Should We Link Pay and Performance?

One of the things I have observed is that most people are not altruistic.

They pursue vocations for a number of reasons all of which have payback.  The payback may be something other than money - it could be status, a sense of achievement, or even an investment in some potential future return like, in the case of some religions, brownie points with a deity.  The point is, people do things to get something in return.

In a business context the issue is linking a person’s performance to a return, and importantly varying the return amount based on performance.  We do it all the time, and we teach our kids to do it all the time as well.  We give and expect loyalty bonuses from people we trade with - airpoints for example. If I ‘perform’ correctly by flying more miles, I will be ‘paid’ more points and be given a higher status.  At home we teach our kids that if they do their jobs they get pocket money - if they don’t, they don’t!

Yet there are some professions that actively resist this in their ranks, and I have never understood why.  The education sector seems particularly resistant, yet as a parent I would love to reward the teachers that apply themselves 110%, are involved in extracurricular activities and whose students have better learning outcomes than their equivalent peers paid more.

I genuinely believe that every job can have a performance pay component and it isn't that hard when you take the position that performance can be a mix of absolute and relative.

I define performance as one’s measurable achievement relative (in no particular order) to:

1. Their achievement against their own potential,
2. Others doing what they do, and
3. The requirements of the job.

If you apply yourself fully and in so doing manage to get a 90% outcome against the requirement of the job, you might well be entitled to more than the person that applies himself 50% but gets a 110% outcome.

This is an interesting topic, and one I will explore further in future blogs, but for now I just wanted to ask:

“is it fair that I get paid the same as someone else who applies themselves more or less than me, and/or who performs better or worse than me, and/or who exceeds or misses the requirements of their job?”

I think not.

Cheers!

DK