Pay per performance

When talking about pay-per-performance, we usually refer to concepts related to kpi’s, incentive systems based in the setup of indicators to meassure the performance of the individuals or teams

The Salary Budget Survey, performed by WorldatWork for the 2010-2011 period, covering 2.500 respondents in the U.S., refers to the average base salaries increase, free of any kind of calculated variable incentive.

This is what, and how, the companies will modify the salaries of their employees, according to the perceived performance.

As a summary of the report and the attached matrix:

- 2,5% average salary increase across all employee categories for 2010
- Low performers can expect up to a 0,7% increase ( or none )
- Middle performers will see a pay raise of 2,4%
- High performers can expecta n average of 3,7%
- 24% of the employees are rated as hich performers
- 8% are considered low performers

These figures are pretty coincident with the 20-70-10 classification proposed by Jack Welch:

"I really support differentiation—ranking employees into performance categories of the top 20%, middle 70%, and bottom 10%, and then managing them “up or out” accordingly. But don’t companies face all sorts of resistance when they try to implement this system?"

This is a transparent-clear message for the low performers: up or out. Is the manager the one to make all the effort to support the employee to go up