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Making pay for performance work.

Making pay for performance work

Pick up any sports page nowadays and you will undoubtedly read about some athlete who, despite having a sub-par year, has demanded (and received) a hefty salary increase. The thought that usually comes to my mind is, "Why don't they pay these guys based on how good they are?" A noble thought. Yet when it comes to our own jobs, we often expect a regular salary adjustment regardless of performance. * Making the old new. The concept of pay for performance is probably as old as the work force itself - piecework and its sweat-shop connotations being an extreme example. Many industries have successfully tied compensation to performance, in the sales field in particular.

Though somewhat of a late-comer in the health care field, pay for performance is gaining wider acceptance. On paper, the logic seems perfect: The largest increases go to those who produce the most. Underlying the system, however, are critical components which, if not in place, can have the opposite of the desired effect on your work force.

Elements of a workable pay for performance system include:

[paragraph] Sufficient funding. A pay for performance system must differentiate between levels of employee performance. Only an established salary range based on achievement can achieve this. Nothing will destroy employee morale faster than seeing marginal employees reap the same rewards as top performers. Employees need to know that extra effort will be substantially rewarded.

[paragraph] Accurate measurement. An assembly line worker may be judged by the number of units produced, while a professional baseball player's skill might be ascertained by his batting average. In the laboratory, however, finding a yardstick to measure with is not so easy.

Begin by establishing a system to gauge your employees' efficiency. A thorough annual performance appraisal is the most effective way to accomplish this task. The appraisal should reflect performance throughout the previous year and not unduly emphasize recent events. A review of previously set goals and how well they have been met is a crucial factor in awarding an increase based on pay for performance.

Make employees aware of the standards they must meet to receive an appropriate increase. Keep those standards realistic to encourage employees to develop. At the same time, don't make them so easy to attain that they weaken the impact of an excellent performance rating.

As salary levels increase over the years, so should performance expectations. Ask yourself whether you are rewarding a 10-year employee for doing the same thing multiplied by 10 or expecting and rewarding steady growth.

[paragraph] Commitment. Many of the managers and supervisors who expound on the concept of a pay for performance system are uncomfortable when they must determine who is to be rewarded for their efforts. This problem is especially rampant when funding resources are limited and you must "rob Peter to pay Paul."

Supervisors and managers commonly take the easy road. They distribute increases evenly, regardless of individual performance. In following this scenario, they will end up with a mediocre staff as frustrated top performers find employment elsewhere.

To make pay for performance work, all parties - managers, supervisors, and employees - must be committed to a system of effective performance appraisal and compensation adjustments. Where such a system is in force, it should be emphasized during employee interviews and orientation. In this way all new employees will be made aware of the requirements for salary advancement.

* Equity adjustments. While a pay for performance system should be your lab's main compensation program, it need not be the only one. Competition in recruitment and escalating salaries may require occasional equity adjustments. Such market agreements should be geared primarily toward starting salaries, but seasoned employees should also be given opportunities to advance via demonstrated performance.

As responsible administrators, we must distribute the ever-shrinking health care dollar shrewdly. I can think of no wiser use of budget dollars than to reward those who perform to the utmost of their ability in our labs.
COPYRIGHT 1990 Nelson Publishing
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Maratea, James M.
Publication:Medical Laboratory Observer
Article Type:column
Date:Sep 1, 1990
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