Linking Remuneration and Bonuses to Performance Reviews Can Create Culture Cancer

 

It’s been common to link remuneration and bonuses to the performance reviews in a company. There is a belief that this delivers better performance when there is a monetary incentive available to your staff. But this can cause a culture cancer, rather than actually improving the results in your company. As the negativity grows, you’ll find that you’ll frequently need to turn to a recruitment agency.

 

The problem is that while performance reviews are tied to a form of compensation, they change the dynamics of the company. People begin to undermine their coworkers and they cause deception in departments, and turn the company into an ‘every man for themselves’ attitude. Some Fortune 500 companies have discovered the problems associated with the link and have separated the bonuses and raises from these reviews, and have started to determine them based on other factors.

 

Some companies have decided a better route to go is to pay staff a fair market price for their position. Each time a local market changes, a cost of living bonus is applied to everyone’s salary. This discourages the negative cancerous environment from developing. That way, there are better alliances formed in the company. This also offsets the frequency you need to locate new staff with any recruitment agency has to offer.

 

Another approach is doing universal increase or bonus percentage, as long as the company as a whole meets the goals that are set for it. This encourages everyone in the company to give their very best and help to offer better camaraderie than if they are only worried about their career in the company.

 

That doesn’t mean performance reviews should be removed. On the contrary, these reviews are essential for proving justifiable terminations, and addressing the problems that may occur. In these cases, you use them simply to evaluate where an individual stands for the course of the year. If there are problems, you can still address them at this time. But there aren’t any unrealistic expectations that are associated with these reviews and they become more honest snapshots, since everyone presents them like they should.

 

With this new approach, you remove the potential for a cancer culture to form at work. You won’t have employees trying to undermine each other in order to appear like they’ve shown some new potential. You also avoid individuals who show improvement just before it is time for their review in order to appear like they’ve made significant growth to boost their compensation, only to return to old habits as soon as their bonus hits the system. Instead, you are left with everyone on the same playing field. That means you have a team that works together and focuses on working as a team for the greater good of the company. This will also mean a lower turnover rate, which will translate to less time focusing on recruitment and labour hire and more time on advancing your business. Moreover, your business should grow.

 

For more information on how to employ great people to support your business growth, please click here.

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