Your organization wants to do away with ratings. But if you do that, how are you planning to determine pay increases?
The good news: you can make pay decisions without ratings. You first need to establish an approach to understand, differentiate, and measure performance. The three factors to consider are:
- Employee Performance Measurement Metrics:The ability to differentiate employee performance
- Merit Budget:Typically a fixed dollar amount that is set aside to recognize and reward employees.
- Pay Range Structure:Market data or an internally developed salary scheme (which should correlate to market data) will determine the minimum, mid, and maximum pay ranges for the positions in your organization.
I’ve put together a five-minute video outlining my process. A deeper dive into how everything works can be found in the rest of the blog post below.
Step 1: Establish Employee Performance Measurement Metrics
The 5-level rating scheme is too limited to measure performance meaningfully - it needs to go. But most see the only alternative as having no system to measure and track performance. Establishing a new, more robust measurement system is a must.READ MORE