What Does a Bonus Mean?

Compensation Cafe

Can your employees tell the difference between a raise and a bonus? After all, we often don't make much of a communication effort when we award bonuses. Most employees don't really understand that business performance affects merit budgets.

Performance Management 2.0: Improving Your Employee Motivation Strategy


How do you address employees who aren’t performing? I joined 15Five’s Director of People Science, Courtney Bigony and Chief Culture Officer, Shane Metcalf, in a recent webinar where we addressed ratings and compensation as they relate to performance reviews. In my book, Next Generation Performance Management , I differentiate between Performance Management 1.0 (PM and Performance Management 2.0 (PM is not tolerating poor performance.


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Progressive Performance Management: Why Your Employee Compensation Strategy Is Holding You Back


The Annual Performance Review is Dead! One of the main issues that HR leaders face when considering a progressive performance management program is how to revamp their employee compensation strategy. Alan Colquitt is one of the world’s greatest experts in the field of HR and performance management. Courtney: In your book, Next Generation Performance Management , you differentiate between Performance Management 1.0 (PM

The Dark Side of Incentives

Compensation Cafe

When describing their annual incentive plan (STI) most organizations will highlight to eligible employees the upside reward opportunities provided by the plan. That is, the better your personal performance the greater the reward.

Quick Reminder on Performance Management Effectiveness

Compensation Cafe

I recently ran into a study on effective performance management practices that I want to share with you. Not because it says anything really new, but because it does a great job on focus and insight, attributes we can all use when it comes to performance management. whether employees perceive that central elements of performance management are designed well and function fairly."

6 Ways Incentive Plans are Like COVID-19 Planning

Compensation Cafe

Comparing incentive plans to a pandemic response seems like a stretch, but great incentive plans are all about stretching. Stretching company performance. Every good incentive plan project starts with a simple question.


Possible Works

A recent Mercer 2019 Global Performance Management Study highlights the changing business scenario and the need for a more flexible and employee-oriented performance management system. What Makes a Difference in Performance Management?

When Incentive Pay Goes Rogue!

Compensation Cafe

A friend of mine likes to say: “It’s not that incentive pay doesn’t work well, it’s that it works TOO well. 5,300 professionals and managers fired. Like any well-designed incentive compensation plan, Wells Fargo’s started with a strong company culture and a simple goal that required special effort. Where was the team whose counter-incentive plan was based on finding and correcting fraudulent activity on the part of plan participants?

5 Lessons from Glittery Smelly Incentive Plan Mistakes

Compensation Cafe

It turns out that incentive compensation doesn’t just work, it can work too well at motivating the wrong behaviors. Make sure you design your incentive plan to reduce the possibility and rewards for cheating. Incentive plans are difficult to get perfect. Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. Dan has written several industry resources including an issue brief on Performance-Based Equity Compensation.

A New Grad Schools Us on Performance Management

Compensation Cafe

When we make performance management purely rules-based the people who score best are often those who are the best at following the rules, not the best at building company value. Our performance reviews and management systems, as well as our incentive plans and reward programs must all account for the fact that human beings are doing the performing. Lately it seems like many companies are considering getting rid of performance review scores altogether.

The Real Cost of Mismanaged Incentives: Wells Fargo

Compensation Cafe

Today is a steaming jolt of quadruple espresso in response to the Wells Fargo incentive pay mess. Let me start with the fact that I have been interviewed a few times about this story and even I was surprised by my response to the question, “What companies in the financial world are considered to have good incentive programs?” and Jim Brennan’s Excessively Successful Incentives ). Even worse, rather than adapting the incentive plan over time.

Do Your Incentive Plans Motivate Choking?

Compensation Cafe

Could it be that we are designing and communicating incentives for our highest performance all wrong? A recent study titled “ Reappraisal of incentives ameliorates choking under pressure and is correlated with changes in the neural representations of incentives ” appears to show that the fear of losing a reward allows people to perform at the edge better than the desire for earning more award.

Everyone Gets a $100,000 bonus!

Compensation Cafe

When 1,380 employees got a $100,000 bonus each, the story should have made headlines everywhere. The brilliant bonus decision was a wonderful example of a corporation that cares deeply about its employees. Each employee of Hilcorp was granted a one hundred thousand dollar Christmas bonus for their individual contributions to company success. No differentiation by title, grade, base pay, seniority, performance, race, sex, hair-color, weight or other irrelevant variables.

Rewarding Today's Unsung Heroes: Could a "Viral" Bonus Plan Work for You?

Compensation Force

While the details on the ground at IGN Entertainment may have changed since then, their inspired peer-to-peer bonus plan brings us a great example of how we might engage employees in rewarding the heroic actions of their peers during our challenging times today. This post first ran in 2011.

An Unpopular Sales Incentive Plan Design Fiasco

Compensation Cafe

The new sales incentive plan was not well received. All the worldwide regional managers in the audience spoke up in loud protest when it was announced at the global sales conference. Their disapproval disappointed the corporate headquarters compensation experts tasked with the duty to faithfully but delicately comply with the incentive program guidelines supplied by the division's senior management.

Cafe Classic: Don't Blame Incentives

Compensation Cafe

Editor's Note: Incentives are a tool. Incentives are not the cause of bad reinforcement programs, any more than forests should be blamed for the existence of warfare. Some opponents of incentives show the same thinking that would condemn trees because they may be shaped into spears, arrows and catapults instead of being turned into sturdy houses or inspiring artworks. Because incentives are powerful, they should be designed and implemented with great care.

3 Performance Management Best Practices for Healthcare


3 Performance Management Best Practices for Healthcare Sep. Too often healthcare workers are simply told “you need to do the following 25 things,” says John Lutz, Principal at ECG Management Consultants , consistently rated as one of the top healthcare consultancies in the U.S. Instead, performance management needs to sync with the overall mission of the organization. When workers feel disconnected from their mission, performance lags and outcomes decline.

Are You Thinking About Your Performance Management System Too Narrowly?

ATD Human Capital

Performance management system failure most often comes down to a lack of clear purpose. However, a lack of alignment can also derail performance management systems. Is Performance Management Aligned? While the performance review or appraisal process is usually the key point in managing performance, it is only one element of the performance management system. Managers are usually on the hot seat for failures.

Excessively Successful Incentives

Compensation Cafe

The only thing worse than an incentive that doesn’t work is one that works all too well. Wells Fargo is just the latest company to be ethically embarrassed and financially distressed by a fiasco involving excessively motivational incentives. Thousands of employees were discharged over scandalous fraudulent practices that generated illegitimate bonuses and enriched salespeople while bilking their clients.

Money for Motivation: How Incentive Based Pay Works


Even small companies ( I’m looking at you, Mr/Ms HR Manager of a company with less than 250 employees ) can incorporate these elements into their compensation planning without too much stress. We want to instantly think that we can drive performance or discourage behaviors through monetary incentives. Here are a few: Bonuses. Group incentives. Variable compensation tied to business performance is the same thing. This Hinges on Performance.

Cafe Classic: Are You Watching the Store?

Compensation Cafe

A new business year brings with it both the end and the beginning of the company’s annual management incentive plan cycle. While the left hand is busy processing performance assessments and award payouts the right hand is getting ready to launch the new cycle.

Why Bother Talking About Total Rewards?

Compensation Cafe

Plus, you can help them manage their time effectively by communicating a single Total Rewards calendar for benefits, performance management and total compensation. "Total Rewards" makes a great title for an employee statement because it sums up what's on the page.

Cafe Classic: Is Pay a Critical Part of Culture or Not?

Compensation Cafe

The survey also included responses to this question from HR professionals and managers, offering a good comparison point. According to them, ‘managers and executives leading by example’ and ‘a shared mission and values’ were some of the top attributes of culture.

Help Managers with the Challenges of Video Calls

Compensation Cafe

These are just a few of the scenarios that can happen in performance management and salary discussions -- but remember that we'll be doing most of these discussions on video this year. Picture what it's like to have someone celebrate a personal best in your office.

17 Words About Incentive Pay

Compensation Cafe

The 17 words listed align incredibly well with common incentive plan designs. A quick review of incentive pay basics. This is another situation where many people would be very disappointed if they didn’t “get their bonus.” But, if you ask the people at the very top, they will usually tell you that people shouldn’t expect to get paid on their bonus. That leaves three that don’t fit our normal incentive models.

4 Tips for 2020 Career Development

Compensation Cafe

What happens when you disappear raises, slim down bonuses, freeze salaries and/or jack up benefit costs? Many managers yearn to gussy up titles as a way of making employees feel better in a down market. As you know, managers have a bad habit of over-promising.

Make Milestones Matter

Compensation Cafe

Because they act as signposts, they are visible both to your project team and to management. Projects can and will be stopped by your project sponsors or senior management when milestones are ignored or signal poor clarity of purpose.

Heed These 5 Performance Management Realities—Before It’s Too Late!


Previously, we wrote about the pressing need to solve the performance management puzzle that baffles so many of our organizations. To “solve” performance management, we not only need to address each piece of the puzzle but we also must come to terms with a new set of realities. Here are five of the most critical new realities that, once embraced, will help us all solve the performance management puzzle: 1.

Cafe Classic: If You Want. (The Pay Plan Edition)

Compensation Cafe

If you want to spend additional money on employee compensation without generating any impact on outcomes or behaviors, then give employees a bonus based completely on your discretion and tell them only that it is based on your judgment about what they deserve.

Performance Management In The Post-Rating Era – Quo Vadis?


Many early-adopter organizations who jumped aboard the train to abolish employees’ performance ratings are finding themselves on a challenging journey that is characterized by two key questions: What does the elimination of ratings do to the organizational culture of high performance which is still propagated and undisputed in most of those organizations? Delegating these decisions to individual managers or to some machine-based algorithms is not the answer.

Cafe Classic: Develop Grow Achieve - 3 Tiers for P4P

Compensation Cafe

Editor's Note: Three cheers for Dan Walter's cogent and Classic advice on how to make pay for performance more successful in your organization. Pay for performance continues to rise. However, the failure of pay for performance is rising almost as fast.

Cow Tipping

Compensation Cafe

Has your annual management incentive process become more bureaucratic (get those appraisal forms in on time!) But if you want to manage compensation, never mind lead or direct it, you have to stop playing follow the leader.

Singing, Dancing and Posing: Aligning Incentives, Performance Metrics and Strategic Objectives

Compensation Cafe

How clear is the line of sight between your performance pay programs, strategically linked performance metrics and the organizational strategy? Do your managers see these performance measures as they really are (imperfect proxies for larger, intangible strategic constructs), or do they focus on the performance measures themselves as the ultimate goals? Managers will receive bonuses tied directly to their survey scores.

Why Communicate Now?

Compensation Cafe

At the end of the fiscal year, the department has information about raises which they transfer to managers who send it down the line. Talking things through using reference materials will also help everyone calm down a bit (see below) and build back her/his relationship with the manager.

Why the Best Employee Incentive Programs Succeed


If you want to put one of best employee incentive programs in your workplace, you might need to step out of your own comfort zone and move away from cash rewards. Traditionally, employee incentives programs use cash rewards tied to a specific individual achievement. A bonus. But studies show that while cash incentives for employees’ motivation might work for a short-term boost, they can be counterproductive in the long run.

Cafe Classic: Scenario Planning and Reward Design in an Uncertain World

Compensation Cafe

From the article: Trying to gain a better understanding of the trends shaping the competitive environment has always been critical for managers. What might the possible scenarios mean for how we manage and reward our employees?

Cafe Classic: What Do Dead Horses Have To Do With Compensation?

Compensation Cafe

Surprisingly, management often tries to keep the dead horse alive. Instead of “dismounting”, management tries (as a last ditch effort) to revive the dead horse in question. However now the company really needs to set employee performance goals in sync with FY business goals.