Darren Gorton in his blog (Item 5 in September Carnival of Trust Top 10) Trust vs Control: Is control merely a substitute for trust? makes a perfect case to nurture the culture of trust to deter fraud and reduce cost of control.
I further extend his point and argue that creating, developing and nurturing Pay for Performance culture is the first step towards harnessing the power of trust between employees, business partners and stakeholders. Here is why.
1. Organizations that embrace Pay for Performance philosophies communicate often with their employees about organization goals, contribution of individuals to the organization goals and how individual pay is linked to the performance. This transparency is the first seed in developing trust between employer and employees
2. A well-designed pay-for-performance system increases employees’ understanding of what is required of them, their performance and the organization’s outcomes. Merit awards, bonus and promotions are based on evaluations by the person's supervisor, colleagues and people they supervise. So everyone knows that the rewards are based on collective feedback of the team itself, fostering team trust and collaboration.
3. With Pay for Performance culture, the pay increases and bonus are consistent across the various functional units of the company. So, everyone in organization puts their best to drive organizational goals, fostering cross-functional synergies.
4. Organizations that use sound pay-for-performance practices enable transparency of executive pay and it’s linkages to performance to the stakeholders. Empowered with this transparency, stakeholders and business partners now have more reasons to trust the organization leadership pursuit of corporate goals.
With the difficult economy driving the urgent need to bring out the best in people (with trust) and reduce the cost (of controls and fraud), there is no better time than now for organizations to create, develop and nurture the culture of trust and transparency with Pay for Performance practices.
I further extend his point and argue that creating, developing and nurturing Pay for Performance culture is the first step towards harnessing the power of trust between employees, business partners and stakeholders. Here is why.
1. Organizations that embrace Pay for Performance philosophies communicate often with their employees about organization goals, contribution of individuals to the organization goals and how individual pay is linked to the performance. This transparency is the first seed in developing trust between employer and employees
2. A well-designed pay-for-performance system increases employees’ understanding of what is required of them, their performance and the organization’s outcomes. Merit awards, bonus and promotions are based on evaluations by the person's supervisor, colleagues and people they supervise. So everyone knows that the rewards are based on collective feedback of the team itself, fostering team trust and collaboration.
3. With Pay for Performance culture, the pay increases and bonus are consistent across the various functional units of the company. So, everyone in organization puts their best to drive organizational goals, fostering cross-functional synergies.
4. Organizations that use sound pay-for-performance practices enable transparency of executive pay and it’s linkages to performance to the stakeholders. Empowered with this transparency, stakeholders and business partners now have more reasons to trust the organization leadership pursuit of corporate goals.
With the difficult economy driving the urgent need to bring out the best in people (with trust) and reduce the cost (of controls and fraud), there is no better time than now for organizations to create, develop and nurture the culture of trust and transparency with Pay for Performance practices.
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