Variable pay strategy: Teach workers to ‘manage the boss’

by Bruce Tulgan

The biggest trend in employee compensation is pay-for-performance. In many organizations, less employee pay is fixed; more is contingent on performance. That’s great … when it works.

Pay-for-performance is effective only when managers spell out for each employee exactly what he or she must do to get paid more or reap perks like flexible scheduling.

In reality, too few managers do what’s necessary to make pay-for-performance work. They don’t take the time to outline expectations for every task for every employee. They don’t bother monitoring performance and don’t “keep score” by tracking whether the employee meets deadlines, follows instructions or contributes a fair share.

It doesn’t have to be that way.

Solution: Teach the employees to “manage the boss.” Impress upon both managers and employees that supervision is a two-way relationship. If a manager isn’t making it clear what an employee needs to do, then the employee should ask—even insist—that the supervisor spell out the parameters.

What employees need to know

To achieve this goal, train your employees to:

Understand how they support their managers’ goals. Employees are more likely to engage in the work if they know how their actions—or inactions—affect the team’s or organization’s success.

Keep close track of their actions—in writing. They should know what they have to do to earn bonuses, raises, extra days off or other coveted perks. Employees can chart their own actions—whether they met goals and deadlines and what they contributed—and then report that to the boss.

Know whether they will be ranked—and, if so, when, how and by whom. If you use a forced ranking system—with employees evaluated, graded and compared with each other—they should know which aspects of their work the boss will be tracking.

Maintain an ongoing dialogue with the boss. Encourage managers to adopt an open-door policy that invites employees to engage in ongoing conversations that will help them understand the boss’s performance expectations.

Try to get the boss involved in ongoing, written tracking. Employees should remind their managers to document in writing how well each staff member’s performance is lining up with expectations every step of the way. And employees should keep score themselves, whether the boss does it or not.

Your role: How it really works

Make sure employees know how much money is at stake and whether there’s a chance they can do something to earn more. The best way to be clear: Talk with the boss.

The sad fact is that in the real world of undermanagement, most managers gravitate to the status quo because it’s easier. When employees all get the same raises, managers don’t have to keep track of who’s outperforming whom.

Bottom line: HR pros can help employees help their bosses be better at managing pay-for-performance. But HR can’t do all the work. Get employees involved in their own management, and watch your organization’s pay-for-performance policy take hold.