Daniel mentions a couple of challenges (a "bombed" earlier version of a
1950s performance review plan and a president who believes pay raises
should be tied to performance reviews) and then asks:
>* What's wrong with coupling performance reviews to pay increases?
What's wrong with tying pay increases to performance reviews is that this
practice steadily inflates the salary base.
If a pay increase is needed to keep employee pay from being ravaged by
inflation then simply give everyone an annual pay increase that serves
that purpose and don't pretent it's a reward for last year's performance.
>* If they're de-coupled, how does an organization give pay increases?
This is partly answered above but I would suggest a better question: Why
are pay raises given? One answer is as a bonus for an exemplary,
especially valuable performance. You don't a performance appraisal system
to do that. A second reason, as noted above, is as a hedge against
inflation, to protect the buying power of employee pay. A third reason is
to motivate people to contribute to the organization that pays them, and
profit sharing is one way of doing this, as are bonuses tied to specific
performance targets, and even stock options.
My real answer here is to suggest that the president in question is well
served by getting very clear about why the company would grant pay raises
before focusin on how to do it. Focusing on how will lead to absolutely
elegant solutions to the wrong problem.
>* What are the reasons for formally scheduled performance appraisals?
The standard reasons given are to provide feedback, to improve
performance, to align employee and organizational interest, etc, etc.
These are all good things to do, however, the typical performance
appraisal system does a lousy job of it for lots of reasons (see my paper
"Don't Redesign Your Company's Performance Appraisal System, Scrap It!" at
http://home.att.net/~nickols/articles.htm ).
>What other models exist to break the mold?
The answer here is similar to the why question I posed above. Performance
appraisal systems typically don't work because too much is attempted under
one heading. Salary administration and performance management simply do
not mix; they're like oil and water. One obvious solution is to unbundle
them. Separate the performance management system from the salary
administration system. This requires thinking through the reasons,
motives, aims and purposes of each BEFORE putting any system in place.
You will find at the web site noted above another article that addresses
how to deal with the separate elements of what is now a very tightly
bundled package known as "the performance appraisal system."
>* Are there any best practices you're aware of that are contemporary
>models of learning organizations using successful performance appraisal
>systems.
Jack Zigon has a web site where lots of useful information can be found.
Robert Bacal runs a discussion list that focuses on performance
management. Both can be found via a simple web search. And, I've copied
them both on this in case they want to respond to you directly. You
should also look into Alfie Kohn's "Punished by Rewards" and the work of
Peter Scholtes who, like me, is an unabashed foe of classic performance
appraisal systems.
--Regards,
Fred Nickols Distance Consulting http://home.att.net/~nickols/distance.htm nickols@worldnet.att.net (609) 490-0095
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