What is a compensation policy?

You want to reward the people who perform well. You want to recognise them and thank them for the effort they put in and the contribution they make to reaching the company's goals. So it is good to reward people from time to time. In many jobs today, reward means far more than salary alone. It covers all the material and non-material things that contribute to good behaviour and improved performance. We call this 'the new way of rewarding'. But how do you reward your people? All of that is set out in the compensation policy.

The compensation policy

Where the old way of rewarding was built on salary and bonuses, the new way of rewarding is about real conversations. It turns out that money no longer works as a driver to get people performing well and keep them satisfied. According to researcher Kilian Wawoe there are six different purposes of reward: increasing motivation, improving performance, greater satisfaction, happiness (at work), fairness and talent development. Money still matters for one of them: fairness, which is about whether the salary relationships between you and your colleagues are right. None of the other purposes are achieved with money, so it has to be done differently. Because if you get 20% more salary, will you work harder? No. The good conversation within the new way of rewarding is about improving performance. The three annual conversations of the traditional review cycle are a thing of the past, and manager and employee hold a continuous dialogue about growth, development and better performance. That means you look far more at the employee's talents and at what their ambition is.

How can you reward your people?

1. Give people autonomy and responsibility Autonomy and responsibility are among the best ways to play to people's strengths. It is important that people feel part of your organisation. Giving them responsibility and autonomy makes them feel they matter, which creates more engagement. Let them set their own goals based on the organisation's goals, for instance. In short: give people the room to bring ideas forward and to discover where their strengths lie. 2. The opportunity to grow and develop By investing in people's growth and development you show them that they matter to the organisation and that there is room to grow. It is worth knowing that growth does not always mean taking a vertical step. Someone can also become a specialist in their field. Discuss with them how they would fill that in themselves and what they need from the organisation. 3. Feedback and recognition Because who does not get a kick out of being recognised for something they did well? It is important to compliment people when things are going well and to coach them, through feedback, when things are going less well.

How can performance management software help with your compensation policy?

An online tool lets you show people where they stand and where their development potential lies, which puts them in control of their own growth. As a manager, you can also see at a glance where everyone is in their development. In Treams , people can set goals aimed at their own development points, and both employees and managers can update those goals at any moment. That way you can see who is performing well and reward them appropriately.