I have sat in on meetings with clients where the subject has been how to handle the annual pay round. Companies typically have a policy about how to award salary increases, but in essence many take a pot of money and spread it thinly across every employee. However, those self same companies will say that they reward performance - a real contradiction!
In doing some research around this subject it seems to be a common problem and has been dubbed as the 'Peanut Butter' approach. Spread it too thinly and it wont be as tasty. So why does this happen?
One typical cause seems to be management's ability to carry off the policy. If an organisation truly wants to reward employees based on performance they need to ensure that managers have the tools and ability to handle the situations that inevitably arise - how to handle under performers, how to get a difficult message across etc.
Pay for performance must be the right approach if organisations want to recruit and retain the most talented people and as is so often the case this starts with a mind set change followed closely by training.
In doing some research around this subject it seems to be a common problem and has been dubbed as the 'Peanut Butter' approach. Spread it too thinly and it wont be as tasty. So why does this happen?
One typical cause seems to be management's ability to carry off the policy. If an organisation truly wants to reward employees based on performance they need to ensure that managers have the tools and ability to handle the situations that inevitably arise - how to handle under performers, how to get a difficult message across etc.
Pay for performance must be the right approach if organisations want to recruit and retain the most talented people and as is so often the case this starts with a mind set change followed closely by training.
