Basing Compensation on Performance Management
| Source: Accounting Office Management & Administration Report
This article presents elements of performance management and emphasizes the appraisal process as key to its effectiveness. A performance management plan includes:
Compensation based on performance management applies to total compensation, not just to bonuses. Staff can be rewarded for achievement, and the firm can get away from giving the same raises and bonuses to everyone. It helps satisfy staffs’ need for fair treatment and recognition. It is the appraisal process that creates continuous improvement. The appraisal process constitutes the basis for the compensation program, career path decisions, and performance improvement. Appraisals should focus on improvement, not on identifying negative performance. Those who conduct appraisals must be trained in how to criticize, use specific examples, and avoid generalizations. Poor performance must be linked to its causes. The appraisal should review previous goals against progress and modify the goals if necessary. Staff should be involved in setting goals. Appraisal should be a continuous, albeit informal, process and should not occur just once or twice a year. Partners should never forget they are role models. They should attend training sessions and comply with all procedures. From Accounting Office Management & Administration Report, April 2006, p. 1. For subscription information contact Institute of Management & Administration, Inc., 3 Park Avenue, 30th Floor, New York, NY 10016-5902. One-year subscription $349. 212-244-0360, [email protected]. |