Financial Compensation and Rewards

Proper financial compensation and rewards are important to the morale and motivation of people in any organization. Projects are no exception. However, there are several issues that often make it necessary to treat compensation practices of project personnel separately from the rest of the organization:

• Job classification and job descriptions for project personnel are usually not compatible with those existing for other professional jobs. It is often difficult to pick an existing classification and adapt it to project personnel. Without proper adjustment, the small amount of formal authority of the project and the small number of direct reports may distort the position level of project personnel in spite of their broad range of business responsibilities.

• Dual accountability and dual reporting relationships of project personnel raise the question of who should assess performance and control the rewards.

• Bases for financial rewards are often difficult to establish, quantify, and administer. The criteria for ''doing a good job" are difficult to quantify.

• Special compensations for overtime, extensive travel, or living away from home should be considered in addition to bonus pay for preestablished results. Bonus pay is a particularly difficult and delicate issue because often many people contribute to the results of such incentives. Discretionary bonus practices can be demoralizing to the project team.

Some specific guidelines are provided in this book to help business managers establish compensation systems for their project organizations. The foundations of these compensation practices are based on four systems: (1) job classification, (2) base pay, (3) performance appraisals, and (4) merit increases.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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