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Pay for Performance

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  • Alan Mayes
    Our company is developing a new Performance Appraisal system. We are giving serious thought to de-linking pay from performance. It has been argued that pay is
    Message 1 of 6 , Apr 30 11:54 AM
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      Our company is developing a new Performance Appraisal system. We are giving serious thought to de-linking pay from performance. It has been argued that pay is not a motivator and that top performer will continue to be top performers regardless of increases. The alternative proposed is to give every salaried employee a merit raise at the same level as our union members receive. I would like more information on the success of de-linking pay from performance. Any thoughts or ideas will be greatly appreciated.


      Alan Mayes


      [Non-text portions of this message have been removed]
    • Kurt Wilkening
      The success of the performance side of the equation really does not include pay. In other words, in your new system, stress that the two (pay and
      Message 2 of 6 , Apr 30 1:20 PM
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        The success of the performance side of the equation really does not include pay. In other words, in your "new" system, stress that the two (pay and performance) are really separate issues.

        In lean economic times one could argue that if there is little spread or variability among overall ratings and salary increases, then a flat across the board pay increase policy makes sense. It does little good to tell someone they're "successful" and award a 2.8% salary increase and another person they're "exceptional" and award a 3.3% increase.

        Also, for most tenured employees, intrinsic motivators drive performance, not the year end salary increase. Employees take pride in and care about doing excellent work and what is said on their performance evaluations.

        Bottom line, if you cannot provide meaningful variable increases, why provide them at all and go flat across the board.

        >>> "Alan Mayes" <zpiarm@...> 04/30/01 02:54PM >>>
        Our company is developing a new Performance Appraisal system. We are giving serious thought to de-linking pay from performance. It has been argued that pay is not a motivator and that top performer will continue to be top performers regardless of increases. The alternative proposed is to give every salaried employee a merit raise at the same level as our union members receive. I would like more information on the success of de-linking pay from performance. Any thoughts or ideas will be greatly appreciated.


        Alan Mayes


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      • Lynn Sikorski
        Perhaps missing the point here is that pay is a form of recognition. I agree that there are people who will be excellent performers regardless of pay, just
        Message 3 of 6 , Apr 30 2:39 PM
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          Perhaps missing the point here is that pay is a form of
          recognition. I agree that there are people who will be
          excellent performers regardless of pay, just for the
          intrinsic benefit of the work. However, for the other 95%
          of the population, it's not that simple. IMHO, the fact
          that you bust your butt and get fabulous results, and then
          get the same increase as the employee who is lackadaisical
          about deadlines and quality, may very reasonably have an
          impact on motivation, morale and further performance. Even
          in lean times.

          ______
          Lynn



          -----Original Message-----
          From: Kurt Wilkening
          [mailto:WilkeningK@...]
          Sent: April 30, 2001 2:21 PM
          To: zpiarm@...; perfmeas@yahoogroups.com
          Subject: Re: [perfmeas] Pay for Performance


          The success of the performance side of the equation really
          does not include pay. In other words, in your "new" system,
          stress that the two (pay and performance) are really
          separate issues.

          In lean economic times one could argue that if there is
          little spread or variability among overall ratings and
          salary increases, then a flat across the board pay increase
          policy makes sense. It does little good to tell someone
          they're "successful" and award a 2.8% salary increase and
          another person they're "exceptional" and award a 3.3%
          increase.

          Also, for most tenured employees, intrinsic motivators drive
          performance, not the year end salary increase. Employees
          take pride in and care about doing excellent work and what
          is said on their performance evaluations.

          Bottom line, if you cannot provide meaningful variable
          increases, why provide them at all and go flat across the
          board.

          >>> "Alan Mayes" <zpiarm@...> 04/30/01 02:54PM >>>
          Our company is developing a new Performance Appraisal
          system. We are giving serious thought to de-linking pay from
          performance. It has been argued that pay is not a motivator
          and that top performer will continue to be top performers
          regardless of increases. The alternative proposed is to give
          every salaried employee a merit raise at the same level as
          our union members receive. I would like more information on
          the success of de-linking pay from performance. Any thoughts
          or ideas will be greatly appreciated.



          Alan Mayes


          [Non-text portions of this message have been removed]


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        • Mike Smith
          ... From: Alan Mayes [mailto:zpiarm@eagle.ca] Sent: Monday, April 30, 2001 2:54 PM To: perfmeas@yahoogroups.com Subject: [perfmeas] Pay for Performance Our
          Message 4 of 6 , Apr 30 7:07 PM
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            -----Original Message-----
            From: Alan Mayes [mailto:zpiarm@...]
            Sent: Monday, April 30, 2001 2:54 PM
            To: perfmeas@yahoogroups.com
            Subject: [perfmeas] Pay for Performance

            Our company is developing a new Performance Appraisal system. We are giving
            serious thought to de-linking pay from performance. It has been argued that
            pay is not a motivator and that top performer will continue to be top
            performers regardless of increases. The alternative proposed is to give
            every salaried employee a merit raise at the same level as our union members
            receive. I would like more information on the success of de-linking pay from
            performance. Any thoughts or ideas will be greatly appreciated.

            Alan Mayes

            Alan

            In the last 30 years of working in HR with a variety of performance
            appraisal/compensation systems linking pay with performance is something
            that seems to come and go as an issue.

            If we don't pay people they won't come to work. If we want to use pay as a
            motivator and reward it needs to be linked with some kind of performance.
            That means it should happen close in time to the performance and it should
            be big enough that the reward is seen as worth extra effort. (The
            Vroom-Yetton expectancy theory does pretty much explain why someone will
            work for a reward).

            Most pay/performance models do not make the link explicit-except -we always
            pay sales people for their actual sales performance! And many systems lose
            sight of what they are aiming at and try to do too many things. And do you
            know any CEOs who don't want their bonuses? Is your CEO talking about
            de-linking his pay to performance?

            Rather than not linking pay to performance have you considered going to
            either of the following?
            1.everyone gets the same except the bottom X percent who get little or
            nothing, and the top x percent get bonuses.
            2. gainsharing where all get a cola/market adjustment and the rest is based
            on the company beating the (reasonable) business and financial objectives.
            The more the company objectives are exceeded the more the people get.
            {Gainsharing is where employees share the excess over targets. Profit
            sharing is where employees share the profits. There is more risk and
            greater reward in gainsharing.}

            Remember Lincoln Electric. They had a (profitsharing, I think) system for
            years where everyone got bonuses. The janitor could get 100% bonus. They
            went away from the 30-40 year successful formula and did not do nearly as
            well as an organization. I believe they went back to it recently.

            The motivation equation is the same for everyone. Effort=payoff. While there
            are non monetary rewards
            If there is not enough money, none of the others will keep someone in your
            company.

            Mike Smith, SPHR

            On the Web at http://www.mikesmith-hr.com
            Site for free forms and articles
          • Somnath Sanganeria
            Hello Alan: First of all do excuse me, as I have only thoughts to share but no ideas on this issue. Pay is a form of recognition for efforts put in. This is
            Message 5 of 6 , Apr 30 11:54 PM
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              Hello Alan:

              First of all do excuse me, as I have only thoughts to share but no ideas on
              this issue.

              Pay is a form of recognition for efforts put in. This is true right from the
              shop-floor level to the CEO and even the shareholders.

              There has been a lot said about de-linking pay from performance. However,
              till date I have not seen a live example of this kind of PA system
              successfully implemented, and has been able to retain top performers.

              No matter at whatever level we are, pay happens to be the single largest
              motivator. However, after a certain level, pay becomes less of a motivator
              and other factors come in force, as in Hersberg's theory. An efficient PA
              system should not only reward for the performance, but also recognise
              employees' future needs. Then we can move over to Potential development...

              Somnath Sanganeria
              Manager, Human Resources and Administration
              somnath@...
              Tel: (022) 692 6690 and (022) 692 6691
              www.marketingQ.com and www.MAQSoftware.com


              -----Original Message-----
              From: Alan Mayes [mailto:zpiarm@...]
              Sent: Tuesday, May 01, 2001 12:24 AM
              To: perfmeas@yahoogroups.com
              Subject: [perfmeas] Pay for Performance


              Our company is developing a new Performance Appraisal system. We are giving
              serious thought to de-linking pay from performance. It has been argued that
              pay is not a motivator and that top performer will continue to be top
              performers regardless of increases. The alternative proposed is to give
              every salaried employee a merit raise at the same level as our union members
              receive. I would like more information on the success of de-linking pay from
              performance. Any thoughts or ideas will be greatly appreciated.


              Alan Mayes


              [Non-text portions of this message have been removed]


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            • gaild@ttm1.com
              Amen Lynn, well said. I deal with this issue continually, especially with Gen X, the MONEY is very important. VERY important. I have ee s tell me
              Message 6 of 6 , May 1, 2001
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                Amen Lynn, well said. I deal with this issue continually, especially with
                Gen X, the MONEY is very important. VERY important. I have ee's tell me
                continually, I am working so hard to achieve results because I expect a good
                review. To many, yes, they are pleased with doing an exceptional job, it's
                also about being rewarded.
                Gail Dampman, SPHR
                HR Resources

                -----Original Message-----
                From: Lynn Sikorski [mailto:kaleidoscope@...]
                Sent: Monday, April 30, 2001 5:39 PM
                To: perfmeas@yahoogroups.com
                Subject: RE: [perfmeas] Pay for Performance


                Perhaps missing the point here is that pay is a form of
                recognition. I agree that there are people who will be
                excellent performers regardless of pay, just for the
                intrinsic benefit of the work. However, for the other 95%
                of the population, it's not that simple. IMHO, the fact
                that you bust your butt and get fabulous results, and then
                get the same increase as the employee who is lackadaisical
                about deadlines and quality, may very reasonably have an
                impact on motivation, morale and further performance. Even
                in lean times.

                ______
                Lynn



                -----Original Message-----
                From: Kurt Wilkening
                [mailto:WilkeningK@...]
                Sent: April 30, 2001 2:21 PM
                To: zpiarm@...; perfmeas@yahoogroups.com
                Subject: Re: [perfmeas] Pay for Performance


                The success of the performance side of the equation really
                does not include pay. In other words, in your "new" system,
                stress that the two (pay and performance) are really
                separate issues.

                In lean economic times one could argue that if there is
                little spread or variability among overall ratings and
                salary increases, then a flat across the board pay increase
                policy makes sense. It does little good to tell someone
                they're "successful" and award a 2.8% salary increase and
                another person they're "exceptional" and award a 3.3%
                increase.

                Also, for most tenured employees, intrinsic motivators drive
                performance, not the year end salary increase. Employees
                take pride in and care about doing excellent work and what
                is said on their performance evaluations.

                Bottom line, if you cannot provide meaningful variable
                increases, why provide them at all and go flat across the
                board.

                >>> "Alan Mayes" <zpiarm@...> 04/30/01 02:54PM >>>
                Our company is developing a new Performance Appraisal
                system. We are giving serious thought to de-linking pay from
                performance. It has been argued that pay is not a motivator
                and that top performer will continue to be top performers
                regardless of increases. The alternative proposed is to give
                every salaried employee a merit raise at the same level as
                our union members receive. I would like more information on
                the success of de-linking pay from performance. Any thoughts
                or ideas will be greatly appreciated.



                Alan Mayes


                [Non-text portions of this message have been removed]


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