Chapter 7
Linking Rewards to Performance
7.1 INTRODUCTION
The number of companies we have worked with who think the ultimate solution to improving performance is to link their measurement system to rewards is only slightly outweighed by the number of companies who regret doing so!
It is much easier to criticise a reward system than to design one. Designing a reward system requires you to make a complex series of interrelated decisions about targets, measures and rewards, with elements of judgement and assumptions added in, and a mistake in any one of these elements will create problems. On top of this you will have to keep the system up to date whenever strategy, objectives, measures and targets change.
Before we launch into the detail of creating a reward system linked to performance it is worth pausing to think about the link between money and motivation. On an executive development course participants were asked what motivated them. ‘Money’ was the response from most people. ‘OK,’ said the tutor, ‘If that’s the case, why aren’t you working in the City?’ ‘I don’t want to commute’, ‘You have to sell your soul to the bank’, ‘I need a little work/life balance’ were some of the responses. So, the draw of a large City salary was outweighed by factors such as living where you want to live, not feeling you are on call for your employer all the time and spending time with the family. While most people felt money motivated them, when put to the test it just was not true. Having said ...
