[Blog 56] The Chief Guru Chronicles 205: Leveraging Pay-Mix to Drive Performance and Foster Staff Loyalty in Singapore

HR Guru Executive Compensation

In today’s competitive business landscape, companies in Singapore are constantly exploring new strategies to optimise employee performance and foster staff loyalty. One effective approach that has gained traction is the use of pay-mix. By strategically structuring compensation packages, organisations can align employee motivations, drive performance, and enhance staff loyalty. Let us first explore the concept of pay for performance, the impact of pay mix on staff motivation and achievement, and the correlation between pay mix and staff loyalty.

Additionally, we will learn how companies can get the mix and leverage right to maximise the effectiveness of their pay-mix strategies.

Pay for Performance:

Pay for performance is a compensation strategy that rewards employees based on their individual contributions and achievements. This approach ensures that employees are compensated in proportion to the value they bring to the organization. By linking rewards to performance, companies create a culture of accountability, motivation, and achievement. Pay for performance provides a clear framework for employees to understand how their efforts translate into financial incentives, creating a strong connection between performance and rewards.

Getting the Pay Mix Right:

To effectively leverage pay mix, companies must carefully analyse their company goals, industry benchmarks, and employee expectations. Here are some key considerations to get the pay mix right:

  1. Define Clear Performance Metrics: Clearly define performance metrics that align with the company’s objectives and values. These metrics should be measurable, transparent, and communicated to employees, ensuring clarity and fairness in the reward system.
  2. Tailor Pay Mix to Job Roles: Different job roles may require different pay mix structures. Assess the nature of each role and determine the appropriate balance between fixed salary, short-term incentives, long-term incentives, and non-financial benefits. For example, sales roles may have a higher proportion of variable pay to incentivise achievement of sales targets, while technical roles may focus more on skill-based development and career progression opportunities.
  3. Consider Market Competitiveness: Benchmark compensation practices in the industry and local market to ensure that the pay mix remains competitive. Striking the right balance between competitiveness and affordability is crucial to attract and retain top talent.
  4. Flexibility and Customisation: Provide flexibility in the pay mix to accommodate individual preferences and varying levels of employee performance. Consider offering a menu of benefits and incentives that employees can choose from, allowing them to tailor their compensation to suit their needs and aspirations.

Leveraging the Pay Mix Effectively:

Once the pay mix is defined, companies must leverage it effectively to drive performance and foster staff loyalty. Here are some strategies to maximise the effectiveness of pay mix:

  1. Communicate Expectations Clearly: Transparently communicate performance expectations and how they relate to the pay mix. Employees should understand the link between their individual performance, the associated rewards, and the overall success of the organization. This clarity creates a sense of purpose and motivates employees to strive for excellence.
  2. Provide Timely and Constructive Feedback: Regularly provide feedback to employees regarding their performance, highlighting areas of strength and areas for improvement. Constructive feedback allows employees to understand how they can maximise their rewards and drive their personal and professional growth.
  3. Performance Recognition and Celebration: Implement a robust performance recognition program that acknowledges and celebrates exceptional achievements. This can include public recognition, rewards, and opportunities for career advancement. Recognising outstanding performance reinforces the relationship between effort and rewards, boosting motivation and fostering loyalty.
  4. Continuous Development and Learning Opportunities: Invest in employee development and provide opportunities for skill enhancement and career progression. By offering training, mentorship programs, and challenging assignments, companies can demonstrate their commitment to employee growth and create a sense of loyalty and long-term commitment.

The Effects of Pay Mix on Driving Staff Achievement:

Pay mix plays a crucial role in driving staff achievement. By incorporating performance-based elements, such as bonuses and incentives, into the overall compensation structure, companies can incentivise employees to go above and beyond in their roles. Performance-based rewards not only acknowledge exceptional performance but also provide a sense of recognition and fairness. Employees who see a clear correlation between their efforts and the potential financial rewards are more likely to be motivated to excel. Furthermore, a well-designed pay mix considers individual preferences and career goals, allowing employees to feel valued and supported in their professional development. This holistic approach to compensation helps create a conducive environment for staff achievement and growth.

The Correlation between Pay Mix and Staff Loyalty:

A thoughtfully crafted pay mix can significantly influence staff loyalty. When employees perceive their compensation as fair and aligned with their contributions, they develop a stronger sense of commitment to their organization. A pay mix that includes performance-based rewards fosters a sense of equity and recognition, reinforcing the idea that hard work and exceptional performance are valued and rewarded. This, in turn, enhances employee loyalty by creating a positive psychological contract between the employee and the organization. Employees who feel valued and fairly compensated are more likely to demonstrate higher levels of engagement, productivity, and loyalty over the long term. A strategic pay mix that balances financial rewards with other non-financial benefits, such as career development opportunities, work-life balance initiatives, and recognition programs, can further strengthen the bond between employees and the organisation, promoting long-term loyalty.


In Singapore’s competitive business environment, leveraging the right pay mix is crucial for driving performance and fostering staff loyalty. By defining clear performance metrics, tailoring pay mix to job roles, considering market competitiveness, and providing flexibility and customisation, companies can get the mix right. Additionally, effective leverage of the pay mix through clear communication, timely feedback, performance recognition, and continuous development opportunities maximises its impact. Short-term and long-term performance bonuses or incentives plans can further motivate staff performance and provide a balance between immediate gratification and sustained commitment. Ultimately, by incorporating pay mix strategies that drive staff achievement and loyalty, companies in Singapore can position themselves for sustained success and cultivate a high-performing and dedicated workforce.

It is crucial that your company’s compensation plan both motivates employee and sets the foundation for their own individual advancement. If your company is planning or reviewing to implement an effective compensation strategy, contact HRguru immediately on our Executive Compensation consulting services.

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This article is part of a series of accounts of The Chief Guru Chronicles, a column which recounts our Founder & Chief Guru Tommy Ng’s experience and encounters in HR management across various countries and industries. The purpose of this column is to provide helpful information on the subjects discussed, and to educate readers through challenges experienced. It should not be perceived and used as a professional advice. Any views or opinions are not intended to malign any religion, races, ethnic group, organisation, company, individual or country. In addition, we do not make any warranties about the completeness, reliability and accuracy of the information. As a disclosure, some names, information and situations were intentionally concealed or edited in order to protect the identity of the involved parties. Except as expressly consented, the contents may not be reproduced, transmitted, or distributed without HR Guru Pte Ltd permission.

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