Executive Summary:
Why do most pay-for-performance initiatives fail to motivate managers and employees while a few galvanize entire organizations and generate real bottom-line growth?
Our experience strongly suggests that pay-for-performance initiatives most often break down because companies fail to effectively manage change, articulate goals, and measure results. Many organizations turn to technology as a solution, but seldom take time to understand how it fits into the pay-for-performance puzzle. This paper, written in response to numerous inquiries from executives, is intended as a guide to using technology effectively in the strategic management of talent and the implementation of pay-for performance systems that really work.
"About 83 percent of companies with some type of pay-for-performance program say the approach is only somewhat successful, or not working at all," according to The Wall Street Journal ("Firms Report Lackluster Results from Pay-for-Performance Plans," June 15, 2004).
"About 83 percent of companies with some type of pay-for-performance program say the approach is only somewhat successful, or not working at all,"
-The Wall Street Journal
The article adds that, as companies move toward pay-for-performance as a way to increase productivity and control compensation expense, they find themselves struggling with how to successfully communicate performance goals and measure performance results.
Meanwhile, impending changes in workplace demographics compel organizations to adopt more strategic approaches to managing their talent. The U.S. Bureau of Labor Statistics forecasts a shortfall of 10 million workers by 2010, with the greatest deficit to occur in the 25 to 44 age group.prime working years.
The ability to attract and retain a high-performance workforce in an environment of scarcity therefore needs to be a key component of long-term competitive strategy. Organizations able to overcome the challenges of successfully implementing pay-for-performance and other strategic talent management tools will clearly have a competitive advantage.
Before a company can manage and motivate its managers and employees in ways that are consistent with its long-term strategic goals, senior management must be able to answer several fundamental questions. Among them are these:
- Does the organization have the right people in the right roles doing the right things?
- Which managers and employees are the most critical to the organization's long-term success?
- Is the organization taking meaningful steps to develop and guide their careers?
- Does the company have an adequate, up-to-date succession plan that addresses all of its key positions?
- What strategies is the firm using to retain its best performers, and will those strategies work in a scarce labor market?
- Do the firm's culture and systems adequately support strategic talent management and pay-for-performance? Further, do the firm's systems adequately support current Sarbanes-Oxley requirements?
For companies that rely on a combination of discrete applications, spreadsheet programs, and paper-based systems to communicate goals, track employee performance, manage compensation, and other critical HR processes, questions like these are difficult to answer. Management executives and consultants agree that technology must be a core component of human resource management; yet alone, it cannot ensure success. as the Wall Street Journal article confirms.
Fortunately, HR software providers such as Authoria have responded to the challenges confronting today's corporate leaders by creating sophisticated, highly-integrated applications that enable companies to manage and motivate people in ways that are highly consistent with their competitive strategy and long-term goals. Based on our years of combined experience, we've built this guide to help executives more clearly understand the growing importance of strategic talent management and pay-for-performance. It will cast light on the crucial link between management, employees, and technology.and how the choice of technology and the way it is implemented determine failure or success.
We've supplemented the paper's core content with a high-level executive discussion and case study that offers a window on how one leading company approached the technology decision-making process. You'll also find a decision-maker's checklist of topics important to consider in evaluating existing and new systems and capabilities. We urge you to carefully consider the issues and insight presented here, and to contact us regarding any issues that remain unresolved.
