How Employee Appraisals Can Be Linked to Compensation Planning Tools

Employee performance appraisals are often closely tied to compensation decisions in a pay-for-performance culture. By integrating PerformYard’s performance management data with compensation planning tools, organizations can streamline merit increases, bonuses, and salary adjustments based on review outcomes.

This report explores how to link employee appraisals to compensation planning using PerformYard’s ed integrations (e.g. ADP, Paylocity, BambooHR, Workday, etc.), best practices for pay-for-performance, case examples, and technical methods for U.S. organizations of varying sizes.

PerformYard Integration with HRIS and Compensation Tools

PerformYard integrates with leading HRIS, payroll, and HCM systems so employee data—such as job titles, hire dates, and salary rates—syncs automatically. These connections ensure performance reviews are always informed by accurate employee information and can feed directly into compensation decisions in the organization’s HR system. Key integration partners include ADP, Paylocity, BambooHR, Gusto, Rippling, UKG, Workday, and most other HRIS platforms via file transfer. PerformYard treats the HRIS as the system of record, pulling in new hires, terminations, org changes, and pay-related fields to eliminate duplicate entry and reduce errors when linking performance to pay.

How Integration Works

PerformYard’s API-based connectors provide one-way syncing from the HR system into PerformYard. For example, the ADP Marketplace app syncs nearly all core employee fields—name, title, manager, hire date, compensation details—into PerformYard. Paylocity, BambooHR, and others offer similar one-click sync. UKG Pro connects through a standard API to keep employee data aligned and support smooth performance cycles. These integrations ensure reviews reflect each employee’s current role, department, and compensation (when synced). After a cycle concludes, organizations can use the results for compensation planning in their HRIS or a dedicated compensation tool.

Supported Tools and Capabilities

The table below outlines the major systems PerformYard integrates with, how each integration works, and whether the system includes compensation planning features—specifically, support for pay-for-performance. All are widely used by U.S. employers across HR, payroll, and compensation management.

Technical Methods for Linking Data

Performance appraisal data can flow into compensation tools in several ways:

• Built-In Integration: When an HRIS or compensation system offers an open API or connector, performance ratings can sync automatically. Workday and ADP, for example, allow a saved PerformYard review report to be retrieved via the PerformYard Reporting API and passed to the comp system as JSON. PerformYard’s REST API also supports programmatic access to review results and employee data, enabling custom scripts or middleware to sync information into tools like Paylocity or BambooHR (when they accept incoming API data). This approach works best for organizations with IT resources that can set up seamless, automated data flows.

• Data Export/Import: PerformYard review reports can be exported as CSV files, which many mid-size and smaller organizations upload directly into payroll or compensation tools. A common practice is to apply a merit increase matrix (e.g., based on performance rating and salary range position) to the exported data. The resulting increases can then be imported back into the HRIS or entered into a compensation module. PerformYard also supports SFTP integrations that automatically deliver files on a schedule for systems that can ingest them.

• Manual Coordination: When technical integration isn’t available, HR teams link performance to pay using PerformYard reports as reference. After a review cycle, HR might export each employee’s performance rating and manually enter the corresponding pay change in payroll systems such as Gusto or Paychex. Even small organizations without compensation tools can use PerformYard data in merit worksheets (Excel/Google Sheets) and then update payroll manually. Consistent employee records across systems still reduce errors and ensure performance is included in pay decisions.

The goal of integration—whether automated or manual—is to make linking reviews to pay seamless and accurate. With reliable data sync, HR maintains a single source of truth and avoids re-entering names, titles, or salaries across multiple systems. This foundation supports more advanced pay-for-performance practices.

Best Practices for Linking Performance Reviews to Compensation

‍Linking appraisals to pay can strengthen a performance-driven culture, but it must be done thoughtfully to stay fair, consistent, and motivating.

Define a Clear Pay-for-Performance Philosophy

‍Set expectations for how performance ratings influence pay and communicate them in advance. Many organizations use a merit matrix that ties each rating to a recommended raise range, often adjusted by an employee’s compa-ratio. This creates consistency and limits ad-hoc decisions. ClearCompany notes that aligning compensation with performance ensures pay decisions reflect actual results, and most U.S. employers offer some form of merit or incentive pay tied to reviews. Whether handled through software or policy, a defined framework prevents bias and promotes equity.

Ensure Reviews Are Fair and Calibrated‍

When pay is tied to ratings, the accuracy of those ratings is critical. Standardized criteria, consistent rating scales, and leader calibration sessions help reduce bias and keep expectations aligned across teams. Many organizations use tools like PerformYard’s 9-box grids or summary reporting to spot rating outliers. HR should also monitor for adverse impact to ensure performance-linked pay practices don’t unintentionally disadvantage protected groups.

Use Technology to Automate and Guide Decisions‍

Compensation tools integrated with PerformYard can automatically apply performance data to merit recommendations, calculate new ranges, or enforce guidelines. Some organizations push ratings into market-pay tools (like Compease or PayScale), while others use integrated HRIS modules (Workday, ADP, BambooHR) that suggest raise amounts based on imported scores. Automation reduces manual work, increases consistency, and helps prevent errors—such as awarding outsized raises to low performers. Systems like Paylocity also provide dashboards that surface real-time performance and pay data so managers make informed, compliant decisions.

Maintain Transparency with Managers and Employees

‍Linking reviews to pay can create anxiety if communication is unclear. Many organizations separate performance discussions and compensation conversations so reviews focus on development, while pay decisions follow later using the same data. Regardless of timing, explain what drives raises—budget, market data, and performance ratings—and give employees visibility into total rewards where possible. Equip managers with clear guidelines, access to performance data, and training on allocating increases fairly. Transparency builds trust and reinforces the credibility of the process.

Combine Multiple Criteria for Decisions‍

Performance should be a major input, but not the only one. Most organizations also weigh compa-ratio, market competitiveness, and budget constraints. A strong performer far below market may merit a larger adjustment; a top performer already at range max might receive a lump-sum bonus instead of a big raise. Compensation tools help managers balance these factors by showing ratings, current pay, and salary-band position in one view. HR should set guardrails to ensure decisions consider both performance and structural fairness.

Review Outcomes and Pay Equity

After each compensation cycle, assess the results for equity and alignment. Look for patterns such as whether high performers consistently received stronger increases and whether any demographic disparities appear that aren’t supported by performance data. Modern systems allow reporting that overlays raises with review scores, making it easier to run pay-equity checks and identify problematic trends. If inconsistencies emerge—such as lenient ratings in one department skewing pay—adjust processes or provide additional manager training. Regular audits help maintain fairness and support compliance with U.S. pay-equity laws.

Case Examples and Results‍

When performance data flows directly into compensation tools, organizations see major efficiency gains and stronger talent outcomes. One HR administrator described moving from weeks of spreadsheet work to completing the entire compensation cycle “in about a day” using integrated performance and compensation modules in ADP Workforce Now—an outcome that can be replicated with any well-connected system. Syncing PerformYard review data into a compensation tool eliminates duplicate entry, shortens the merit cycle, and frees HR teams to focus on strategic analysis rather than manual updates.

Beyond efficiency, linking pay to performance can strengthen accountability and culture. Salesforce’s decision to tie executive bonuses to diversity goals is a well-known example: connecting compensation to specific KPIs helped accelerate progress and signaled organizational priorities. Similar approaches can be used at any level—e.g., tying sales bonuses to customer satisfaction scores gathered during performance evaluations. Integrations make it easier to pull these metrics into compensation formulas.

Smaller and mid-size organizations benefit as well. One mid-size tech company used PerformYard for quarterly OKR reviews and BambooHR for annual salary adjustments. By importing PerformYard ratings into a merit spreadsheet, they created a simple but structured merit matrix (e.g., “Exceeds Expectations” = ~5% increase). Engagement results showed higher employee trust in the fairness of pay decisions, reflecting a broader U.S. trend toward using real performance data—even in lightweight systems—to reduce favoritism and guesswork.

Large enterprises apply the same principles with more formal systems. A financial services firm using Workday for compensation and PerformYard for performance reviews pulls review ratings via API into Workday’s compensation worksheets. Managers then see each employee’s rating alongside recommended increase ranges, creating a more data-driven and defensible process. Workday notes that these integrations reduce bias, save time, and reinforce consistent pay-for-performance programs—a benefit this organization observed firsthand.

Finally, not all companies tie raises tightly to ratings; many are shifting to continuous feedback and separate compensation discussions. But even in these models, organizations still rely on performance indicators—gathered throughout the year—to inform pay decisions behind the scenes. Integrations support this approach by pulling goal progress, feedback notes, and check-in data from PerformYard into a broader performance picture at year-end. This leads to more holistic compensation decisions while reducing the pressure of a once-a-year review.