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Pay For Performance
Below are prior articles and Q & A's published in The Pen newsletter on this topic. Other
topics are listed on the left menu navigation bar.
Rule 19 - Employee Performance Review Program
Overview of functions handled by the Pay & Classification Division
Your Benefits and Compensation
a monthly column in The Pen Newsletter covering Benefit & Compensation topics
Why Won't They Pay Me What I’m Worth?
I wish I had a dollar for every time I hear people complain that they are not paid what they are worth. I could retire rich. Almost everyone, regardless of income, education or position, believes that he or she should be earning more money. People at minimum wage obviously want to make more, but people at the highest levels also want more.
Professional athletes are a prime example. National Hockey League players make about $1.8 million annually, on average. Remember when they could not reach agreement with owners on an annual contract, despite the fact that the league was in extreme financial difficulty, and as a result the entire hockey season was cancelled?
Hey, it's tough to feed a family on $1.8 million these days. The belief that we are "entitled" to more compensation speaks well for us as individuals. We possess strong self-worth and self-esteem and believe we should be highly compensated for who we are. Yet, too often our expectations are not founded on the realities of the marketplace OR on our ability to "earn" our income based on performance.
Here are a few ways you can help demonstrate your value and prepare for your next performance evaluation:
1. Document Your Accomplishments. Break your accomplishments into three parts. First, define the problem, situation or challenge. Second, show step-by-step how you solved the problem or accomplished the task. Finally, describe how your accomplishment was a benefit to the organization. During your performance review, present your written accomplishments to your boss. It is really tough to argue with well-documented performance.
2. Find a Mentor. Having someone within your organization that can help you learn and grow is a valuable resource. It is not as difficult to find a mentor as some people think. It just takes the courage to ask. It is rare that anyone would say "NO", give it a try.
3. Continue Your Education. You can never have too much education and you are never too old to learn. Education can lead to new job opportunities, promotions and pay raises. Get that college degree, or take trade courses, training seminars, or simply conduct independent research and study. You will never regret it.
4. Stay Current. If you are "out of date" and "out of touch" with what is happening in the world, then your earning power will go "out the door." Technology advances, world news, the latest business, cultural and fashion trends, are all relevant. By being able to communicate about what is happening around us, we increase our value and we become more marketable.
5. Perform Beyond Expectations. Always do more than you were asked to do. Take initiative to achieve superior results and make unexpected contributions. These things do not go unrecognized.
If you have done your "homework," and established your value through exceptional performance, prepare your case and present it to your boss. You may be amazed at how your initiative can launch your career in a new direction. The opportunities to earn "what you are worth" are out there, but your goals and expectations must be realistic and, based on your value and contributions.
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Copping Out on Performance Management
Ever notice how Paula Abdul can’t be negative about any contestant on American Idol? Everyone is a “Super-Star”! It is human nature to follow this example when it comes to performance reviews. After all, who wants to face up to and tell the contestant (oops, make that the employee), on the other side of the table, that they are average—or worse yet, below average? Telling someone he/she merely "Meets" their objectives is difficult and it just doesn’t feel good. Where is Simon Cowell when you need him?
Unfortunately, the panel of judges is not available for performance reviews; they are usually done one on one. To avoid a negative or lengthy review, sometimes a manager will use “copping out” tactics such as:
An employee, who is an average performer, comes due for a review. The manager breaks out the performance management form. In moving through the form, the manager gives mostly “Good (meets expectations)”. By sprinkling enough “Very Good” and/or “Excellent” ratings in the process it makes the overall review score fall somewhere between a "Good" and a "Very Good" in the employee’s mind. The employee ends up feeling pleased with the overall numerical rating and believes that they are more than meeting the expectations for their role with the department. The manager is also pleased that he or she avoided any meaningful conversation or feedback. The discussion that was needed to help the employee understand the difference between performance that meets expectations, and performance that truly exceeds expectations, never happened.
By creating individual goals and objectives for employees the manager can set the bar for "Good" versus "Very Good" performance expectations. This can make performance reviews easier for both the manager and the employee. Managers and employees should have open and honest discussions about the kind of behaviors and performance it takes to earn the higher ratings. Measurements like quality, quantity, accuracy, timeliness and achieving deadlines can be the starting point for a "Good" rating. Then explain how adding things, like innovation, creativity, collaboration and leadership to the mix, can make a difference in achieving a "Very Good" or “Excellent” on any of the goals and objectives that were set.
Basically, a “Good” rating means an employee is performing the duties or tasks and meeting expectations of their position. The truly exceptional ("Excellent”) employees, in any organization, are those that drive performance and improve business results by using their imagination, skills, and understanding of the performance measurements.
Once performance standards are communicated and understood there is no longer a need for a Simon Cowell, just sit back and watch the “Super Stars” rise to the surface.
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CREATING A PERFORMANCE CULTURE
Creating a true performance culture isn’t easy, but the results can more than justify the time, effort and angst. Focusing on pay in “pay for performance” may be misleading. Rather, the emphasis should be on performance potential, as opposed to expectations. Managers sometimes confuse working on performance management processes with operational excellence. Hype and fancy forms about individual or team accountability are not the same as results. Here are a few things that may help you develop the commitment, skill and experience to drive the results you are seeking:
• Recognize That Improvement Opportunities Exist. Review each job in your organization. Determine which specific results justify each position, and find out if you are actually getting those results.
• Review the Job to Be Sure It is Doable. It is difficult to do a poorly designed job well. Good employees are often asked to do more than is humanly possible and slackers are given a comfortable place to hide. Make sure the job standards are appropriate to obtain the expected results.
• Determine Worthwhile Goals. Once you have a good job design, you should ask your employees to help set realistic goals. Most of your employees would gladly commit to loftier goals if they could help set those goals, rather than following orders handed down from Management.
• Measure It. If it cannot be measured, it probably isn’t important enough to do. Set goals that require measurement and that focus on the customer’s needs and wants.
• Re-Evaluate Consequences. We should not treat every employee equal to every other employee. Treat people equitably, not equally. If someone does more, they should be rewarded. If they do less, they should be able to feel the difference. In a world where there is a great deal of scrutiny regarding government spending, we need to re-evaluate the consequences, and to be certain excellent performance is rewarded, performing a rewards audit to determine all the intended and unintended consequences can help.
Instead of concentrating entirely on the monetary benefits, individuals may be more likely to participate in a performance program when they witness effective supervisory practices that create an environment of accomplishment and satisfaction. Remember, it is easier to revitalize the talent you have, rather than recruit and train new people. Make the most of the loyalty, skill and experience your employees bring to the table.
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The Reality of Paying for Performance
Imagine a world where businesses clearly specify each employee’s goals and resulting rewards. Employees understand exactly what they have to do to earn the defined salaries, incentives, and promotions. When an employee achieves the agreed upon goal, the employee receives the expected compensation.
Pay for Performance is all about people….their goals, motivations, styles and concerns. In this perfect world, businesses encourage a kind of cross enterprise “personality” that makes the Pay for Performance program successful. It involves every layer of the reporting structure, giving meaning and satisfaction to everyone’s work lives.
In this perfect world, management applies a high level of expertise in planning, negotiation, communication, relationship building and more. They also do a great job of teaching their managers and supervisors these same skills, empowering them to make everyone in the organization more effective.
In turn, managers and supervisors encourage individual performance in their employees. Some methods used are mentoring, guidance and mediation when communicating expectations and assessment of job performance.
Meanwhile, employees actively participate in the review process. They understand how reaching their own objectives enable them to achieve greater rewards and help the company as well. Given this motivation, plus know-how and training, employees carry out their responsibilities competently.
In a perfect Pay for Performance system the company establishes its goals for the year, decides the tasks necessary to meet those goals, develops a budget, and lets the plan filter down through the ranks with performance and reward plans.
This system works well in a perfect world because goals, employees, responsibilities, titles, reorganizations and the business environment as a whole are understood. AND, there are no surprises right before review time.
Unfortunately, in the real world, even the most careful managers and advocates of Pay for Performance still have ups and downs, regardless of the proficiency of implementation. The truth is - human nature and the unpredictability of fate have a huge impact on the Pay for Performance process.
So, if we use the right tools in preparing objectives, developing job standards, setting goals that are in alignment with business or department priorities, and rewarding specific performance, we could all live in the “Perfect World”.
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