For Talent Management Success, How to Best Reward High Performers?

A man on the podium wins first place for best talent management

There is some controversy in the talent management arena about how to create and reward high performance and about the role that extrinsic motivators like money can play in creating a high performance culture.

While the majority of our clients use pay-for-performance as a component of their total rewards and recognition philosophy to create a high performance culture, a recent survey by Willis Towers Watson found that:

  • Only 20% of employers believe merit pay is effective at driving higher levels of performance
  • 26% of employers still pay bonuses to employees who fail to meet expectations

The survey also found that companies are beginning to put more weight on the strategic importance of people’s roles, their contribution to team goals and their ability to help the company succeed in the future, not just the present.

To complicate matters, authors like Dan Pink have pushed the idea that intrinsic motivators like autonomy, mastery and purpose drive real and lasting motivation, not extrinsic rewards like money.  In a similar vein, psychologists tell us that extrinsic rewards only temporarily change what people do.  They assert that rewards like bonuses, vacations and awards do not change the underlying attitudes and beliefs required for lasting and committed behavior change. Some even postulate that financial rewards can ultimately have a negative impact on intrinsic goals like personal growth and engagement.

So when you want to help your people perform at their peak and move the business strategy forward in a way that makes sense, what role should rewards play in your talent management strategy?

Base Salary
Let’s start with base salary.  We consider base salary a “ticket to play the game.”  From our perspective, base pay is a talent management hygiene factor that needs to be at a certain level to be a positive factor in ensuring a healthy organizational culture.  Similar to basic levels of employee engagement, leadership, trust, safety, ethics, character and respect, base salaries need to be good enough that they don’t demotivate or undermine performance.  But it doesn’t necessarily follow that significantly increasing a person’s base salary results in higher levels of performance.

In fact, the largest research study we could find on pay and motivation found people’s satisfaction with their salary is mostly independent of their actual salary.  But as most of us know about ourselves, money can be a powerful draw to attract and retain employees. Gallup finds that 44% of employees say they would consider taking a job with a different company for a raise of 20% or less.  As you may imagine, the higher the level of employee engagement, the less likely an employee is to leave for more money.  Correspondingly, the higher the level of dis-engagement the more likely an employee is to leave.  In fact, dis-engaged employees are almost twice as likely to leave for higher pay.  So it is not ALL about the money.

Our Advice on Base Salary: Make sure that you have a compensation plan that puts your base pay in a range that allows you to attract and retain the quality talent you need to execute your strategy in your unique marketplace.  If you find you need to “overpay” to lure and keep talent, you are probably compensating for a larger strategic or cultural issue that should be resolved with non-monetary talent management strategies.  Remember, you can buy people’s time, but not their discretionary effort, loyalty and advocacy. So if you want them to be truly engaged, find the sweet spot of base pay that does not serve as the sole motivation for people to join or stay.

Pay for Performance
Assuming your base pay is at an acceptable and healthy level to attract and retain the talent you need, the next question becomes how to best use performance-based rewards to motivate high performance.  We believe that it is a leader’s job, and the purpose of an effective talent management strategy, to create the circumstances to get the most out of their people.  And we know that rewards and recognition play a major role in shaping a work environment.

Like most talent management challenges, tying rewards to performance or performance reviews has both pros and cons.  Most of the pros relate to being able to better attract and reward those who deserve it while most cons relate to subjectivity, politics and muddying the waters with respect to career and performance development.

Our Advice on Pay for Performance: For people to strive to perform at their peak there should be, in addition to the intrinsic motivators tied to your corporate culture, a commensurate level of rewards and recognition tied to their higher performance in a way that aligns with the overall company strategy.  To get it right, make sure that your rewards and recognition create desire and motivation to perform by:

  • Providing positive feedback for desired behaviors
  • Delivering meaningful, customized and proportional rewards for higher performance
  • Distributing the greatest share of the rewards to the highest performers
  • Ensuring the rewards are timely, fair, proportionate and consistent
  • Basing them upon clear, accurate and achievable definitions of success and failure
  • Having the rewards based upon a clear performance cause and effect

Intrinsic Motivation
Once your extrinsic motivators of base pay and pay for performance are in place, you should make sure that you have created strong enough intrinsic reasons for people to stay and to perform.  If your organizational culture is devoid of meaning, you will most likely see signs of complacency, a lack of innovation, and a lack of stretch goals as people try to stay with the status quo.  To add more meaning into your culture, make sure that any intrinsic motivators are meaningful, emotionally significant, modeled by leadership and aligned with the business strategy.  Above all else, make sure your talent can answer the question, “Why is it worth it to be here and perform at a high level?”

Rewarding the behaviors that are in sync with your corporate culture and business strategy can make a huge difference. Setting the right talent management strategy to attract, develop, engage and retain top talent accounts for 29% of the difference between high and low performing organizations.

Is your rewards and recognition program helping to create high performance?

To learn more about creating a high performance culture, download How to Create a High Performance Culture White Paper.

Comments are closed.

Congratulations on your pro-activity in establishing this program and developing such an effective New Employee Orientation course.

Farhat Ali
President and Chief Executive Office

Fujitsu

We partnered with LSA to pilot a customized behavioral interviewing program to help ensure that we continue to hire the best and brightest as we continue to rapidly scale. LSA’s ability to understand our business and our unique culture combined with their desire to ensure that the best practices framework truly fits our performance environment and is highly adopted by our people is a real blessing. Most other firms want to just ‘give you training.’ Not LSA, they are focused on helping me hit our hiring forecasts and attract A players.

Jennifer Remling
Director of Global Recruiting

AKQA

We have worked with LSA Global for our learning and development needs and have always had great success. They helped us recently with customized Management Workshops that we held for the second time. It was fantastic, and I would highly recommend LSA to anyone that is attempting to get immediate and impactful improvements.

Mary Johnston
HR Manager, BU Radiology Informatics

VNUS Medical has been very pleased with the effective management development programs that LSA Global has delivered for us over the last four years. The programs have been universally facilitated by experienced and best in class instructors. The knowledge gained by our management team has been put into practice very quickly. VNUS is very happy to be working in partnership with LSA because they consistently deliver excellent programs that receive exceptional feedback from our management team.

Cindee Van Vleck
Director Human Resources

We value our relationship with LSA Global. We came to LSA because we wanted to improve overall behavioral based interviewing capabilities of our managers to increase the probability of both hiring top talent and future leaders. LSA designed a highly customized solution for our business and culture. We are currently rolling out this solution to our leaders. I would highly recommend LSA Global as a top quality resource.

Rae Phillips
HR Project Manager - Training & Development, PHR

Each program is preceded by an assessment of the participants. The course is then designed to fit the specific parameters and needs of the group. The highly interactive delivery is provided by recognized experts in their fields. On the spot coaching is provided during the program and each participant receives individual follow-up after the course. Courses can be delivered in-person or virtually. Given the nature of Cisco’s business and the way we operate, these remote workshops are a must for anyone who joins our company. Their work is eye opening. Great content and fantastic delivery.

Frank J. Kuypers
Business Development Manager

For our go to training outsourcing partner, LSA provides exactly what we want. As always, they deliver outstanding work!

Elizabeth Siebert
Director, Organizational Excellence & Development

Intuit

In the Next Generation Management Development courses, I was trained with skills and tools that have made me and my team more productive, motivated, and successful at communicating with other departments.

 

Kevin Ashman
Firmware Engineering Supervisor

The LSA Global team was very receptive and flexible to our needs every step of the way. Their staff and facilitator demonstrated attention to detail, responsiveness, and professional courtesy. The participants were thrilled with the outcome and rated the communication skills workshop and the facilitator as ‘Excellent’. I’d highly recommend working with the LSA Global team to meet your professional development needs.

John Mastrorilli
FRDP Leader

Intuit

LSA’s consultant designed and delivered a half-day team building solution for our recent conference. It included careful customization to integrate the design with our new mission and values. Everyone had fun and identified key issues with our teamwork. Altogether a great program!

Bob Ward
Director of HR

We recently contacted LSA Global to assist us with a unique training request. We gave LSA a very short deadline and LSA custom designed a training program to meet our exact requirements within the limited time allotted to them. We found their facilitator to be well versed in the subject matter and very credible; the design provided practical and valuable information to our team of managers. I highly recommend LSA Global, particularly in the area of management training.

Julaine K. Souza
Senior Vice President

PalmSource has found our relationship with LSA extremely beneficial. We worked closely with LSA to customize the right Management Training Program solution to meet our unique business needs. LSA is a quality organization, one that I’d recommend to any company looking for a first class training and consulting partner.

Ken Boehm
Vice President of Human Resources

Thank you to LSA Global for their partnership and support in helping us to design and roll-out our valuable management development training program. I personally have partnered with LSA Global at four of my previous companies. It continues to be a delight working with LSA. We look forward to partnering with them at Blackhawk Networks for future training and consulting needs.

Suzanne Kinner
VP Human Resources

Blackhawk Network

Our company engaged LSA to do a specialized “train the trainer” program, and the consultant’s performance outdid our exceptionally high standards for such a program. Very crucial to the success of this program was the work done upfront to discuss our needs and to interview key members of our organization so that the program specifically met our goals. Our facilitators continue to comment on the success of the program. Thanks also for the follow-up.

Frank Abbott
Chief Financial Officer

We recently partnered with LSA Global to offer our Supervisors and Managers a customized two-day management training program. Everyone who attended said it was by far the best management training program they had ever attended. The content was rich and highly interactive. The case studies were relevant. Each participant walked away from the training much better equipped to lead their teams.

Jeff Coon
Director of Human Resources

Evaluate your Performance

Toolkits

Toolkits

Download key published insights and tools from industry experts highlighting best practices in the areas of talent, strategy and culture.

More

Health Checks

Health Checks

Want to know how you stack up against leading organizations?  Receive a complimentary benchmarking analysis courtesy of an LSA Expert.

More

Whitepapers

Whitepapers

Get up to speed on timely solutions critical to your business. Published by LSA Experts based upon client feedback and key industry trends.

More

Methodology

Methodologies

First we identify the key metrics you want to improve. Then we assemble a dedicated team of elite experts who have successfully solved similar problems with similar clients.

More

Blogs

Stay up to do date with the latest information on how we help high growth companies align their culture and talent with strategy.

More

Case Studies

Client Case Studies

Real world consulting and training approaches from LSA projects, providing insights on how your company can outperform the competition.

More