How financial institutions can better align performance management and compensation systems
As talent management consultants, we see more frustration among our clients over performance management and compensation issues than any other human resource issue. But aligning these two things is critical to helping employees understand your organization’s expectations around performance and how performance impacts compensation.
By establishing an effective performance management system, your financial institution can positively impact the performance of not only individuals but also the entire organization.
The benefits of continuous performance management
So what goes into an effective performance management system? It’s defining a position’s expectations, facilitating goal setting, and encouraging formal and informal communication throughout the year (and not just during an annual review period).
The benefits of continuous performance management are clear. Regular performance discussions provide timely feedback to employees. Positive feedback most often leads to more positive on-the-job behavior and higher morale. Constructive feedback provides an opportunity for the employee to change behavior to achieve desired outcomes and feel a greater sense of achievement.
On the organization’s side, engaging in recurrent performance-related discussions on a monthly or quarterly basis increases the likelihood of employees achieving their performance goals. It enables the financial institution to identify and remove obstacles, catch performance slips prior to progressing to the termination stage, and demonstrates to employees that the organization is invested in their success.
Research shows that the majority of employees are motivated to attain high performance if they know they will be rewarded with a greater-than-average increase or when they see a direct link between the achievement of pre-determined goals and objectives and an incentive award.
Let’s take a deeper dive into the benefits of continuous performance management and how organizations can make the transition from traditional annual performance review. Click here to keep reading.
