Simon De Baene is the co-founder and CEO of Workleap.
When performance and pay happen in separate processes, something important gets lost. Employees miss the link between effort and reward, while managers face pressure to make consistent, fair choices without the right tools. In my experience, this disconnect creates frustration and a breakdown of trust from both sides.
Performance management is extremely complex, and too many companies are stuck with tools that don’t connect the dots. Often, managers do not have sufficient access to data, which can lead to inconsistent or inappropriate decisions. Without transparency into the process, raises and promotions feel arbitrary to employees. That perception erodes trust, even when managers are doing their best to be fair.
Employees often connect their worth to these performance and compensation discussions, so it’s imperative to have a 360-degree approach to keep individuals engaged, inspired and trusting. Gaps in systems and processes between performance and compensation quickly become gaps in employee trust and experience.
Why Integration Matters
Treating performance and pay as a single conversation changes the dynamic. Addressing the two simultaneously builds transparency and shows employees what drives advancement. Pay becomes part of the growth journey and not a once-a-year, awkward discussion. This has a domino effect: Engagement rises, motivation increases and high performers are more content.
When performance and pay are more aligned, they provide the opportunity for development to become more actionable. Employees better understand which skills, behaviors and results matter most, and feedback shifts from a box to check during reviews to an ongoing dialogue.
Linking performance directly to pay builds a sense of fairness and accountability, giving employees a clear line of sight between their efforts and their rewards.
How To Integrate Performance And Pay
To fix these pain points, companies need to merge their performance and pay pathways into one and adopt unified tools to empower decisions with data. When managers see this performance data alongside compensation guidelines and budgets, they’re equipped to make fair, transparent decisions. Modern workflows that replace manual processes will save time, avoid second-guessing and reduce ambiguity all around.
1. Align review cycles with pay decisions.
When reviews and pay decisions happen on different timelines, managers have trouble bridging the gap, and employees lose trust. Deloitte’s “2025 Global Human Capital Trends” survey shows 61% of managers and 72% of workers lack trust in their organization’s performance management process.
Setting clear cycles also eliminates guesswork for employees and ensures consistency. A simple calendar showing when goals are finalized, reviews occur and pay decisions are made can go a long way toward building credibility.
2. Tie development to compensation.
Employees want to know which skills and behaviors influence their performance and pay, and organizations that tie clear goals to outcomes drive stronger performance. When performance goals are measurable and linked to objectives, 72% of employees feel more motivated.
Setting defined benchmarks creates a roadmap for growth, so reviews become forward-looking conversations rather than backward-looking checklists.
3. Share pay frameworks openly.
Pay transparency directly affects engagement and retention. Publishing pay bands, promotion criteria and growth paths helps employees see fairness in the process. Incorporating this into one workflow improves employee trust and organizational commitment and makes them less likely to seek other job opportunities. “Employees who work for organizations with high levels of pay transparency are 59% less likely to leave” compared to those at organizations with opaque pay practices.
4. Use integrated technology.
Another issue is reliance on manual processes like one-off spreadsheets, documents and emails, all of which lead to fragmented data. With the technology available today, this mish-mash of documentation wastes time and leaves ample room for error. Platforms and AI-enabled tools that connect performance reviews, goal-setting and compensation into one clear, continuous workflow give managers insights and employees visibility. (Full disclosure: My company produces products in this space.)
5. Equip managers to communicate the link.
Managers are the face of the process, but in my experience, many lack the training to connect performance and pay. In fact, only 26% of organizations believe managers are effective at enabling performance. What’s more, “managers drive 70% of the variance in team engagement and make or break the employee experience.” Providing the right tools and guidance helps managers deliver a more holistic viewpoint. When managers can tell a clear story, employees are more likely to trust and stay engaged.
The Effects On Engagement
People who feel their work is recognized and rewarded show up differently. Collaboration improves, problem-solving deepens and energy rises. It is a cultural shift and much more than a soft metric: Highly engaged teams are 14% more productive and see 78% less absenteeism. What’s more: Turnover is 51% lower in stable environments and 21% lower in high-churn industries when engagement is higher.
Engagement should be viewed as a growth strategy. One of its strongest drivers is clarity—knowing what’s expected and how performance connects to pay. When that connection is visible, employees lean in, contribute more and stay longer.
Long-Term Growth And Success
Performance management and compensation can’t be isolated from each other. When employees understand their path, feel valued and see how their contributions fairly translate into rewards, they do better work.
Forbes Human Resources Council is an invitation-only organization for HR executives across all industries. Do I qualify?