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Tech Talk Fundamentals of the Software Design

Reduce Costs with Performance Path

Cut costs with our next generation performance management system.

Executives everywhere are looking for better ways to reduce costs and improve customer satisfaction. Cash management will only become more important as the recession continues. Don’t waste money on generic appraisals and training. Less than 10% of the people who go through generic appraisals and training improve their performance.

Ways to reduce cost with Performance Path ®

Performance Path ® is the next generation employee performance management system. Combining information technology and organizational psychology employees are rewarded for more than short term, “line-of-site” rewards. It ensures alignment between business objectives, individual performance and incentives. Designed to create sustainable value, Performance Path ® provides a disciplined focus on performance results that creates a culture of achievement-not entitlements.

Pay increases are not automatic…they are earned.

Differentiating between those that add value and those that don’t across the board raises not only rewards mediocrity but compounds cost increases. The graphics below provide a simple example.

We compared two employee groups of 50 employees each. The first group received a 3% across the board raises. The second group was paid based on their performance.

The performance based group was divided into three segment 10% high performers, 80% high average performers and 10% low performers. Top performers received a 3% pay increase average performers received 1.5 pay increase and low performers did not receive a pay increase.

We then amortized these pay increased over five and 10 years respectively. To our surprise after just five years the across the board raises increased base pay by 5.67% . In 10m years base pay ballooned over 12% as compared with the pay for performance group.

Performance Path ® gives you more bang for your compensation dollars.

Pay for performance pay off by lowering direct compensation costs and increasing the return your human capital investments.

Many organizations differentiate their performers pay by performance. Unfortunately many top performers see the actual in -the-pocked difference between high performers pay increase and average performers’ insignificant. That is where providing non-financial incenses for performance increases can build commitment and loyalty without increasing relative cost (Incentive Cache for more details).

Financial and non-financial incentives that can be removed ensuring employees not only focus on what is best for themselves in the short term but what is best for the business in the long term. Performance Path ® is a no-nonsense pay-for-performance system that rewards the best, develops the mid-level skills, and provides fair and legally defensible means to reduce underperformance.

When is a reward not a reward?

Wasting money on rewards and incentives is a fact for many organizations. If you have ever received a gift that you did not want you already know the answer to the question. Some corporation I are very good at presenting high performers with plaques. Some people line their office walls with them. They are proud to receive the accolades and symbols of appreciation.

While others feel disappoint and slighted. They would have felt excited if instead of a plaque they were given an opportunity to work a special project of interest, advanced training or expanded vacation time. Blindly presenting rewards and recognition to staff can damage individual initiative , create disappointment or even resentment on the receiver’s part. Linking valued incentives and rewards with and waste money spent on rewards due to a lack of understanding of motivational psychology and limited reward choices.

Pay for Performance Increases Management Skills.

How do you know if your managers are creating value or destroying it?

Some managers are technically competent but their management abilities leave much to be desired. Since management affects the motivation and development of many staff and customers the actual impact of poor management is staggering. Our performance based appraisal system hard wires measurable management accountabilities into each manager’s appraisal. The result, management excellence becomes a priority. Pay and benefits reflect the full impact managers have on long term competitiveness. (See Performance Dashboards for more details).

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