Most companies baseline the employees' compensation during the year-end and convey the updated structure during January.
Irrespective of many different kinds of recognitions, cash compensation remains the topmost in terms of how people value their work.
For a variety of reasons, the current structure of compensating everyone at the year-end only falls short.
- It does not promote the team culture. Always Individuals are rated instead of teams. How can we reward the entire high-performance team?
- Performance reviewers always have an unconscious bias towards the performance during the 4th quarter. But, it should consider for the overall performance of the year. Individuals who exceed and go beyond in different times of the year may not be well appreciated.
- In difficult conversations, the managers reiterate the company quarter results to convince the employees. This strategy does not correlate well many times.
- Compensating everyone at the same time of the year may bring uniformity but unfortunately, it brings unnecessary comparisons. Individual's compensation should just be tied to the company contract and not to the other team members.
- Top talent may not have the patience to wait for the year-end.
- It also induces sudden instability and attrition during the first quarter. Some of the managers even started to expect this year over year.
- Mobility and moving across the teams during the mid-year may impact the individuals.
- Due to predictability, People can start to game the system.
People are the core asset of any company. How to reward the top talent, appreciate the hard work and retain the talent has always been the most debated and highest priority item for many C-suite executives.
Its the time for the companies to start thinking about how to restructure the employees' compensation.
I certainly do not have the best alternatives but, I believe the timely appreciation, transparent incentive rates, team rewards will demystify the clutter and pave ways for the continuous run of high-performance teams.
