Pay can be a sensitive topic—but that doesn’t mean you shouldn’t talk about it. Understanding the link between pay and performance can be vague. This webinar looks at what pay for performance is, the top reasons why it works, what mistakes are being made and what you can do today to build productivity through pay.

1. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com

2. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Ben Peterson
Co-founder and CEO
BambooHR
Mykkah Herner
Head of Professional Services
PayScale

3. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
What Is
Pay for Performance?
“Links pay (base and/or variable), in whole or in part, to
individual, group, and/or organizational performance.”
—The World at Work Handbook of Compensation, Benefits & Total Rewards

4. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Types of
Pay for Performance
• Bonus
• Variable (commission)
• Yearly raises

5. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
5 Reasons
You Should Pay Employees
for Performance

6. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Cost-Efficiency
1

7. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Recruiting and Retention
The average raise is 3 percent of salary.
The cost to replace an employee is 30-400 percent of salary.
2

8. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
It’s the Right Thing To Do
3

9. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Better Culture and
Happier Employees
“In large part, culture is a product of compensation.”
— Alec Haverstick
4

10. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Drives Results
5

11. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Who Does Compensation
Matter Most To?

12. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Age
BABY
BOOMERS
1946-1964
GEN X AND
BUSTERS
1965-1983
GEN Y AND
MILLENNIALS
1984-2002
COMMUNICATION
ABOUT COMP
AVERAGE TENURE
CAREER MINDSET
Mostly Private
15+ yrs
Retirement
Work/Life Balance
COMMUNICATION
ABOUT COMP
AVERAGE TENURE
CAREER MINDSET
Somewhat Private
5+ yrs
Management
Work/Life Balance
COMMUNICATION
ABOUT COMP
AVERAGE TENURE
CAREER MINDSET
Public
15 mos-2 yrs
Go-Getters
Advancement
Flexibility

13. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Gender
MEN
• No. 5 reason they left their job
• 79 percent are annoyed by low salaries
• 74 percent are annoyed by unequal pay
WOMEN
• No. 3 reason they left their job
• 86 percent are annoyed by low salaries
• 83 percent are annoyed by unequal pay

14. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
MANAGERS
• No. 4 reason they left their job
• 84 percent are annoyed by low salaries
• 79 percent are annoyed by unequal pay
Manager Non-Managervs
NON-MANAGERS
• No. 3 reason they left their job
• 81 percent are annoyed by low salaries
• 78 percent are annoyed by unequal pay

15. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
• Individualized Rewards & Recognition
• Variable or Incentive Pay Plan
• Base Pay Plan
• Company Culture, Compensation
Philosophy & Compensation Strategy
The Compensation Mix

16. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
• Develop Clear Compensation Strategy
• Get Reliable Market Data
• Develop Clear and Aligned Goals
Strategy

17. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
How Should I Start Paying
for Performance?

18. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Ben’s Tips
for What To Do Today:
Culture matters.
Define what should be measured.
Baby steps.
Don’t be a copy cat.
1.
2.
3.
4.

19. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Mykkah’s Tips
for What To Do Today:
Gain executive buy-in.
Align with organization goals & culture.
Get the right systems in place.
Train managers properly.
Communicate clearly across the organization.
1.
2.
3.
4.
5.

20. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
Immediate Actions
Elementary
Intermediate
Advanced
1.
2.
3.

21. 5 Reasons You Should Pay Employees for Performance
bamboohr.com payscale.com
“Employees won’t believe there is a link between
pay and performance unless they can see it.”
—Margaret O’Hanlon, re:Think Consulting

22. 5 Reasons You Should Pay Employees for Performance
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Follow BambooHR and PayScale on social media:
bamboohr.com/blog | payscale.com/compensation-today
Thank you!

23. 5 Reasons You Should Pay Employees for Performance
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Questions?
BambooHR
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