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the success of failure: the paradox of performance pay (assesses the…
the success of failure: the paradox of performance pay
pay for performance is a key methodology in the compensation field and a central component of contemporary civil service reform
assesses the performance compensation in the federal government in contemporary
history
policy findings
needed for effective
performance compensation
the rising and falling tides of interest in the various incentive plans have more to do with changing social, political, and economic fashions than with accumulating scientific evidence on how well the plans work
most managers think that performance should be an important part of a compensation system
Formidable Conditions for Successful Performance Pay
conditions
people
organization
production
pay for performance runs well if (a) employees have to complete one well-defined task, (b) the output is clearly measurable, and (c) the result can be attributed to one person’s effort
assumptions about human nature and motivation are key to pay-forperformanceplans. These programs may be effective if (a) employees work primarily for cash and (b) they care about absolute pay levels.
personnel are less interested in absolute pay than in comparisons
relative to some reference point such as others’ salaries, the jurisdiction’s budget, or the state of the economy, considerations not germane to pay for performance
institutional factors affect performance pay programs
political realities
performance pay obviously is a titanic cultural icon
performance pay accordingly remains as
seductive as ever as a quick fix to address human capital problems
it is difficult to overstate the attractiveness of pecuniary
incentives in a political arena
practical experience
employees should be rewarded for results
Performance pay is offered as a replacement for the traditional
federal pay schedule
a “best practices” performance pay project at the GAO may not “have looked at its own earlier studies of the technique in other agencies,”
Contingency compensation, in brief, is neither quick nor easy. It should never be oversold as a panacea for organizational problems, and, if attempted, it should be merely one part of the compensation and benefits system
The key flaw in contingency compensation is the assumption that the interests of the organization and its workforce are at odds—viz., conditioning pay on performance is needed to impose alignment of conflicting employer–employee needs.
When unexamined cultural beliefs, well-meaning ideas, ideological goals, and political
loyalty prevail, administrative values are overpowered and the ability to manage is
thereby impaired
There is a distinction, stated differently, between pursuing objectives as a function of monetary exchange versus as a function of duty, between an obligation to personal gain versus public good, and between extrinsic versus intrinsic work motivation
practices are seldom discarded simply because they are dysfunctional
Successful compensation plans, based on practical experience and research findings, are exceptions that prove the rule that performance pay is hazardous to implement; to assume otherwise is wasteful, self-defeating, and reckless
Even an unusual, well-funded program is subject to the legacy of governmental below-market compensation strategies; as such, it is vulnerable to
economic conditions, leadership changes, budget cuts, and skepticism about giving bureaucrats extra money to simply do their jobs
Money is important, but not in attempts to induce better work; perhaps pay is most effectively used in recruitment, a human resource function with marginal long-term bearing on performance.
Funding and using the flexibilities in the General Schedule, as discussed above, is a more promising strategy than instituting disruptive and costly radical
new systems.