Could Performance Based Compensation Be Your Next Growth Engine?

Every company says that its people make the difference. But what company admits to having “bad people”? The key is developing strategies to motivate associates to excel for the customer. Now comes survey results in April 22nd’s USAToday entitled “Survey: Pay to rise with a whimper, not a bang” that essentially says that “your difference” (people) are not going to be well compensated over the next 3 years! So, how can you motivate a staff to excel when they can barely maintain their standard of living?

The survey states:

• 80% of businesses expect wage growth, adjusted for inflation, to remain subdued in the next 3 years, rising between 0-3% (which is reportedly an improvement from 2011-2013 when wages shrank 0.7% after inflation.
• 40% of respondents said payrolls will grow in the next 6 months
• 75% of companies predict economy will grow 2-3% in next 12 months

So, given that …

• Wages for existing employees essentially remain flat.  A cost of living adjustment is very low and realistically doesn’t cover increases in everyday living (i.e. utility cost increases, food (especially for fresh produce, meat, chicken, etc), health insurance, car insurance, education … get my drift).
• New employees frequently get hired in at a higher rate than existing employees due to experience, the issue of supply & demand for new talent in key roles or the competitive market.
• Competitors offering significant packages to “steal” staff, especially key roles and salespeople (we’ve heard of some sales packages that are guaranteeing $150-200K, albeit, the fine print is a 1 year guarantee.)