Performance Related Pay Awards - no annual performance review
Posted by Mrs Andrea Rae (Inspiring Reward Ltd)
09:53AM 09 Mar 2021
If your organisation has moved away from the annual performance review process to a more agile, regular performance 'conversation' approach, what methodology and processes are you now using to manage performance related pay awards?
Thank you!
Comments (3)
Iain Barton (Aegon Asset Management)
12:48PM 11 Mar 2021
We have not had traditional 'merit matrix' pay awards for a few years now, mostly due to the limited size of pay pots and a need for some more structured action to address pay hot-spots. Instead, we've created a structured pay & progression scheme for Ops teams where they have lots of performance MI, and for others we have introduced a model to move people through pay ranges over time, as long as certain conditions are met. We have put more focus on the bonus scheme for in-year performance differentials in the meantime - a move our unions generally support.
Sharon McArthur (Lockheed Martin Corporation UK)
12:09PM 11 Mar 2021
Such a great question. We have just moved to this methodology and are still ironing out the kinks (it's a journey!). It's our first year and we are yet to deal with the ramifications on pay because of this change.
The view for the global organisation is that performance is rewarded through an annual incentive and pay increases are a flat rate aligned to inflation and other measures (including pay forecasts), although we will allow for differentiation in pay increases by ranking into 2 groups (80/20) and market adjustments. So we will still have some version of perf related pay. We have moved to a performance system where employees set up to 5 goals, and managers will have regular check ins to discuss them, but no rating or ranking is applied to them.
How this will work in practice, and how the business will respond to the change are still a mystery. We have communicated the change and the removal of the performance rating system we used and the response is mostly positive, but have yet to communicate in any detail how this relates to pay. I expect that there will be further discussions towards the end of the year about the impact of this change.
Happy to give you more detail on the pay side if you want to contact me directly.
We have not had traditional 'merit matrix' pay awards for a few years now, mostly due to the limited size of pay pots and a need for some more structured action to address pay hot-spots. Instead, we've created a structured pay & progression scheme for Ops teams where they have lots of performance MI, and for others we have introduced a model to move people through pay ranges over time, as long as certain conditions are met. We have put more focus on the bonus scheme for in-year performance differentials in the meantime - a move our unions generally support.
Such a great question. We have just moved to this methodology and are still ironing out the kinks (it's a journey!). It's our first year and we are yet to deal with the ramifications on pay because of this change.
The view for the global organisation is that performance is rewarded through an annual incentive and pay increases are a flat rate aligned to inflation and other measures (including pay forecasts), although we will allow for differentiation in pay increases by ranking into 2 groups (80/20) and market adjustments. So we will still have some version of perf related pay. We have moved to a performance system where employees set up to 5 goals, and managers will have regular check ins to discuss them, but no rating or ranking is applied to them.
How this will work in practice, and how the business will respond to the change are still a mystery. We have communicated the change and the removal of the performance rating system we used and the response is mostly positive, but have yet to communicate in any detail how this relates to pay. I expect that there will be further discussions towards the end of the year about the impact of this change.
Happy to give you more detail on the pay side if you want to contact me directly.
Sadly I dont have input for you Andrea but am interested in any replies, as this is a hot topic in our Org too.