Compensation Strategy That Promotes High Performance

Compensation Strategy That Promotes High Performance


Compensation is directly tied to employee retention. Simultaneously, it is also tied to performance management. HR can leverage science-backed performance management platforms to promote fair compensation strategy and decisions, thereby improving employee engagement. 

Holding onto top talent is not easy, even more so as the Great Resignation morphs into the Great Upheaval. So, having a solid compensation strategy becomes crucial for high employee retention and performance. 

Successful compensation programs align performance management and ultimately the end goal of motivating high performance. A performance management software helps HR teams motivate high performance at scale promoting ongoing conversations and regular check ins. 

The data shows that when it comes to an effective compensation strategy and performance management process, fairness reigns supreme. 

Many see a fair compensation process where the manager is credible, motivated to get it right and when employees have a voice. Hence, the move towards ongoing performance management conversations with software like WorkCompass.

HR teams view fair compensation and reviews as a way to increase performance and motivation. HR can now leverage science-backed performance management software to promote fair compensation decisions at scale.


Removing a Rating Bias 


The majority of companies use some sort of rating system to aid decisions when it comes to compensation. This rating system or practice can hold back HR teams from moving towards a progressive performance management programs that effectively motivate high performance. Ratings are historically seen as an efficient way to make compensation and promotion decisions in organizations. However, are they actually effective? Fair? And does it eliminate bias? Something which, if there is a rating bias, can demotivate employees.

Firstly, people are more holistic than a number on a rating scale. Secondly, most rating scales are highly biased and oftentimes can say more about the person conducting the rating than the individual or employee being rated.

A performance management software system, like WorkCompass, has 360 reviews which removes any bias through anonymous surveys which can then be married to how the employee has performed against the goals agreed and the competencies of the company. This leads to a much fairer decision making process when it comes to compensation, but also brings clarity to the employee on how the decision was reached.


Using Role Clarity to Unlock Psychological Safety


Only 50% of employees have a clear understanding of their role according to research. Meanwhile, the science shows role clarity is the foundation of effective performance management and is shown to be a key component to psychological safety. A so-called invisible force at the heart of all high-performing teams. So it is important to prioritize clear role and performance agreements from the start. WorkCompass, through our software, delivers clarity around one’s role through ongoing conversations and feedback between manager and employee.


Distinguish Development and Compensation Conversations 


We promote regular performance conversions as opposed to twice a year or yearly reviews. Through these conversations it is important for HR/Manager to separate those meetings into development discussions and compensation discussion.

It has been shown that combining the two is demotivating. A high performing HR team will offer regular reviews that focus on development and a separate yearly compensation discussion.




Help employees feel like owners  by using organizational-based incentives like profit sharing, bonus programs, employee ownership, or stock options.

Profit sharing programs improve productivity and performance, while individual pay-for-performance programs can lead to a culture of competition. However, a balance can be struck for both individual pay-for-performance and company-wide incentives. 


Promote People More Often 


There are two options for HR staff and business when it comes to compensation and promotion. Firstly, you have Broad-banding which essentially offers a wider or broader pay range in order to reduce promotion opportunities for people more often. They determine market pay based on job ladders. 

The second option is Narrow-banding. This offers many levels to provide more opportunities for promotion with tighter pay ranges. We’d advocate against broadbanding as it has fewer levels, which results in less frequent promotions and can lead to demotivation among employees.

There are plenty of ways to promote people without necessarily increasing pay. Increase an individual’s responsibility, move someone laterally into another role which may be more aligned to their future career goals or strengths, or place them in a mentorship program to build their skills for promotion down the line. 

A fair and objective performance and compensation procedure should be the foundation. Further to this, the science shows, the key to motivating high performance comes from offering strengths-based careers, stimulating intrinsic motivation and motivating through purpose. No matter what, pay your high performers well and take the money issue off the table to enable higher-level motivations such as purpose and strength development. 

HR can create a fair compensation program that unlocks thriving and high performance with WorkCompass.

Finally, if you’d like to know more about how WorkCompass can help your organization. Please get in touch today and request a demo.