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Why Performance-Based Pay Isn’t Always a Motivating Factor for Employees

Why Performance-Based Pay Isn’t Always a Motivating Factor for Employees
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Performance-based pay has gained quite the popularity among companies. While employers believe it to be a motivating factor for employees to work harder, employees might not feel the same. 

The top-performing employees often feel that it increases their stress levels while the low-performing ones get demotivated. There are also chances that the employee’s focus is shifted only towards earning money instead of reaching the company’s goals.

As it is in the company’s best interest to retain talented employees, think over if you want to tie your employee’s performance to financial incentives. If not, are there any other ways to ensure higher job satisfaction with performance-based pay? Keep reading to find the answer.

Why Is Performance-Based Pay Not a Motivating Factor Anymore?

The reason why it isn’t a motivating factor anymore is that employees associate it with the expectations of overwork and underappreciation. 

It may come across to them as employers want them to work past their limits—meaning they have to work longer at night or even on weekends. In other words, they have to disrupt their work-life balance so that companies can increase their profits.

With the news coming around that America is the most overworked developed nation in the world, working harder and faster for more money isn’t an incentive anymore.

How to Make Performance-Based Pay Work?

If you still want to implement performance-based pay and want it to work, then there’s one thing you can do. 

Help your employees remember that their paychecks and success are in their own hands. You can set goals, put up leaderboards, and display each member’s progress to motivate the entire team.  

You may also purchase prizes like gift cards, gaming consoles, Bluetooth headphones, or even a laptop and put them on a display. This will get them excited and motivate them to work harder.

Alternatives to Performance-Based Pay

There are also a few alternatives to the performance-based compensation structure. If you don’t want to take the risk of losing your talented employees, you can use them. 

Below you will find different ways to incentivize your employees without paying money.

  • Increase Perks

Great perks can work wonders to boost employee morale. You can offer them game time, movie days, company lunches, or anything that would make them feel like the company is a good place to work. When people feel good about their workplace, they would like to come to work every day. 

If possible, have a well-designed office space with places where people can hang out or relax during their work hours. It would keep them motivated to perform better. 

  • Increase Vacation Days

Vacation is important for employees. Taking vacations can prevent burnout, reduce stress, and promote work-life balance. However, most companies only offer a two-week paid vacation per year.

So, if you find that your staff is motivated by time off, you can provide them with an extra week of vacation if they perform well.

  • Schedule Retreats

In case your company can’t provide additional PTO, you can plan short workplace retreats for your staff. Apart from being a vacation, it will also help with team bonding. 

You can also plan something simple like having group meals, playing games, or renting a cabin in the woods to spend the weekend. All these can work as great incentives for employees. 

Final Words

Know that offering incentives to employees doesn’t mean that you can underpay them. Try offering competitive compensation along with these incentives. It might help your employees feel that they’ve got a great workplace to work for. 

This may not seem much but it will go a long way in retaining employees and keeping them motivated to work harder. Additionally, try to have an open conversation with your employees to see if they are happy with their compensation packages. Ask them if they are getting motivated in any way. It is hard to find and retain good employees, so you shouldn’t be afraid to shift your perks and benefits if needed.

About the author

Samita Nayak

Samita Nayak is a content writer working at Anteriad. She writes about business, technology, HR, marketing, cryptocurrency, and sales. When not writing, she can usually be found reading a book, watching movies, or spending far too much time with her Golden Retriever.