This is an excerpt from our ebook collaboration with BambooHR, “Evaluating and Rewarding Employee Performance at the Speed of Business.” Download the full guide here.
How your compensation strategy compares to other employment options will help determine whether great employees will decide to join your organization, and how long they’ll stay.
In this age of rapid job hopping—aka “hyper-hopping”—it’s crucial to get pay right from the moment an employee first walks through the door. It’s become increasingly clear that hiring an employee doesn’t bind them to your organization forever. In fact, a BambooHR study found that one in three employees had quit a job within six months of starting it, with one in six saying they’d quit a job within three months!
Between administrative costs, recruiting costs, productivity costs and more, the hidden costs of turnover can equal six-to-nine months of an employee’s salary, crippling to any organization, so getting pay right from the get-go is ever more crucial. And retention of top employees is just as important — realistically, more important — than bringing in new talent.
Can We Talk?
Ultimately, a good performance management system should motivate employees to improve performance. Sadly, the annual performance review often does the opposite. Research has shown that performance reviews often trigger a fight-or-flight response. How can we hope to coach employees to improve when they’re torn between putting on their Nikes or putting up their dukes?
Annual reviews often trigger a fight-or-flight response. There's a better way to evaluate performance.
- Nobody wants to hear about the task he failed at nine months ago, especially when he’s already learned from that mistake and doing a better job now.
- Likewise, even your top performers aren’t interested in hearing about what they did right nine months ago. Top performers are constantly looking ahead to the next challenge. The annual performance review doesn’t come fast enough.
Frequent feedback, on the other hand, is timely and actionable. Plus—and this is the BEST part—ongoing feedback turns the notion of performance management from a punitive activity into a growth activity—it encourages ownership while it builds skills. Frequent, positive interactions between managers and employees will let employees gain the trust and confidence they need to have honest conversation about comp. Encourage managers to provide informal, in-the-moment feedback along with more formal scheduled meetings to help develop this culture of trust.
Want the step-by-step on managing pay-for-performance? Grab your copy of “Evaluating and Rewarding Employee Performance at the Speed of Business” today!
Tell Us What You Think
Does your organization provide frequent feedback? We want to hear from you. Tell us your story in the comments.
Image: Iván S. Pasarín/Unsplash