Incentivizing a sales team, motivating a department to reach goals, or simply offering an additional option to increase earnings through meritocracy is becoming a constant practice in companies. And one of the ways to offer this differential is implementing variable compensation.
Once the parameters for granting the benefit are defined, most organizations create a spreadsheet (either in Excel or Google Sheets) to track team performance and, at the end of the month, make the payments.
But what they don't know is that some mistakes can undermine strategic compensation practices and negatively impact the company environment. Next, you'll find 5 common mistakes in this practice:
Lack of information
Displaying consolidated data for the team, determining who will earn what, when, and how much, might seem simple for company management. However, for those awaiting variable compensation, a lack of transparency in information can become a demotivating factor.
How were the calculations made? What variables were considered? Are the criteria correct? These are some questions that often cross the minds of professionals who expect to be recognized through meritocracy, but which are not always voiced, leading to internal conflicts and also an unfavorable organizational climate.
2. Wrong calculations
Spreadsheets were a lifesaver for companies for a long time, but they always leave room for human error. A wrong formula or a slip-up by the person entering data can lead to incorrect payments, causing several problems.
One of them is financial loss, whether for the company or the employee who is receiving less. The other is the credibility of the strategic compensation system, which generates distrust among people and ends up compromising the real objective of the action.
3. Lost Time
Bureaucratic tasks consume precious time, especially when it comes to typing data into a spreadsheet. If this data comes from other departments, then rework is certain.
What if, for some reason, the spreadsheet becomes corrupted and you lose all your data? This would mean many hours spent recalculating all the values, checking the data, and continuing your work.
4. Tampering risks
As much as we may not want to believe that someone could alter business controls, it's a fact that spreadsheets leave room for tampering. A disgruntled employee could change values in the spreadsheet to harm someone or benefit themselves. There's also the possibility of deleting the document or sharing it with people outside the company.
The topic of information security is something that should be taken seriously, especially if you are implementing meritocratic systems in the company.
5. Lack of team commitment
If the previous four errors are made, you fall into the fifth: a team uncommitted to the company's goals and results, which affects the corporation's overall performance.
A strategic compensation system that isn't clear generates insecurity and dissatisfaction among the team, affecting the organizational climate. Rumors spread, any change in the company faces resistance, and you end up with an internal crisis to manage.
Bonus tip: how to get around the situation
We couldn't conclude this post without offering a solution to all these problems. And that solution lies in using technologies that guarantee data reliability, as well as transparency of information when communicating results to everyone.
Individual performance software allows the organization to implement a Serious rewards system, with well-established policies and rules, and monitor the performance of each employee individually. This way, it is possible to maintain management at a glance in your company and adequately compensate each professional according to their dedication.
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