“The value of an idea lies in the using of it.” Thomas Edison.
In my recent videos, I explained why performance management systems have failed. I also outlined the six universal truths that drive great performance. So how can these principles be applied in organizations?
I believe that performance management ought to be architected to elevate individual and collective performance. The first and possibly biggest barrier to overcome is arriving at a way to pay people without using performance ratings. Here is an approach…
• Separate different components of compensation, i.e. base pay, bonus, equity
• Write down principles for each component. They serve a distinct, yet complementary purpose, and should not be conflated
• Align compensation budgets according to these principles
Transparently communicate principles across the organization. In the words of French philosopher Michel Foucault, “The greatest barrier to trust is opacity.”
• Bring leaders together to make compensation decisions on their people. Principle based decisions when made collectively will have more fairness than those made individually
