DON'T ADDRESS POOR PERFORMERS; when managers within an organization don't address poor performers they need to understand that the only possible result is an organization full of moderate to poor performers. People that care and do great work will get the message loud and clear and begin to understand that they don't have to work as hard - it doesn't matter and in fact is a waste of their time. They will either move on to another organization - or "quit and stay", getting increases for doing less.

PAY LESS THAN THE JOB DEMANDS IN THE MARKET; purposely or by default, it doesn't really matter, it's never a good practice. Organizations should definitely never over pay against the market but undervaluing a job will cause turnover, foster low productivity or prevent you from hiring the best people possible.

IGNORE THE VALUE OF A FORMAL COMPENSATION STRATEGY; the positions in your organization are not as unique as you might think. Your employees will eventually run into someone or find some information that will suggest they are not paid fairly. A formal compensation strategy serves to guide the organization in a competitive market when it comes to 'how to pay people'. And when published, should give employees some confidence that this is an overall plan, accountability and intent.

DON'T TRAIN YOUR MANAGERS TO DELIVER PERFORMANCE AND SALARY REVIEWS; if you are going to give people salary increases, aside from making sure it reflects their level of performance, it's important that the coinciding message is delivered clearly - "good job" or "improvement required" and possibly "you are on a performance improvement plan". In order for managers to do this with confidence, they need some specific tools and methodologies. In particular, they need to understand that this is an opportunity to motivate people. It's all in how the message is delivered. Give them training and then follow up with some refresher courses. People represent 65 to 80% of controllable expenses - make sure managers are getting the most out of their groups.

DON'T EDUCATE YOUR MANAGERS ON THE VALUE OF PAY FOR PERFORMANCE; it's definitely easier to give everybody the same salary increase, but I don't know anyone who says it is easy to be a good manager. Every performance management training program should include a module on compensation practices. This should include an overview of how the company is doing relative to the market, how pay for performance relates to market pay and how differentiating top performers from those who contribute less impacts the manager's effectiveness. How they use this knowledge could well mean the difference between their own success and failure.

SET INCENTIVE PLANS THAT ARE AT CROSS PURPOSES OR DON'T INCLUDE CLEAR METRICS; All goals should roll up to or contribute to an annual set of 3-5 business goals. These can be categories such as revenue, expense, process improvement, or sales, for example. If you have a job that is not contributing to business goals such as these - it should not exist. It is possible to find an objective for a receptionist that contributes to each of these - it has been done! When goals are set appropriately and metrics are clear incentive plans drive and reward the behaviours that contribute to annual goals - it is a beautiful thing. But, having separate departmental or division goals only serves to divide and conquer. I have actually worked in an environment where divisions were competing for resources and not supporting one another, to the detriment of the organization...all because of the incentive plans.

SO IS PAY REALLY A MOTIVATOR?

The simple answer is yes and no. It is a motivator only if your strategy is solid and applied consistently. It is a de-motivator if organization practice is described in one or more of the list above. But the reality is much more complex.