How it works

While the processes remain separate in emerging Performance Management, compensation and career development remain integrated with and enabled by it. As such, performance outcomes continue to drive compensation decisions, but in specific, targeted ways. Part of this stems from the nature of the types of rewards and recognition available, and the other from long-standing leading practice. In each case, the need to use and communicate the purpose of each type of reward is paramount in successfully using them as motivators for high levels of performance. 

looks_oneLeverage salary or pay increases to reward annual performance and growth

Because a salary (or hourly rate) is an ongoing expenditure by the company, it should reflect the ongoing (best estimate) value of the individual to the company. As such, annual salary increases are designed to reward continuing value to the company, regardless of short-term successes or shortcomings. Performance against position standards and competencies should theoretically grow year-over-year in each role and level, and thus that success should justify the annual pay increase decision.