Paying for Performanceat a local SME
Our client, a local SME, has been in business in Singapore since the early 1990s. As part of a corporate-wide drive to improve productivity, the management decided to review and revamp the way that employees were appraised and rewarded. Specifically, the management was keen to reward good performance, and to drive a culture of excellence.
Several challenges were identified:
- the existing performance appraisal was not linked to work outcomes and was very subjective;
- incentives were not linked to individual performance, resulting in sometimes inequitable distribution of rewards;
- employees were not clear how they were rewarded, and consequently unsure about what behaviours to demonstrate;
- employees were rewarded by tenure and familiarity with their supervisors;
- there was a general ‘fear’ of the overall appraisal process; and
- job roles were not clear, especially between job levels, leading to uncertainty and poor accountability
The subjectivity of the existing system was such that many could not see how their actions translated to incentives, taking reference instead from recognized weak performers who also got similar bonuses and rewards. The motiviation to work hard and to perform better had been eroded by a inequitable system that valued loyalty and familiarity more than performance.
The following were developed:
- revised job descriptions for key job functions in the organization;
- a revamped appraisal system that measured work related key performance indicators objectively;
- separate appraisal systems for non-executive and executive employees;
- a structure for short- and medium- term incentives to improve retention of identified talents; and
- a new rewards system that
- incentivised employees based on individual performance
- promoted intra- and inter- department collaboration through the introduction of team incentives and organization rewards; and
The newly designed appraisal and rewards framework has been well recieved by both employees and supervisors. Greater job clarity has led to improved accountability and lower incidences of duplication of work or ‘dropped balls’. Employees are now clearer about what needs to be done and how rewards can be earned. Cross-team collaborations have improved, and good performers are now happier that their efforts are recognized and rewarded. Overall, the new system has helped introduce a culture of teamwork and performance.