Reward High Performers: How to Get It Right

How to Best Reward High Performers
Few topics in talent management spark more debate than how to reward high performers effectively. Most leaders agree on the goal — encouraging and sustaining exceptional performance — but far fewer agree on the means. In particular, there is ongoing tension around the role of extrinsic rewards, such as compensation and incentives, in shaping a true high-performance culture. While money clearly matters, the real challenge lies in understanding:

• When money motivates.
• When money backfires.
• How money fits into a broader system that reinforces accountability, growth, and meaningful contribution.

Recent Rewards and Recognition Research: How to Reward High Performers

While most of our clients include pay-for-performance as part of a broader rewards and recognition philosophy, the results often fall short of building a true high-performance culture. A Towers Watson survey underscores why:

• Only 20% of employers believe merit pay effectively drives higher levels of performance.
• 26% of employers still award bonuses to employees who fail to meet expectations.
• More organizations are shifting emphasis toward the strategic value of roles, contributions to team outcomes, and the ability to drive future success — not just short-term results.

When we assess organizational culture, we see the same disconnect. Reward systems are often designed to signal performance differentiation, yet day-to-day practices frequently dilute that message, leaving high performers under-recognized and average performance implicitly reinforced.

The Role of Intrinsic and Extrinsic Motivators
The debate becomes even more nuanced when considering the growing body of work on intrinsic motivation. Authors such as Dan Pink argue that autonomy, mastery, and purpose — not money — are the true drivers of sustained motivation and discretionary effort. In a similar vein, many psychologists contend that extrinsic rewards may influence behavior in the short term, but rarely reshape the deeper attitudes and beliefs required for lasting, committed performance.

From this perspective, bonuses, trips, and other tangible rewards can prompt temporary compliance without fostering genuine ownership or engagement. Some researchers go further, suggesting that an overreliance on financial incentives can actually crowd out intrinsic motivation, weakening commitment to personal growth, learning, and long-term engagement if rewards become the primary reason people perform.

What Role Should Rewards Play in Your Talent Management Strategy?
If the goal is to help people perform at their peak while advancing business strategy in a sustainable way, the question is not whether rewards matter — but how they should be used. What is the appropriate role of rewards in a talent management strategy designed to reinforce accountability, fuel growth, and differentiate truly exceptional contribution? More importantly, how can organizations reward high performers without undermining the intrinsic motivation, ownership, and long-term commitment required for enduring success?

How to Best Reward High Performers
Here’s our two cents.

1. Base Salary
   Start with base salary. We view base pay as the ticket to play the game. It is a talent management hygiene factor — one that must reach a credible threshold to support, rather than erode, a healthy organizational culture.

   Much like baseline levels of engagement, leadership trust, psychological team safety, ethics, and respect, base salary needs to be “good enough” to avoid becoming a source of distraction or resentment. When pay falls below market or is perceived as unfair, it reliably undermines performance. What does not follow is the assumption that materially increasing base pay will produce proportionally higher performance.

   The largest research studies on pay and motivation show that satisfaction with compensation is largely independent of absolute salary levels once basic expectations are met. That said, money still matters — particularly for attraction and retention. Gallup reports that 44% of employees would consider leaving their current employer for a raise of 20% or less. Engagement, however, changes the equation. The more engaged employees are, the less likely they are to leave for marginal increases in pay. Conversely, disengaged employees are nearly twice as likely to jump ship for higher compensation.

   In other words, it is not all about the money.

   Our Advice
   Ensure your compensation structure places base pay within a range that allows you to attract and retain the caliber of talent required to execute your strategy in your specific market. If you find yourself routinely “overpaying” to recruit or keep people, you are likely compensating for a deeper strategic or cultural issue — one that would be better addressed through leadership effectiveness, role clarity, development, and meaningful work.

   You can buy people’s time. You cannot buy their discretionary effort, loyalty, or advocacy. The goal is to find the base pay sweet spot — sufficient to remove pay as a source of dissatisfaction, without making it the primary reason people join or stay.

2. Pay for Performance
   Once base pay is at a healthy level — sufficient to attract and retain the talent required to execute your strategy — the focus shifts to how performance-based rewards should be used to encourage higher levels of contribution.

   We believe it is the leader’s responsibility, and the core intent of an effective talent management strategy, to create the conditions under which people can do their best work. Rewards and recognition matter because they shape behavior, signal priorities, and reinforce what the organization truly values. As with most talent management decisions, linking rewards to performance or performance reviews comes with real tradeoffs.

   The upside is clear. Well-designed pay-for-performance systems help differentiate contribution, reinforce accountability, and visibly reward those who create the most value. The downside is equally familiar: subjectivity, organizational politics, inconsistent application, and the risk of confusing compensation decisions with coaching, development, and career growth conversations.

   Our Advice
   If you want people to consistently perform at their peak, intrinsic motivators embedded in your culture must be reinforced with rewards and recognition that credibly reflect higher performance and align with strategic priorities. Done well, pay for performance strengthens focus and commitment. Done poorly, it erodes trust and blunts motivation.

   To get it right, design rewards that create genuine desire to perform by clearly reinforcing desired behaviors, delivering rewards that are meaningful and proportionate to contribution, and allocating the largest share of rewards to the highest performers. Timing and fairness matter. Rewards must be timely, applied consistently, and grounded in a transparent cause-and-effect relationship between performance and outcomes. When people can clearly see how their actions drive results — and how results drive rewards — pay for performance becomes a powerful amplifier rather than a source of skepticism.

3. Intrinsic Motivation
   Once the extrinsic fundamentals — competitive base pay and credible pay-for-performance — are in place, the real work begins. Leaders must ensure there are compelling intrinsic reasons for people to stay, commit, and perform at a high level. When an organizational culture lacks meaning, the symptoms are predictable: leadership complacency, minimal innovation, risk aversion, an absence of stretch goals, and quiet acceptance of the status quo.

   Intrinsic motivation is what sustains performance when incentives fade into the background. It is fueled by work that matters, progress that is visible, and a sense that individual effort contributes to something larger than the next compensation cycle. Without this, even generous reward systems become blunt instruments — expensive, but ineffective.

   To strengthen intrinsic motivation, ensure these drivers are authentic and emotionally resonant, not corporate slogans. They must be modeled consistently by leaders, embedded in daily decisions, and clearly aligned with the business strategy. Purpose that is disconnected from how the company actually operates quickly loses credibility.

   Above all, high performers should be able to answer a simple but decisive question: Why is it worth being here — and doing what it takes — to perform at a high level? When that answer is clear and believable, intrinsic motivation becomes a durable competitive advantage rather than a leadership aspiration.

The Bottom Line
Rewarding behaviors that genuinely align with your culture and business strategy is a critical performance lever. The implication is clear: how you reward high performers either reinforces the conditions for sustained excellence or quietly undermines them. The real question is whether your current reward practices are intentionally driving higher performance and engagement — or simply maintaining the status quo.

To learn more about creating a high performance culture, download The Steps to Create a High Performance Culture that Thrives

by Tristam Brown: CEO

Tristam Brown is an executive business consultant and organizational development expert with more than three decades of experience helping organizations accelerate performance, build high-impact teams, and turn strategy into execution. As CEO of LSA Global, he works with leaders to get and stay aligned™ through research-backed strategy, culture, and talent solutions that produce measurable, business-critical results. See full bio.