Tuesday, May 06, 2008

You Have To Define Performance In Order To Reward Performance

A new pay system for some employees in Columbia, Missouri is facing criticism. Since October, salaries for garbage collectors have been based on a pay for performance strategy. Under the new pay for performance system, the city garbage collectors get a one percent increase for doing their job, and a three percent increase for going above and beyond.

Garbage collector Jason Norman says the new system is unfair to all the workers. "We all work hard. We are out here in the snow, ice, rain, heat. We all deserve a certain percentage, but when they said some guys work harder than others, that's not true because it's a team effort."

The plan works by first letting the workers evaluate themselves. Then they are evaluated by their supervisors. Both employees and supervisors go through training on how evaluations will be performed, and the supervisors follow guidelines to help them grade the employees.

This system will never work. It won't work because the worker's performance has no direct measurement. You can't reward performance if the performance isn't defined.

A pay for performance plan works as long as two conditions are met:

1. The performance must correspond to a defined metric
2. The reward must be worthy. In other words, there needs to be a pot at the end of the rainbow.

And yes, we have an example for you.
The Ultimate Pay For Performance Plan

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