What is Pay-for-Performance?
Pay-for-performance compensation means rewards commensurate with performance and is reflected in merit increases to base salary and incentive payouts.

Why is it important for your organization?

• People are motivated to perform better when rewarded for superior performance.
• Clear performance objectives and rewards based on achieving them result in high productivity and performance.
• Reward systems that recognize performance attract and retain high caliber employees,

Where do you start?
Ensure fairness and consistency in pay practices through the compensation structure, typically with a series of grades, corresponding midpoints and salary ranges. Grade positions are based on both internal and external equity. “Whole job” internal ranking is our preferred approach as fast, efficient and cost effective for slotting positions to reflect internal equity. We use broadbands, where appropriate, to provide more flexibility.

Pay-for-Performance Base Salary Plan:
The base salary plan covers practical aspects of:

• Awarding annual merit increases
• Administering the compensation structure, including promotion increases, lateral changes or demotions
• Adjusting for outliers below the range minimum or above the maximum

Pay-for-Performance Incentive Plan:
The incentive plan is the vehicle for handsome rewards based on superior performance without affecting the compensation structure. The following principles are addressed:

• Mix of incentive to base salary, based on position responsibility, risk, impact of decisions etc.;
• Payout formula, recognizing the threshold at which payout commences and payout after targets are achieved;
• Relationship between individual, team and organization-wide performance.

How Performance-Solutions-Group can help you:

• We develop the compensation structure through internal ranking and market-pricing benchmark jobs.
• We custom survey competitive-set pay practices to determine market pricing.
• We develop the overall pay strategy.
• We integrate compensation with performance management, working with management to develop aligned performance objectives.
• We develop the performance evaluation built on the performance objectives, together with core competencies.
• We design the incentive plan, built on the principles identified above.
• We develop the working documents and provide our own online performance management system for setting objectives and conducting the performance evaluation.

Contact Performance-Solutions-Group, Inc.
If you need assistance in reviewing your compensation program or would like to discuss it, please contact us at
(203) 987-3338; info@performance-solutions-group.com