Lackluster Results from Pay-for-Performance

As reported in today's Wall Street Journal, "Many companies' efforts to link employees' performance to their salaries are yielding lackluster results." Findings are based on Hewitt Associates research. So why might this be?

Hewitt suggests that it's a result of what they call 'learning curve' issues - that companies haven't yet figured out how to do it. I strikes me, though, that it's the managers who are having the real problems.

First, they need to be able to articulate exactly what it is that they want their direct reports to achieve. And frankly, that's not easy to do, especially when most managers are professional problem solvers, not employee development experts. Clearly, bosses are far better abled to recognize when someone does something wrong than to tell their employees what it is they're looking for from them ahead of time.

Second, because of their problem-solving mentality, bosses see mistakes as things to clean up and not employee development opportunities. There's simply far too much blame and not nearly enough insight or instruction to help direct reports learn the right lessons from their mistakes.

Third, managers tend to focus far more on criticizing employee weaknesses than on identifying and leveraging employee strengths. But while mitigating weaknesses may stop people from screwing up, real success can only come from focusing on, and better utilizing, an employee's strengths. But alas, most managers simply don't know how to do that in a way that encourages and motivates direct reports to truly excel.

So all you managers out there - as you work on your mid-year reviews, please keep this in mind. It's up to YOU to help your employees understand what's expected of them. It's up to YOU to articulate it in such a way that they not only understand it, but they can achieve it as well. It's up to YOU to help them be their Absolute Best.