Linking Pay To Performance: Cascading Goals

Ask any competitive sports coach to identify the primary team goal before any given

season and he or she would certainly respond with something along the lines of, to win championships. The individual tasks of all members of the organization, both big and small, revolve and the realization of this one, all-important goal.

Most businesses operate according to the same basic principle; yet championships instead manifest in the form of augmenting profit margins. Now, in the ever-exasperating world of budget management, it is sometimes difficult to link pay to performance, for how can one determine a specific individuals impact on the overall budget, and therefore his or her proportional cut of the pie?

Think of cascading goals like a pyramid: at the top is the single, dominating objective, supported by decreasing layers of goals, that although increasingly-vary as one approaches the bottom, are all connected to the original objective. The top is narrow and controlled by few, while the bottom layers are comprised of the rest of the bunch. Although the direction of the various enterprises is limited to a select group, without the support and aid of its bottom levels, any pyramid is destined to collapse. For this reason, as in sports, the whole success of a business is the sum of each and every one of its parts. This system is more than worth its weight in gold for alleviating some of the stress of budget management.

Cascading goals tie an individuals pay to his or her control over the primary objective. For example, top executives of a company, whose jobs include activities like spearheading marketing campaigns or making big financial decisions, make the most money. In working towards the companys ultimate goal of garnering greater profits, these individuals make the big decisions and are therefore allotted the greatest percentage of the budget. Along the same lines, managers who might control hiring in a specific region are given a less, yet proportional sum and other employees under them a still less, but still comparable amount.

For the new employee, working hard hours throughout the long days, the cascading goals system should not be seen as an obstacle, but rather as a window of opportunity. Sustained outstanding work etiquette gives way to promotions, which assign the employee with more and more responsibility and added compensation as his or her professional goals inevitably draw greater connections to those in the top tier of the pyramid.

There is an added morale benefit to paying for performance. When an employee feels like the work he or she is doing is menial, there is just less excitement in the job. The motivation and desire to take pride in ones work really arent there. However, employees who believe that their work is crucial to the advancement of the business as a whole will almost invariably work to the best of their abilities.

The ability to peer up the steep slope towards the pinnacle of the pyramid gives them perpetual incentive for the future.

While an HRMS is not designed specifically to perform the full cascading goal process, however it can be used to track basic HR performance and therefore ultimately affect the HR & Payroll combination of events.

by: Carolyn Sokol

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