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Stop Basing Pay on Performance Reviews


Superb post from Harvard Business Review on the correlation between money and performance reviews. Performance reviews are used to help employees increase their proficiency but in recent years, people don’t care about improving, they only care how much compensation they receive, which removes the true reason for performance reviews. Read below on how to motivate your employees without it all being based on compensation:

If your company is like most, it tries to drive high performance by dangling money in front of employees’ noses. To implement this concept, you sit down with your direct reports every once in a while, assess them on their performance, and give them ratings, which help determine their bonuses or raises.

What a terrible system.

Performance reviews that are tied to compensation create a blame-oriented culture. It’s well known that they reinforce hierarchy, undermine collegiality, work against cooperative problem solving, discourage straight talk, and too easily become politicized. They’re self-defeating and demoralizing for all concerned. Even high performers suffer, because when their pay bumps up against the top of the salary range, their supervisors have to stop giving them raises, regardless of achievement.

Original post HERE


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