Extract from IDS Executive Compensation Review 327

Making performance-related pay work at KPMG

It is the ambition of many companies to develop a high performance culture and performance pay is often seen as the way to achieve it. Making performance pay work has its own challenges, but as KPMG’s head of reward explains in this article, changing the way it rewards its people has had a positive impact on employee perceptions.

As a result of shifting the balance of reward to variable pay and performance, KPMG’s internal surveys show staff increasingly recognise the link between achievement and compensation. The overriding reward principle is that market-leading performance will be matched by market-leading pay. This approach to reward includes placing a greater emphasis on variable pay than ever before and forms part of a wider HR initiative to promote a high performance culture at the firm.

Detail is provided on how the new principle has been set up, including providing information on the performance cycle. Further information explains the full breakdown of the performance distribution, how pay progression works and bonus payments.