Two themes related to the topic of "Using Your Performance Management Process to Support Pay for Performance" include: the importance of ensuring alignment of individual goals with business strategic objectives and gathering information in a way as to be able to clarify the connection between compensation practices and impacts on performance. This is not dissimilar to clarifying the connections between performance management processes and their impact on individual performance. Many are striving to establish links and identify meaningful, real connections. When we increase understanding of how an individual´s actions contribute directly to business success, we are creating a situation where natural consequences are experienced and understood. Similarly with pay systems, if employees are clear on how the system works, what performance expectations are and how they will be linked to compensation, the employee has more control over the outcome. Along with increased control over the outcome also comes more responsibility. When the individual directly feels the impact of poor performance and the rewards of top performance, "managing" performance becomes less of an issue.
A Harvard Business School Working Knowledge article from 2002 discusses the topic of educating employees around how the pay system of an organization works, for example: making sure individuals are clear on what is expected of them and how meeting or not meeting those expectations will directly impact compensation and rewards. The article entitled "Compensation: What's the Big Secret?" is by Tom Krattenmaker and can be accessed here:
