Rewarding performance has long been a cornerstone of organisational success. Rewards and recognition serve as clear signals of appreciation for tangible outputs and contributions made towards the company’s objectives. They also act as a retention tool, encouraging employees to strive for excellence and remain engaged in their work. However, since every job comes with a learning curve, one question that often arises is, ‘Should organisations reward employees based on their learning or their performance?’
Let us take the case of Aparna, who works for a popular bakery. Known for her insatiable curiosity and boundless enthusiasm for learning new recipes, techniques and ingredients, she thrives on attending workshops, experimenting with flavour combinations and delving into the nuances of pastry making. Despite her relentless pursuit of knowledge, Aparna’s output may not always match that of her colleague, Mark, who consistently churns out flawless pastries with precision and speed. Should the bakery reward Aparna, the perpetual learner, as generously as Mark, the top performer?
“While it may seem straightforward to reward top performers, a nuanced approach is required to ensure that the organisation thrives both in the present and in the long term,” points out Pankaj Lochan, CHRO, Navin Fluorine. It is crucial to assess the value employees generate for the organisation through their learning outcomes. For instance, if an individual is adept at acquiring knowledge but fails to apply it effectively in their work, resulting in stagnant output and negligible value addition, then their learning efforts may be futile.
“While it may seem straightforward to reward top performers, a nuanced approach is required to ensure that the organisation thrives both in the present and in the long term.”
Pankaj Lochan, CHRO, Navin Fluorine
“While both aspects hold significant value, finding the right balance between the two is crucial for fostering a motivated and innovative workforce,” emphasises Manish Majumdar, head-HR, Centum Electronics. While rewarding performance serves as a clear indication of an individual’s contribution to the organisation’s objectives, learning-based rewards, on the other hand, promote a culture of continuous improvement and personal development, fostering creativity and resilience within the workforce.
While performance-based rewards motivate employees to excel in their roles, driving productivity and efficiency, encouraging employees to acquire new skills, explore innovative ideas and adapt to changing industry trends is essential to stay competitive.
“Rather than viewing it as an either-or scenario, organisations can consider adopting a more holistic approach that recognises and rewards the symbiotic relationship between learning and performance.”
Sharad Verma, VP & CHRO, Iris Software
“Rather than viewing it as an either-or scenario, organisations can consider adopting a more holistic approach that recognises and rewards the symbiotic relationship between learning and performance,” suggests Sharad Verma, VP & CHRO, Iris Software. High performers who are also avid learners essentially future-proof themselves and the organisation. By continuously expanding their knowledge and skills, they not only maintain their current high levels of performance but also equip themselves to adapt and excel as business needs evolve.
Conversely, those who are great learners but struggle with performance may simply need more targeted coaching and development opportunities to translate their newfound knowledge into tangible results.
“While both aspects hold significant value, finding the right balance between the two is crucial for fostering a motivated and innovative workforce.”
Manish Majumdar, head-HR, Centum Electronics
However, solely focusing on one metrics can have its drawbacks. For instance, employees who actively seek knowledge and acquire new skills contribute to the organisation’s long-term success. Ignoring learning efforts may lead to stagnation and hinder innovation.
Similarly, while ensuring performance is relatively straightforward, with tangible outcomes such as sales targets achieved or projects completed on time, assessing learning is more challenging. “Unlike performance, which can often be quantified through metrics and KPIs, assessing learning outcomes can be more subjective and nuanced. Determining the extent of learning and its direct impact on organisational success requires a structured framework and objective evaluation criteria,” asserts Majumdar. Objectivity is crucial in this process, as learning experiences can be subjective and difficult to evaluate uniformly.
Furthermore, the relevance of learning to one’s job role must be considered. While some learning directly enhances job performance, individuals may also seek knowledge outside their immediate responsibilities. Balancing these divergent learning paths is essential to ensure that learning efforts contribute meaningfully to organisational objectives.
To reward employees based on their learning capabilities, Lochan suggests three key criteria. First and foremost, it is crucial to assess the extent to which employees apply their learning to enhance their work and contribute positively to the organisation; mere acquisition of knowledge without value creation diminishes the significance of learning achievements. Secondly, it is essential to examine employees’ potential for growth beyond their current roles for succession planning and talent development. Lastly, emphasis should be placed on employees’ innovative capacity, as those who leverage continuous learning to drive innovation and spearhead breakthrough practices contribute significantly to the organisation’s long-term success.
Both aspects of employee development warrant appreciation, albeit within the context of their respective contributions to the organisation. Therefore, another approach to rewarding learning is to tie it directly to job-related activities and responsibilities. For instance, employees who acquire new skills or knowledge relevant to their roles can be given opportunities to apply and share their learning within the organisation. This may involve mentoring colleagues, leading training sessions, or participating in knowledge-sharing initiatives.
Another approach, as Lochan suggests, is “to categorise employees into quadrants based on their learning orientation and execution excellence.” In this framework, Quadrant C represents individuals who excel in both learning and performance, making them prime candidates for recognition and reward. However, the focus should not solely rest on this quadrant; rather, attention should be directed towards Quadrant D, where employees demonstrate a strong inclination towards learning but struggle to translate it into tangible results.
Instead of pitting learning against performance, organisations can implement a reward system that celebrates the virtuous cycle of learning enabling better performance, which, in turn, creates new learning opportunities. “This can involve offering personalised development plans, stretch assignments, or even job rotations to high-potential employees who demonstrate both a hunger for knowledge and the ability to apply it effectively,” asserts Verma.
Furthermore, a comprehensive approach to rewarding employees involves aligning incentives with both short-term achievements and long-term strategic objectives. Organisations can overcome the challenge of measuring learning and execution performance by adopting meaningful metrics such as learning agility, knowledge transfer, impact assessment, and 360-degree feedback. These metrics allow for effective assessment of employee development and ensure that rewards are distributed equitably based on both immediate contributions and long-term potential.
Whether to reward employees based on learning or performance is a question that necessitates a nuanced approach taking into consideration the value they bring to the organisation, their potential for growth, as well as their capacity for innovation. By striking a balance between recognising learning achievements and rewarding tangible results, organisations can foster a culture of continuous improvement and drive sustainable growth in the ever-evolving business landscape.