Do you automatically increase your employees’ pay every year on the anniversary of when they joined? Have you ever stopped to ask yourself why?
Effectively, you are paying them a bonus for just turning up. It won’t effect their performance or how they feel about your business – it’s just become an expectation. So what about performance related pay?
If you want to celebrate a milestone anniversary like 10 years with the business fair enough but performance related pay is far more advantageous. From your perspective, the advantages of moving to performance related pay are:
- Less administration – it’s fine when the company is very small, but as you grow and have more employees, managing everyone’s employment anniversary can be a huge administrative headache
- Gives you the chance to reward those employees who have done a good job – there are a variety of ways to structure performance related pay, but an increase for meeting, and a higher one for exceeding, performance targets works well
- An at a glance snapshot of your team – you can see who is performing well and those who may be struggling
Of course, this does put increased pressure on your management team as they will have a point in the year when they have to have completed annual reviews, and put forward the pay changes. But you have a good team, so you can be confident they will rise to the challenge.
From your employees’ perspective, you will need to manage the change to performance related pay carefully. As always, good communication is crucial. You will need to reassure them that they will not be adversely affected by the changes.
If you would like help with effective pay and benefits for your company, please call us on 01256 328 428 or fill the form out below and have a chat with us about it at our convenience: