All posts filed under: Total Compensation

From performance management to people development: exploring other paths that lead to high performing culture

Many HR specialists are currently giving much thought to how well-established processes can be adapted to new circumstances. Transformation and digital disruption are much more than meaningless buzzwords. At Avaloq, we have taken the bold step of radically changing all major people processes as part of a corporate culture campaign. We will present our solution in this article. The reason we are doing this is not because we think that ours is the only right way, but because we are convinced that we can improve by exchanging ideas. All that matters to us in the end is having an excellent model for our employees and our company.

Working world needs new compensation models

As described in the article “How to find the right bonus schemes to boost innovation”, the age of traditional compensation models is over in companies whose success rests on their ability to innovate. Rather than effectively serving its purpose of increasing employee motivation, performance-based remuneration actually restricts employee creativity in some cases, as shown by studies and experiments. Nevertheless, many companies are finding it hard to break with Gaussian employee classifications, performance-based bonus parameters or complex bonus-malus systems. Compensation models that back employee development, team spirit and motivation would contribute considerably more to a company’s long-term success and innovation than promised bonuses.   For years, companies have managed their compensation models based on the “pay for performance” principle. These still widespread extrinsic models try to motivate employees using monetary incentives. At worst, they produce egotistical, go-it-alone individuals, or, as illustrated by examples from large banks, they entice employees to operate in legal grey areas in order to achieve their performance targets and pocket higher bonuses in return.  In contrast to this, there are studies that examine the intrinsic …

How to find the right bonus schemes to boost innovation

Many companies still try to motivate their employees by offering performance-related bonuses. But in doing so they are ignoring the findings of various sociological and psychological studies: Financial incentives are no guarantee of improved performance. As a matter of fact, they can have the opposite effect and stifle both the creative design process and innovation.