Taleo Highlights Five Steps for Building a Performance-Driven Compensation Programme

Differentiated Compensation Helps Organisations Create a ‘Talent Insurance Policy’

Taleo Corporation, provider of on-demand talent management solutions, today announced the availability of global pay-for-performance research and a new research whitepaper.

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Performance-Driven Compensation: The Corporate Talent Insurance Policy outlines the impacts of creating performance-driven compensation programmes that align employee compensation to actual impact on the company’s key business goals.

Businesses are looking to manage the flight risk of their star performers through “talent insurance policies” that more accurately find and incent the best performers with differ­entiated compensation.

More than 80 percent of companies around the world are offering incentive programs that include bonuses, stock options or grants and educational scholarships. The biggest challenge is how to distribute and differentiate the incentive compensation between performers who range from being high performers to average or low performers.

“The peanut butter approach to compensation—spreading merit and bonus incentives fairly evenly across the team—not only dilutes the impact of the bonus pool, it hinders the key players in the business,” said Alice Snell, Vice President of Taleo Research. “Having a differentiated compensation programme that is tightly linked to performance management metrics, can make the difference between an organisation keeping its star players and driving powerful company performance or de-motivating its talent pool and ultimately, its impact on the market.”

Technology is enabling organisations to link performance information with compensation data and ensure the right people are aligned with the right compensation and incentive options. To help address the various intricacies of performance-driven compensation, Taleo Research compiled 5 steps for creating and managing a differentiated compensation program:

• Strategy – map the desired company results with the necessary behaviours needed from employees across the company.
• Technology Support – the entire performance and compensation process should have a strong technology underpinning.
• Tactics and Programs – make decisions about what tactics and programs will be essential to successfully executing the program.
• Measurement – measure progress through consistent and frequent discussions between manager and employee about employee performance.
• Communication – communicate the results of the year’s progress against individual and business goals via total reward statements or other tools.