Employers are increasingly getting dissatisfied with using standard pay packages only to find that they don’t work well for their organisation.
Using a dashboard approach to measurement, the three main ingredients which make up productivity are measured and used to reward those who really work hard and give to the lazy what they actually deserve.
The concept of HR having key performance indicators has been around for a long time. It was started in an attempt to bring HR in line with other business areas and to try to get HR people more business focused and accountable for some results. Many of the Consulting companies were quick to jump on the bandwagon offering their own “products” and trying to define – even though they knew little of HR what HR should be accountable for. Companies are now looking at better ways to integrate HR with the business strategy; one such way is to develop an HR dashboard
The process of differentiation was explained in a previous article; here we will look at how you can put it into action. First we need to understand the three key ingredients of productivity. Sustainable productivity consists of three parts
COMPETENCY – which guarantees quality, conformance to standards and safety
PERFORMANCE – which is about how much work is done; volume & speed
RELIABILITY – turning up for work on a regular and timely basis
All three of these can be measured annually and the scores are then used as a basis for fair and equitable bonus payments.
Each of the three areas that form sustainable productivity are measured on a linear scale, Competence and Performance measured on this format during annual appraisal and Reliability information gathered from attendance during the year to measured. Each area has minimum average and maximum scores applied which we would advise organisation on. The average pre-set forms the standard to which all employees must attain before going onto a productivity based scheme.
As can be seen on the chart all of the three areas need to meet the standard before qualifying for bonus. Once the standards are met then bonus is apportioned specifically on increases in performance only. This is a very important point to remember as at this level it is the only area that attracts bonus. This is a hopper scheme and works well for individuals as well as for teams. For teams no one gets any bonus unless the whole team qualifies.