As companies plan their 2024 pay increases, with expected raises around 3.5%, we need to look at how we can create fair systems that reward good work and keep people motivated to stay. I’d like to share what I’ve learned from helping organizations improve their pay practices.
The old way of doing performance reviews often doesn’t work well, leaving employees feeling frustrated and missing chances to improve. The numbers show why this matters – when done right, merit-based pay systems can cut down on people missing work by 81% and boost profits by 23%.
Here are three ways to make merit pay work better:
📊 Use Organizational Network Analysis (ONA) to measure performance fairly. This new approach helps see how people really contribute to the company’s success, cutting down on favoritism and spotting the true high performers.
🔄 Set up ongoing feedback using modern HR tools. Companies that use better evaluation systems have seen people become 15% more engaged, and some have gone from getting just 45% of reviews done to completing all of them.
💡 Create a clear system that shows how performance connects to pay. When people understand how their work affects their pay, it’s fairer for everyone. Using automated tools helps keep things consistent.
The proof is in the results: companies that use these approaches see more engaged employees, more people staying in their jobs, and better work across the board.
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