How do organizations reward achievement of performance goals?

As we reported a couple of weeks back, companies are increasingly switching to a pay-for-performance model, where employees aren't guaranteed a raise just for showing up each day. However, how firms are rewarding their employees for strong performance varies greatly between high- and low-performing organizations, a fact that isn't initially revealed through most high-level reports.

Performance rewards: The standard view

The chart below is a rather simplistic view of the 511 responses i4cp received during the study, which shows that employees are most likely to benefit from a salary increase for goal achievement first, followed on the list by a one-time cash bonus. Stock awards and non-cash awards are also utilized in the reward system, albeit at a much lower level.

However, salary increases may not be the best way to reward employees for meeting goals. Even though the chart above - a chart that most research organizations, including i4cp, would include in their "standard" reports - says so, the more insightful view of how high-performing organizations administer rewards requires a deeper look at the data.

Performance rewards: The interactive view

Using i4cp's new Interactive Data functionality, which allows i4cp members to easily filter and customize i4cp research against a variety of demographics, it's revealed that salary increases are not the most widely used practice by high-performing organizations. This second chart shows the same data as above, only with differentiated responses based on organizational performance and minus mid-range performing companies:

As you can see, one-time cash bonuses are regarded as a better way to reward employees for meeting their performance goals than salary increases, at least according to the practices of high-performing organizations. i4cp's Pay-for-Performance Interactive Data reveals that 72.4% of high-performing organizations award cash bonuses, whereas only 59.2% provide salary increases.

Even looking at some of the other, less-used ways of rewarding performance shows some startling gaps that lower-performing companies should take heed of. Gaps between high- and low-performing organization practices should be regarded as opportunities. By using Interactive Data to gain greater insight into survey results, organizations can easily focus in on these gaps and begin to capitalize on more effective strategies.

A fully functional Pay-for-Performance Interactive Data file is available to i4cp members, but you can download a preview of the study here (Tableau Reader, which is free, is required to view and filter the data).