Performance related pay is put in place by some companies who wish to reward employees on an individual and/or team basis. It is used to incentivise those at the top of their pay band or as a means of enabling employees to progress through the pay system, with pay increases being measured against targets or objective criteria. Although performance related pay is popular throughout different industries, it is imperative that each business implements the system and relevant policies correctly.

What are the Most Common Types of Performance Related Pay?

• Piecework: a price is paid for each unit of output.
  
• Payment by Results: the most popular process of performance pay for labourers where bonuses depend on assessed levels of output for workers.
  
• Organisation-wide Incentives: generally used in tender-led schemes, bonus earnings based on quantified values are put in place for the whole establishment.
  
• Merit Pay: an employee is offered bonus earnings depending on their level of contribution to performance.
  
• Individual Performance Related Pay: a recent development in the public sector, bonuses are established after an appraisal of an employee’s execution of a task and are compared to previously set objectives.
  
• Profit Related Pay: the most common process in the private sector, bonuses or shares are decided based on the overall profit of the organisation.
  
• Commission: most commonly used in sales, retailing and other branches of distribution, percentage payments are offered on sales or turnover, generally once initial targets have been hit.
  

Is Performance Related Pay Right for your Company?

Compensation strategies need to be modified depending on the industry and size of the company, the number of people employed and whether the compensation plan is tied to the company's performance-appraisal practices. An effective performance related pay scheme has rewards for both employers and employees. Read on to get a general idea of the advantages and disadvantages of performance related pay.


Advantages of Performance Related Pay

• offers an immediate incentive for employees to achieve defined work targets
  
• the contribution of an employee is recognised with an evident reward
  
• a performance culture can be developed within the company
  
• managers can develop set goals from a corporate framework, which should improve individual productivity and performance
  
• employees tend to focus more on what they need to do to improve their techniques if it is directly linked to pay
  
• a suitable performance related pay structure will reward the most productive employees
  
• an effective way of dealing with poorer performing employees
  
• rewarding high performance assists in ensuring the company retains the most industrious staff

Disadvantages of Performance Related Pay

• it reduces pay equity and could make a company liable to costly equal pay prosecutions if not operated fairly
  
• the review process can be adversely affected due to emphasis on financial rewards rather than developmental needs
  
• employees can be unmotivated if the goals are unachievable
  
• co-operation and teamwork can be thwarted if goals are set on an individual basis
  
• goals can be too narrowly focused as rewards are generally made for short term projects
  
• employees may begin to expect additional pay-outs each year which can be testing for a company in a low inflation industry

For a company to reap the benefits of a performance related pay system, practices need to be put in place.


Considerations

It’s not unusual for businesses to perform annual performance appraisals which are almost always based on performance standards, generally set by an employer to ensure an employee meets the company’s expectations. For a performance related pay system to be effective and guarantee both employer and employee reap the benefits of tying performance to compensation, employers must clearly communicate their expectations and conduct performance appraisals according to those set performance standards.  

For example, if an employer requires its sales representatives to close 20 sales each month, employees who close fewer than 20 sales are rated as falling below expectations. Employees who close more than 20 sales each month would be rated as exceeding expectations and therefore receive a bonus.


Guidelines  

Employers must give employees and managers guidelines on how the performance related pay system is linked to performance ratings. Setting guidelines is advantageous when addressing queries about the form of wage increase, bonus or other incentive an employee receives for meeting or exceeding expectations. Employers who don't convey the company's standards are producing a performance related pay system that's likely to fail.


Consistency

Consistency in appraisals is imperative with performance related pay structures. Managers must carry out employee performance reviews in the exact manner approved by human resources or an executive leadership team. As previously mentioned, with performance related pay, employees receive salary increases, bonuses and special perks for achieving performance goals. For an employee to receive the base wage increase, they must meet the employer's performance expectations, and this should remain consistent across the board.


Transparency

Transparency is an important element of performance related pay. A transparent pay system allows employees to recognise both the rate of pay and separate elements of their individual pay packets. The justification for performance related payments is sometimes unclear; however a clear pay system avoids doubt and perceptions of inequality as well as reduces the possibility of individual claims. Managers should keep a record of explanations for rewards given so they can be used to give individual feedback or to oppose any possible argument of gender bias.

It’s important to keep in mind that with some roles, such as skilled maintenance staff and supervisors, it can be difficult to measure performance; however this doesn't mean that valuable performance shouldn't be rewarded. This problem has most commonly been tackled by providing a lieu bonus to these types of employees which is generally based on average bonus earnings.

Do you have a performance related pay system? If so, how does it work for your company?



The contents of this article are necessarily expressed in broad terms and limited to general information rather than detailed analyses or legal advice. Specialist professional advice should always be obtained to address legal and other issues arising in specific contexts.

More often than not, HR professionals and managers consider writing job descriptions a waste of time which have to be updated regularly, however writing and updating job descriptions should be seen as essential, as they are one of the most effective employee communication tools for managers, recruiters, and perspective employees.

Whether the company is employing someone new, assessing a current employee or determining compensation, a job description provides consistency and clarity for everybody involved.


The Importance of a Job Description from the Hiring Perspective

From the point of view of a candidate, a prospective employees need to know what the job requirements are so they know if they are qualified to apply for the role. In addition to this, the overview of the position aids them in deciding if they are actually interested in applying. If a job description isn't accurate, a company will be hard pushed to grab a prospective employee’s attention.

A clear, detailed description of the job on offer is important to ensure it doesn't encourage the wrong type of interest. For example, a company may write that they need a trainer for their business, however not communicate which type of trainer and therefore get applications from a variety of people, from horse trainers to fitness trainers. It may seem like common sense that people will know which type of trainer you require from your company outline, however to some it may not be.


The Importance of a Job Description from the Career Advancement Perspective

One of the most important things to staff is that they recognise they have a future within the company that they work for, a future that is interesting and attainable. Employees already in an organisation know what job positions are available, what each role entails, and the qualifications they need to have so they can work on obtaining any skills, knowledge and abilities they might be lacking in their current role.

Additionally, managers need to know what the job requirements are in each role so they can encourage each employee to advance their skill set and grow in their career.


The Importance of a Job Description from the Legal Perspective

Thorough job descriptions are imperative to make sure hiring and advancements in the company are done equally, which helps reduce the risk of unfair hiring practices. During the interview process, it can be difficult to remember each and every detail of the role in question; however ensuring there is a job description to hand ensures consistency when interviewing all candidates.

Accurate job descriptions are also used to define salary and additional offerings for the position. They help determine what industry competitors are offering for the same role and ensure pay equity within a company for those who perform similar work.

What to Include in a Job Description Before a company begins interviewing for a role, it is critical to have a written job description in place for each unique position. An effective job description details the key functions of the role, how the tasks will be performed and the required skills needed to carry out the job. It should try to foresee employee growth and address possible questions about the position in the future.

A job description should include the following:

• Job Title: Describes the position, job title, and level
  
• Salary Range: List the starting salary and include information on potential benefits, such as commission, performance bonuses and annual raises.
  
• Statement of Purpose and Objectives: A brief statement, summarizing in three or four sentences, the objective of the position.
  
• Job Description: List the specific responsibilities and tasks the employee will undertake in order of importance and include any accountability the employee may have for meeting certain objectives.
  
• Description of Reporting Structure: This section provides a detailed description of any roles the employee will hold. This should include supervisory roles as well as who they are answerable to directly and indirectly. It is also important to include if the employee is to work alongside other employees or departments too.
  
• Experience and Skills: Be as specific as possible when stipulating the experience and skills required for the role. For example, if the position requires using a computer, list the type of software or hardware used.
  
• Description of Ideal Candidate: Detail other strengths desirable for the job, such as having the ability to work to tight deadlines.
  
• Work Location and Schedule: Include the geographical location of the job, the days and hours of the position, and include any potential overtime that may be required.
  
• Another important feature to include in every job description is “any other duties as assigned” as an employer can add new tasks to the position as needed. 

Does your company value a clear, up-to-date job description? How is the current system working? I’d love to hear your views.



The contents of this article are necessarily expressed in broad terms and limited to general information rather than detailed analyses or legal advice. Specialist professional advice should always be obtained to address legal and other issues arising in specific contexts.

Within any business, it is normal to be under pressure from time to time, however some employees and business owners often become overly distressed by excessive pressure in the workplace, in fact, more than one in four workers are affected by work-related stress in the European Union. Stress from is a major factor for everyone involved – employers, workers and our society – as it can cause health problems, increase absence and reduces business productivity and competitiveness.

In today’s article I am discussing the issue of work related stress and how you can manage it as an employer.


What is Stress?

Stress is the adverse reaction some people may have to extreme pressure. If stress is intense and continues for some time, it can lead to mental and physical ill health issues, such as depression, nervous breakdowns or heart disease.


Is Stress the Concern of an Employer?

It is an employer’s duty by law to ensure that employees are not made ill by work. Apart from that, action to reduce stress can actually be very cost-effective. Stress in an organisation may result in increased staff turnover, a rise in absence, reduced performance, poor timekeeping and even customer complaints.

In addition to this, employers who don’t take potential stress issues seriously may be left open to claims from employees who have suffered ill health due to work related stress.


Under Health and Safety Law, what must be done about Stress?

Employers must assess all risks for potential stress in the workplace. A risk assessment for stress involves:

• looking for pressures at work that could cause high and long-lasting levels of stress
  
• deciding who might be harmed by these
  
• deciding whether enough is being done to prevent that harm
  

If issues are discovered, reasonable steps must then be taken to deal with those pressures.


Are Some People more likely to Suffer from Stress than Others?

Everyone is susceptible to stress, depending on pressure we’re under at any given time. An employer is responsible for making sure that work doesn’t make their employees unwell. If an employer notices that someone is particularly vulnerable because of their circumstances, they should look at how their work is organised and see if there are ways to relieve the pressure.


How can an Employer Recognise Stress in a Particular Person?

Outward signs of stress in an individual may be evident to managers and colleagues who work with that person all day every day. Employers should try and keep an eye on their employees and watch for changes in a person’s mood or behaviour, such as deteriorating relationships with colleagues, irritability, indecisiveness, absenteeism or reduced performance.

 
How can an Employer find out if Stress is a Problem for their Company?

First, employers must look into staffing matters to get an indication of what issues there might be. This may be evident in an increase in absenteeism, lateness, disciplinary problems or staff turnover, or a reduction in output or quality of product or service. There may be reasons for these symptoms other than stress, however if they could be related to anxiety at work then employers should talk and listen to employees by asking them to describe the best and worst parts of their job, and whether the issues lead to uncomfortable pressure. The findings can then be used to identify common and persistent pressures, and who might be harmed by them.

It is important for employers to remember to:

• respect the confidentiality of staff
  
• tell employees what they plan to do with any information collected 
  
• involve staff as much as possible in subsequent decisions
  
• involve safety representatives in plans and decisions
  
• if five or more staff are employed, record the findings from the risk assessment
  
• check from time to time that the situation hasn’t changed 

What can an Employer do to Prevent Stress from becoming a Problem?

• Managing work related stress doesn’t happen overnight. Processes are ongoing and need to be built into an organisation. Start with these actions:
  
• Show that stress is taken seriously and be understanding towards people who admit to being under too much pressure
  
• Urge managers to be open minded and understanding  towards what staff say to them about the pressures of their work
  
• Ensure that staff have the skills, training and resources they need to carry out tasks assigned to them, so they can be confident in completing their work
  
• If applicable, vary work conditions and be open minded towards flexible working hours to increase staff interest and sense of ownership 
  
• Guarantee that employees are treated fairly and consistently and that bullying or harassment isn’t tolerated from the offset
  
• Ensure two-way communication at all times and don’t be afraid to listen to issues that arise 
  

What should an Employer do if an Employee complains about being Stressed?

An employer should always listen to their staff members when an issue arises. If the stress is work related it’s important to address the source, involve the employee in decisions in moving forward and if necessary, encourage them to seek further help from a doctor. It is also imperative to ensure that the employee’s manager treats the issue with understanding and maintains confidentiality.

If a period of sick leave is recommended, an employer should keep in touch with the employee and their doctor and remember that flexibility is key in this situation. Consider if the employee in question could perhaps simply do part of their job, reduced hours or take on a different role within the company when sick leave ends.

The most important thing an employer must remember is that firing the staff member does not provide an easy way out as this will most likely result in an unfair dismissal claim.


What should an Employer do if Stress is a Problem?

There is no particular way of tackling work-related stress, as what an employer decides to do depends on company working practice and the causes of the problem. I have included a table below to show some of the most common pressures at work that might be relevant to smaller organisations, along with some suggestions about what to do.

In my last article I focused on putting elements in place to ensure the right candidates come and work for your company, and once you get them over the door the real fun starts. Any business owner knows that staff enthusiasm is crucial to individual performance, group productivity, and maintaining a satisfying office culture. So how do you do it? For some inspiration on how to motivate those who work for you, I have put together some techniques which could be adopted and adapted to suit your business.


Set a Good Example

Always keep in mind that attitude is contagious. Try and stay positive in front of employees as much as possible. Include members of the team when making key decisions by listening to their ideas and valuing their opinions to make them realise they are part of the process and that their voices matter.


Make Employees feel they are doing Something Meaningful

Following on from the first point, one of the best ways to motivate employees is to make them feel that they are doing something meaningful. Involving team members in the process of forming company goals will encourage them to accomplish objectives and help them feel that they are doing something meaningful.


Have and Show Trust in the Team

Generally speaking, most people have relatively fragile self-esteem. This is no different for employees. Team members need to believe that their employer trusts them to do their job. A manager can’t just say they have faith; they need to let employees take control of challenging tasks to show they have confidence in their capability.


Give Clear Job Descriptions and Accountability

It is important to ensure that every employee has a clear job description and accountability for tasks they are assigned to. Don’t just focus on responsibilities, but also the expected results so each employee knows what is required of them.


Communicate and Share Information

Managers should always share new information, such as how the business is progressing to achieving goals. This enables employees to see how their work is enabling the company to achieve KPIs. This is also linked to sharing ongoing performance feedback. If things aren't going to plan, it’s important not to blame, but to ask how processes could be improved in the future.


Allow Employees to Share in the Company's Success

Employee performance, productivity, and motivation can all be linked to how devoted a worker feels to their company. Firstly, a salary should be paid that employees believe is fair. Secondly, bonuses and/or commission should be considered when possible. This should encourage employees to achieve goals that have been previously defined.


Encourage Teamwork

The majority of companies have to complete projects which require input from several members of the workplace. Employees should be encouraged to work as a team from the offset, rather than giving individuals separate tasks to complete the project as a whole. The best way to do this is by setting up an initial meeting between the employees involved and referring to them as a team before giving them the trust and faith to get on with the task at hand.

 
Don’t Micromanage

No-one likes to be micromanaged, least of all capable employees. Managers need to know the difference between checking in on employees and checking up on them. There is no point in managers dictating how a task should be completed, as this completely defeats the purpose of having employees to do the work, as well as grow and gain new skills through the process.

 
Create Fair Company Policies

Developing reasonable company policies that effectively support company goals will further motivate employees. For example, managers can’t expect staff members to take personal time to attend a work conference if they want to promote continuous learning. Instead, ensuring policies and practices encourage employee feedback, collaboration and decision-making etc. will ensure employees are on board with company values.


Modify Approaches in Management

The best leaders adapt their management approach to each employee. It’s important to consider each team member and determine the best way to lead them as some employees prefer hand holding and training, whereas others may require less.


Take on Fun Pro Bono Projects

At some points during the year, business may be slow, or depending on the company, projects may possibly be drawn out affairs. Employee enthusiasm and creativity can be kept challenged through volunteer or charity projects, which is also a perfect way to build company case studies.

It’s important to take a look at your business model and see which tips suit to keep your employees motivated. Have you found any other methods that work for continuing enthusiasm? As with any practices put in place, it will be an ongoing process but the company, and team members, will definitely benefit in the long run.



The contents of this article are necessarily expressed in broad terms and limited to general information rather than detailed analyses or legal advice. Specialist professional advice should always be obtained to address legal and other issues arising in specific contexts.

A lot of emphasis is always on employers finding the right employee for their company, however it’s all too easy to forget one simple truth: recruitment is a two way street. Simply from reading a job post, a candidate judges a company and makes a decision if they want to apply for the job or not. In this article, I focus on why candidates might not want to work for a particular company and what actions can be taken to change this.

Why candidates don’t want to work for a company:

1. The job description has very little information on the role, is peppered with inaccuracies, and/or is so generic and unexciting that it generates no interest.
2. The application process takes too long to complete and/or requires a reference from anyone and everyone they previously worked for.
3. The company has a terrible website and social media presence with minimal or outdated information and no engagement, or even worse, there is no online presence at all.
4. The company has a bad reputation online and also amongst other businesses and people in the industry. The reputation is so tarnished that it’s common knowledge not to work for them.
5. Nothing is worse than when a company never keeps promises to follow-up, whether it is to schedule interviews, provide more information, or even to let the candidate know if they have been rejected.
6. The Job Description/Title/Pay/Location/Hours have altered more than once during the recruitment process and the candidate no longer knows what position they are being interviewed for.
7. More often than you may expect, companies demonstrate a lack of respect for the candidate by being unapologetic about being late for the interview or being a no show, by not being prepared, or by being rude during the interview.
8. The interviewer lacks confidence in himself/herself, the position, or the company, which comes across negatively in everything said or done in front of the candidate.
9. The compensation and benefit package is not competitive enough, the work is not interesting or meaningful to the candidate and progression prospects are minimal.
10. The company culture isn't the most inviting and candidates know it. It may be cliquish and lack diversity of opinions, thoughts, and creativity and/or be inflexible and demanding to an unnatural degree. 
    

Now that we have covered the negative aspects, let’s look at how we can turn those around to attract the best people. Getting the attention of promising candidates requires careful consideration, such as:

Social Media

As well as putting companies in direct contact with potential candidates, social media is the perfect way to communicate the personality of a business. When used well, it can give a sense of what an office culture may be like in an honest and believable way and it shows people that it’s a fun place to work, rather than simply claiming it.

The Advert

Too many job adverts focus on attributes the candidate must have which isn’t appealing or exciting to job hunters. The detail is needed, however it’s also important to include what is in it for a candidate who may consider applying for the role. If companies want to excite top people for the role, they need to begin with bold and engaging statements that make the business sound like no other.

Social Responsibility

People are increasingly concerned with the social, charitable and environmental conduct of businesses. It’s no longer just a box to tick, but is now a valuable selling point. If a company is more supportive of charitable causes than others, they will get noticed.

The Smaller Benefits

Most businesses talk about their offer of a ‘competitive salary’ and ‘great benefits package’, however generally, all companies are offering in and around the same thing. Companies need to focus more on unique perks they offer, such as a social element to the workplace or a more desirable location. Companies should try and seek out what competitors don’t have so they can go about offering something different.

Selling a company to a potential candidate doesn't end once they come in for an interview. It’s imperative that businesses remember they still need to sell themselves throughout the interview and do everything in their power to make sure the interviewee says yes to coming on board.

This can be done through understanding the candidate’s motivation and why they are looking for a job, understanding the competition to promote anything that may be different from any other companies the candidate might be interviewing for and promoting the people already working for the business as good people want to work for and with decent individuals. After all, it’s typically the people we work with that make the biggest impact on how long we stay in our jobs.

On a final note, remember candidates are also customers. Any bad impressions left will stick with them long after they have started working elsewhere. It’s imperative that companies treat candidates as they would anyone else, if not better.



The contents of this article are necessarily expressed in broad terms and limited to general information rather than detailed analyses or legal advice. Specialist professional advice should always be obtained to address legal and other issues arising in specific contexts.