Pay for Performance
May 20, 2010
We have a new performance review system at work that ties an individual's bonus to the quality of his or her performance.
Many people were involved in developing this new compensation plan, and a lot of resources have been devoted to training every employee on goal-based performance evaluation. What this means is that we set measurable goals, and our success (and pay) is determined by how well we meet them. Sounds to me that you might be able to do that if you manufacture widgets, but that's not what we do.
I have been thinking about the five people who report directly to me. They are all quite good. Yet I am not permitted to give all of them a top performance rating. What makes this hard for me is that I don't really believe this is an effective system. To me, it's artificial. Instead of assigning numbers in a very limited range (1 – 4), it should be more nuanced. We should be talking regularly with each other about how we are doing, and how we can help each other and our organization to succeed, rather than just once or twice a year. And we should evaluate our employees one by one, not according to a "forced curve."
Maybe setting individual goals will make us a more effective organization, but there is a downside.
For the first time, we will be competing with one another.
Enjoy finding your blog. This type of performance in a "service" organization is terrible. The Air Force attempted such a thing in the mid-1970s. I forget the exact percentages placed on each rating, but only X-percent (approximately 15%) of the people rated by you could get a top-block rating, another X-percent (35%??) could get the next-to-top-block rating, while the remaining 50% would get the third-block rating. Under this system, the people in your department would, perhaps, be penalized. Only one of the five could get a top-block rating while maybe three deserve such a rating. The only thing this system did for the Air Force was drive a lot of good, non-politicking people out of the service. Not a good system
Posted by: Walt Dunlavey | June 03, 2010 at 07:30 AM