It seems obvious to me that if you reward desirable behavior you will get more of it and if you don’t, performance will eventually level off and fewer people may go that proverbial “extra mile”. Complacency and an entitlement mentality can work its way into your organization. Just look at how athletes in the last year of their contracts perform…and then take a look at their performances in years once those mega-bucks contracts are signed. While there are some exceptions to this, all too often performance drops off.
Merit pay and bonuses can be controversial issues in the nonprofit world but I say if it works…go for it. I think nonprofits need to recognize that today’s tough economic environment requires new approaches so they can deliver on their mission. One tool that works very well is a compensation plan designed to take into account a person’s performance. I don’t think it is right (or effective) to shower everyone with the same salary increase year in and year out. Poor performers are unduly rewarded and high capacity performers are punished.
This approach calls for real, meaningful performance reviews, too. I wrote about that recently. Using both tools together, you automatically and fairly encourage top level performance.
What do you think? Call me and let’s talk…