Back to basics: the argument for linking pay to performance

Tips from John O'Brien, chair of the Community Accounting Network

John O'Brien
John O'Brien

Recently, while facilitating a day on pricing and costing, I asked attendees what they thought I was worth for a day. Answers ranged from £350 up to a rather flattering £2,000.

Putting a price on something - and, in particular, deciding how much to pay your staff - is not easy. But salaries are usually the biggest cost facing an organisation, so it's important.

You need to set the salary level and decide the annual increases. Many smaller organisations in the sector follow the local authority settlement on this. Others, however, might think about linking pay to performance. The shift away from grant funding towards commissioning - which the big society heralds - means there is a new argument for this.

In the traditional world of grant funding, if you deliver more or less what the funders intended, all is well. Your grant doesn't disappear if you don't hit targets and, as long as the grant arrives, you know you can afford the salaries. Staff performance and sick leave don't necessarily affect the income stream.

But in the new commissioning and contracting world of the big society, if you don't deliver the service, you won't get paid. So can you afford pay increases? Sickness and staff commitment start to take on a new financial significance.

People in this sector don't work for huge salaries, but pay can be a source of motivation. Maybe linking pay to the performance makes sense from a number of angles.

John O'Brien is chair of the Community Accounting Network and chief executive of CA Plus

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