| | August 2023MANAGEHRMAGAZINE.COM19CXO InsightsBy Vivian Garces, Head of Talent Attraction and Development, Grupo VantiIS PERFORMANCE MANAGEMENT THE BEST WAY TO DEFINE COMPENSATION?During the Q1, companies usually analyze the performance ratings of their employees and make decisions based on that information such as salary increases or variable remuneration bonus distribution. Some weeks ago, I had an interesting conversation with my colleagues regarding whether is a good idea to tie performance management to compensation and what are the implications of that decision so I would like to share some thoughts we had with you.First, we must consider the purpose of the performance management model which is the vehicle used by companies to assess the contribution made by employees to the achievement of corporate objectives. In the different companies in which I have worked, performance management has had several components:· A component to assess the financial performance of the company in which, according to the results of economic indicators for the year, a percentage of variable remuneration over the annual fixed salary is paid, and it varies depending on the organizational level of the person: the c-suite has a greater proportion of their bonus tied to the financial performance of the company than middle managers and theirs is in turn, greater than that of individual contributors.· An individual performance component usually considers one or both of the following elements: the fulfillment of individual objectives or KPIs that show the contribution to the achievement company´s objectives, and a qualification on the competencies or soft skills needed to perform the job, granted by the leader to the employee. In other words: the WHAT and the HOW.Vivian Garces
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