Decoupling appraisal from pay increases LO19886

Eugene Taurman (
Mon, 16 Nov 1998 20:48:09 -0600

Replying to LO19845 --

At 09:47 AM 11/14/98 +0100, you wrote:

>Eugene stated that the purpose of the performance review the exchange
>between manager and employee should cover and that a relation with pay
>increase disturbs this process. He states that pay raises can be related
>to promotions and time in service. >I think that automatic raises related
>to time in service and promotions
>are, at least in some segments of the market, no more of this day and age

I am not certain how I feel about merit raises but some of the most
successful corporations in the world pay for time in service not
individual performance. Matsushita is an example. They pay for group
performance plus time in service. Many others try to pay for performance
but if we track their increases over time they parallel Matsushita. Alex
Stone of Matsushita showed me the data several years ago.

>Pay raise should be related to performance because that what it's all
>about. You sell your quality to an employer and depending on the level of
>the quality in relation with the performed tasks you are rewarded. This
>should be the point of view form the employer as well as from the
>employee. I would hate to be part of a system that rewards we in terms of
>time in service or promotion.

A major problem with pay for performance is knowing who performed. We are
all part of a system and the results are shared. Management might be
better off encouraging team work than selecting a few for more pay.
Especially in light of the poor ability to see and measure individual

I have seen sales incentive programs drain an organization because
salesmen got good at manipulating the system rather than getting good at
selling. They maximized individual pay by manipulating the system to
serve their customers at the expense of other customers. because the could
not be decoupled from the system.

>First let get this straight: everybody wants to earn more. That will
>always be a part of the thinking when you enter the performance review,
>also if the companies policy is that the review is not pay related.

If the review is pay related because the kind of competing Deming warn
against. Destructive competition between members of the same organization.
This competition between manger and employee can because mistrust and poor
behavior if it its not done very skillfully.

...snip by your host...
>Gijs Houtzagers


What you are is determined by the thoughts that dominate your mind.
Paraphrase of Proverbs Ch 23 vs 7 KJV


Eugene Taurman <>

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