Pay-for-Performance: Incentivizing Employee Productivity for Business Growth - Essay Sample

Introduction

Pay for Performance is defined as a compensation mechanism that involves uses of bonuses, salaries, as well as other benefits intended to incentivize the performance of the employees directly. Pay-for-performance plans are a methodology of compensation through which employees are paid according to their productivity rather than the number of hours a particular employee spent on the job or a specific salary scale. In a sense, pay-for-performance has made encroachments into the business. However, it has remained a cold call in public school systems (Bellei, 2005). For instance, there are successful examples where payment for teachers has been interconnected to test scores of the students. In some districts of Minnesota have stopped granting automatic upraise for seniority and base approximately sixty percent of all payment increase on performance. Also, in Denver, school districts and unions designed a particular incentive approach where teachers are given bonuses for earning award teaching certificates and student achievement.

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How could an organization measure the effectiveness of their pay-for-performance plans?

In a school setting, top performers are usually rewarded according to their results and productivity. Many organizations that have implemented a successful and well-established system of pay-for-performance understand that it is possible to have an active workforce that is committed with both their hearts and heads without having a critical performance management framework in place that acknowledges outstanding performance (Young et al., 2012). Below are practices that public schools used to measure the effectiveness of their pay-for-performance plans;

Measuring key competencies and results

In essence, key results define the results of a particular job and must be reproducible and repeatable. This means that teachers might become all top performers getting huge bonuses and salaries. On the other hand, competencies show the feelings and values of an organization, such as public schools that are significant regarding how the work is to be done, such as communication, teamwork, and initiative (Springer et al., 2011). Therefore, measuring both concepts of competencies and key results is crucial to effective pay-for-performance as well as the process of performance appraisal.

Develop clear goals and vision for the program

Public schools should reward teachers and other staff members for exhibiting good behaviors and achieving excellent performance results aligned with the philosophy of the management as well as the overall objectives of the institution (Bellei, 2005).

Involving staff members to establish metrics

If staff members of public schools are involved in developing the goals, there will be a high chance of commitment to meet the goals. The best component of pay-for-performance is objectivity (Young et al., 2012). Both the teachers and the management may compare their respective performances to metrics.

From an employee's perspective, what are the disadvantages of using a pay-for-performance plan?

Pay-for performance system can lead to contention among workers of public schools. Sometimes, an employee may feel in the sense that a manager may show some favoritism to particular employees to assist them in earning high salaries and achieve greater bonuses (Springer et al., 2011). On the other hand, workers who may not earn such bonuses can be jealous of those earning bonuses based on their performance. Contention and jealousy create an unfriendly work environment that can negatively affect productivity.

Moreover, the pay-for-performance system may cause workers to fear their managers or seniors when required to give their inputs for changes. Workers hold back their views or opinions, even if their inputs are good since they are much concerned about reducing earnings (Bellei, 2005). Public schools depend and value on the views of their staff members to make sound decisions about the institution.

Furthermore, workers are resistant to changes in the institution. In essence, employees fear drastic changes in operating processes that will lead to a decline in productivity. For instance, public schools that make necessary changes irrespective of resistance of employees experience a decline in the production process due to lack of motivation from some of the team members (Young et al., 2012). However, managers can reduce the resistance of their workers by explaining the importance of those changes as well as providing adequate and necessary training.

From an employee's perspective, what are the disadvantages of using a pay-for-performance plan?

Pay-for-performance plans use resources and time that could be otherwise be spent on other alternatives. For instance, the amount of time and effort that public schools invest in making performance for employees measurable for compensation, including creating measurements and competencies and so forth, could be otherwise spent on other areas such as delivering service to students (Springer et al., 2011). Also, given the weaknesses of methodologies used in measuring pay-for-performance, the capability of the employer to communicate effectively to the employees on values of their contributions as well as what performance plans entail is a continuous challenge in public schools. However, some employers of public schools communicate better than their counterparts, and this means that the effectiveness of performance plans sometimes varies from one department to the other based on the supervisors' communication skills.

Nonetheless, in many public schools, the importance of any specific worker is subjective and determined ultimately by the employer. Without following straightforward measurable, employees could easily dispute the results when merit plans are determined (Bellei, 2005). Thus, public schools sometimes are hostile to measure contributions of their employees so definitely and clearly, therefore making it challenging to determine effective criteria for pay-for-performance plans.

Conclusion

For decades, pay-for-performance plans have been tagged with a negative aspect by many people across the United States because of the demerits to both the employer and employee (Young et al., 2012). But despite all the hearsay about this plan, pay-for-performance is effective merit for rewarding employees to achieve greater results for an organization. This is because these plans encourage an increase in the retention of employees, increase earnings, and can result in the rise of productivity.

References

Bellei, C. (2005, October). The private-public school controversy: The case of Chile. In Conference on Mobilizing the Private Sector for Public Education, October (Vol. 5, No. 6). sn.

Springer, M. G., Ballou, D., Hamilton, L., Le, V. N., Lockwood, J. R., McCaffrey, D. F., ... & Stecher, B. M. (2011). Teacher Pay for Performance: Experimental Evidence from the Project on Incentives in Teaching (POINT). Society for Research on Educational Effectiveness.

Young, G. J., Beckman, H., & Baker, E. (2012). Financial incentives, professional values, and performance: A study of payforperformance in a professional organization. Journal of Organizational Behavior, 33(7), 964-983.