Management consulting services and training programs
emphasizing performance and accountability
Subjective Objectivity and Other Myths of Performance Management©
The results of almost all studies on incentive pay shows little or no support for the idea that incentives lead to greater productivity, and in many cases, actually has a diminishing effect on those behaviors that do tend to lead to greater productivity (i.e., creativity, risk taking, innovation). In light of this, it is hard to understand why organizations spend so much time and money on developing complicated systems that are designed to detect, measure, and dissect minute differences in individual performance in order to reward those individual performance differences in some exact and discriminating way. Even if the process developed was without flaw, it’s success would still depend on the supervisor, or someone else, making a judgment call of an individual’s performance.
Supervisors simply do not possess the ability to make such discrete distinctions in the judgment of individual performance and translate those judgments into meaningful performance ratings on some numerical scale which supposedly represents human behavior through numerical “descriptions”. It is the fact that the process is, at the core, subjective that serves to undermine the value of objective, discreet measures. (Even in cases where there is a greater degree of objective and numerically measurable evidence available to describe performance, the application of purely objective measures is suspect. For example, widget making may lend itself to a measure of the number of widgets made, however, even in this example, an argument could be made that simply counting the number of widgets made would not necessarily reflect the presence or consideration of other variables.
Totally objective measures, which would be necessary to support small numerical differences along a numerical performance scale (i.e., 2, 2.5, 3, 3.5, 4) do not exist for the most part. We simply do not possess a performance scale upon which an individual may step upon and be measured, and even if that device existed, we would still be severely limited by the use of abstract concepts (e.g., numbers) in an attempt to describe human behavior.)
If the focus is to be on performance, then focus on performance. Working backwards and away from issues of compensation to issues of performance, it stands to reason then that the approach that offers the best hope for affecting behavior and/or performance is not to attempt to turn a subjective process into an objective process driven by money and/or other incentives. Rather, we should focus our efforts on those actions that are directly tied to behavior and performance. In simple terms this means that supervisors should spend time talking to employees for the purpose of clarifying definitions of expectations of behavior and performance and how those expectations might be met in behavioral based terminology. We should focus, not so much on the judgment of whether a particular performance or behavior was attained (past tense) but, rather on the attainment itself (future tense).
Pay is an altogether separate issue. Any consideration of pay is driven by the free market and the law supply and demand. Pay should not be viewed as an incentive but as a necessity, with primary purpose being to attract and retain employees – not to motivate them to perform. Our use of the phrase “pay for performance should not be confused with the traditional use wherein there are pay scales or ranges that are somehow tied back to continuums of performance on some type of similar sliding scale. This is, in fact, exactly what we are attempting to avoid. Our use of the phrase pay for performance refers to the simple idea that a fully competent delivery of work should equate to receipt of a fair market value for the delivery of that work (i.e., a fair days work equals a fair days pay).
Additionally, our use of the “Exceeds Expectation” (EE) category on our proposed performance evaluation and the resulting bonus we recommend accompanying such rating is not a “carrot on a stick” design. In fact, we intentionally do not attempt to pre-define the specific requirements of the performance or behavior that would represent this EE rating, but rather, provide broad guidelines for used for recognition of the EE performance after the performance has occurred. Consistent with this logic, bonus amounts are not identified until after the performance has been evaluated in term of its impact. More importantly, our primary emphasis is not on the EE performance but, is almost entirely focused on the achievement of the “Fully Competent” (FC) rating for work within the defined expectation of the normal scope of the assigned job. A rating of FC is, in fact, a prerequisite of any additional recognition. However, in order to maintain the balance in the “fair days work/fair days pay” equation, we do recommend the bonus payment in cases of individuals exceeding or working outside the normal scope of their job, wherein they contributed to the organization in a meaningful and significant way and for which they were not otherwise compensated.
