base, benefits, stock, etc.) in a way that’s correlated directly to that performance.

What kinds of tactics have you used to pay for performance. What works and what doesn’t?