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Government Leader home > March 2005 issue
March 2005; Vol. 1 No. 1
Pay-for-performance myth busters
Getting employees and managers to accept a pay-for-performance system means getting
past some misconceptions:
Pay for performance is a human resources
issue, not a management issue.
WRONG, said J. Christopher Mihm, director
for strategic issues at the Government
Accountability Office. “Pay for performance is
a vehicle to better achieve organizational
results. If you’re viewing pay for performance
in isolation from a whole series of other
changes or reforms, then you’re missing a
huge opportunity. You need to have a good
strategic planning process in place.”
Pay-for-performance systems are inherently
corrupt because managers are going to play
favorites.
FALSE, said Doris Hausser, senior policy
adviser to the director and chief human capital
officer at the Office of Personnel
Management. If managers don’t construct a
system that includes the input of employees
and is transparent and well-monitored,
employees won’t trust it, she said.
“They’re not going to like it the first year,”
Hausser said. “That’s because it’s change, and
people are naturally skeptical. But a system
that isn’t fair is going to implode. You won’t be
able to keep people. You have to construct a
credible system.”
We’re all going to be paid less.
ABSOLUTELY NOT, Hausser said. But everyone
won’t automatically get paid more. One of
the purposes of pay for performance is to
recruit and retain outstanding employees by
creating organizations that are competitive in
terms of paying market rates.
“The value proposition for employees is that
performance matters,” she said. “Does that
mean you take away from someone else? There
are trade-offs, but I don’t know of any organization
that is looking to give the short end of the
stick to their workers.”
You can do pay for performance on top of the
existing management system.
NO, Mihm said. “The key to success is making
sure you have a valid, reliable performance
management system with adequate safeguards
linked to organizational goals.”
Once we set up the system, that’s it.
FALSE, Mihm said. “We are constantly making
adjustments to our performance management
system,” he said. “This takes time and can be
difficult and contentious.”
Hausser noted that the belief that you can
create the perfect system is common in government.
“These kinds of systems are the very
natural part of the way an organization grows
and works. Systems will probably need [to be
adapted] over time.”
It won’t cost much.
UNTRUE, Mihm said. A new system as farreaching
as pay for performance can’t be done
on the cheap, he said, especially in the early
years. “You have to set up a performance
management system. There are transition
costs, technology costs and training.”
It can’t be fair unless everything is measurable
and quantifiable.
NOT SO, said Pete Smith, president and CEO
of the Private Sector Council in Washington. If
those are the criteria, it’s going to fail, he said.
“You’ll focus people on the wrong things. If
you’re managing a unit of the Federal
Emergency Management Agency or directing a
component of the park service, the performance
measurements are not nearly as easy” as
at some other agencies, Smith said. “And yet
most people who are setting up new performance
measurement programs will try to focus
on quantitative measurements and miss those
that are not.”
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