Rewarding Leaders

Improving Leaders' Pay for Performance Line of Sight

To achieve today's aggressive revenue growth goals, organizations will require a 23% increase in leader performance.  But paying leaders more won't get them but a 2% performance improvement.  Incenting leaders on top-line organizational business outcomes falls short, too.  In fact, all conventional approaches using rewards together only increase leader performance by 5%.

Improving line of sight is key: clearly articulating the relationship between what a leader does and how she is paid improves leader performance by up to 33%.  Unfortunately, almost 3 in 4 leaders don't perceive any connection between their performance and their rewards.

To rebuild line of sight, the best companies focus pay plan design on rewarding individual contributions to business outcomes; differentiate pay for high- versus low-performing leaders; and enable pay transparency among both current leaders and leader candidates.

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