Pay/Performance Link Important to HR

July 27, 2004 ( - More than eight out of 10 (83%) HR professionals said developing a strong link between pay and performance is extremely important, while only 21% gave the same level of importance to addressing the combination of pension cost, volatile investment markets and regulatory complexity.

To develop the strong link between pay and performance, 61% of HR departments that rated this issue as having an extreme amount of importance said they are refining the organization’s performance measurement system and 37% are developing programs to improve productivity and performance. Thirty-five percent said they are setting competitive and equitable total pay levels based on an analysis of each job’s impact on the organization’s performance, according to The Segal Company and its Sibson Consulting division’s poll of 47 attendees of the 2004 WorldatWork conference. The results are of “anecdotal interest, but are not statistically significant,” Segal said.

Communication was a major theme among HR departments in attendance at the conference. Seventy-one percent of those surveyed said it was extremely important – meaning it was an issue monopolizing the majority of the staffer’s time – to communicate effectively with employees to involve them in the organization’s success. Twenty-seven percent said this issue was of moderate importance – an issue the department was concerned about and intended to address in the next year or two.

Additionally, 68% gave high levels of importance defining HR’s role as a strategic leader, while 32% said this issue was moderately important. Perhaps not surprising, no survey respondents said this issue was of no importance – with no immediate plans to address this issue.

Also of extreme importance among 76% of the survey sample was managing the rising costs of medical and prescription drug coverage. Further, 11% saw this issue having moderate importance.

Asked about what strategies HR departments were taking to mange these costs, 60% of those ranking this issue of extreme importance said they are investing in wellness and health promotion programs, 58% are increasing patient cost sharing and 51% are examining detailed medical and prescription drug utilization data to identify key cost drivers.

A copy of the survey results is available at