Rethinking Performance and Rewards in the New Normal

Rethinking Performance and Rewards in the New Normal
Performance is always linked with rewards, what excites one set of people may not excite the other set. As an HR leader, first, understand what exactly excites your people in terms of rewards, do a small dipstick as things have changed now post the pandemic.

Rethinking Performance and Rewards in the New Normal

“For every action, there is an equal and opposite reaction”. Our performance management system also needs to be designed in the same way. You produce a positive action you get rewarded with one. Well, its easier said than done, performance management and reward distribution have always been one complex aspect that we keep trying to figure out constantly, “What will work and what will backfire?” There is so much written about How to design a PMS system, but very few companies have been able to master performance and rewards. At the end of the day, it all boils down to the BELL CURVE. It’s at this juncture that companies need to understand that it’s “to each its own”, a system that work s for one organization may not work for you. You need to understand what drives your people to perform and what they aspire to as rewards. This intimate knowledge of your people is what will help you design a robust performance and reward system in the time to come. 

“The two best measures would be the number of high-potential and high-performing talent you are able to retain and the overall bottom line increase year on year that the organization (break it down to each function) achieves.”

This is where you can while still using the BELL CURVE move it to function level and apportion the rewards according to the performance and contribution of the function aggregating all the way to the overall organization level. This coupled with data insights and analytics will help you keep modifying your total rewards system based on the short and long-term aspirations of the workforce.

With the pandemic changing the way we work and operate it has become more difficult to “observe” performance as most work has shifted to remote.  In such a scenario we need to become more objective than ever while redesigning our PMS system. The measures need to be “outcome” based and not “process” driven like earlier. This needs to be combined with multiple other factors like – going beyond our own area of work, contribution towards new avenues, innovation, and other soft skills that are key to delivering success internally and for our customers. While we redesign our performance and rewards system to suit the new normal let’s look at the top challenges faced by HR professionals. 

Designing KPIs

The base of any PMS is based on KPIs- the key performance indicators. If you are restructuring the way you are working. E.g. – From hierarchical to team-based or a flat structure or uber workforce model, you need to define KPI’s for that “role” appropriately, which can be broken down in terms of “outcome” expectation of the role. E.g. – Improve x% Business performance by adding high-value clients or Build a new and more efficient model for taxation to improve function efficiency by y%, etc. The statements are broad but are outcome-based and linked to the larger business objectives.

Quantifying Performance

With remote and new ways of working quantifying performance is becoming increasingly difficult, but not impossible.  This is where I would recommend increasing use of if not real-time, regular feedback from people you are interacting and working with. This gives the individual a sense of what is being accomplished vs what was expected and a holistic view.  The game-changer could be if you get your external stakeholders to also rate then it gives you a proof of validation of the outcomes.


With the increased use of technology, it’s imperative that HR folks need to identify the right technology they want to implement based on the maturity of the organization.  This is extremely important, I would advise a word of caution to those HR folks who in order to create something world-class land up creating something so complicated that it needs to be thrashed.  There are dime a dozen SAAS-PAAS vendors who can advise you on the solutions available. Improve the system one step at a time this way you create synergy with business and get to know what works and what needs to change with minimal investments. We have chatbots, AI-based systems, and nudge-based systems that could be looked into when you think of digitization of the new PMS. 

Performance is always linked with rewards, what excites one set of people may not excite the other set.  As an HR leader, first, understand what exactly excites your people in terms of rewards, do a small dipstick as things have changed now post the pandemic. A Flexi work from a remote location at the same pay could be a great reward too or opportunities to enhance one skill from premier institutes could be a reward, a great health insurance policy coverage for the entire family could be reward for some folks or a new compensation plan or a variable based pay model for gig workers could be an incentive.

There are various ways you could look at restructuring your existing rewards plan and with the new ways of working taking shape it becomes very important to restructure the way we plan to reward our people for immediate, short, and long term. Especially it becomes very important for organizations to ring-fence its key talent so that as the market opens you are geared to challenge and are not frantically looking to put a team together when the competitor is sailing ahead. Rethink on what your people and organization need at this moment, create a plan that is as flexible and adaptable as your workforce, that’s when things may work out. 


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