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    Pay For Performance and Employment

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    Please review the below three job scenarios. What Pay-for-Performance Program would you recommend?

    Forklift Driver

    Person drives a forklift for a small metals manufacturer. Worker picks up parts that have been boxed and loaded onto pallets and delivers them to warehouse for shipping. Worker then returns and waits for the next load to be readied.

    Custodian

    Person is a custodian for a large, nationwide hotel chain. The custodian's duties are to vacuum the hallways, clean the rest rooms, and carry refuse to the Dumpsters in the rear of the hotel.

    Chief Executive Officer

    Person is a CEO for a small, independent furniture manufacturer. The CEO is responsible for the firm's performance in the areas of sales, new accounts, new products, profits, and return on assets.

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    Forklift Driver

    Person drives a forklift for a small metals manufacturer. Worker picks up parts that have been boxed and loaded onto pallets and delivers them to warehouse for shipping. Worker then returns and waits for the next load to be readied.

    Performance criterion here is going to be based on activities and outcomes.
    Activities focus on what the employee does at the job. They measure the way the job is done. Again, the thought behind this is if the employee does the job correctly, then the desired outcome will occur. The advantage of defining performance as activity is that it is more observable than other criteria. Doing the job the way it needs to be done is very important in organizations where work must be coordinated between employees. People who work at the warehouse (say, those who temporarily stock the merchandise, who process the orders, who loads the trucks for shipment, etc.) depend on the forklift drivers (this is so-called pipeline scheme of process organization). Some performance appraisal techniques focus clearly on this definition of performance.
    Outcomes - this is what usually comes to mind when the word performance is used. Outcomes are the productivity measure of the employee, group or organization. In our situation it could measure the quality and speed of delivery to the warehouse.

    Pay-for-performance system is based on the rating system. The most common performance rating scale is the graphic rating scale. This scale follows the format just described. The factors or criteria are usually those that are organizationally important in determining performance. The reason that the consideration is organizational and not job-related is that a single graphic rating scale is typically used for a variety of jobs within the organization. At best, the factors are outcomes (such as quantity of work, quality and speed of delivery to warehouse) or behaviors (adaptation to change, for instance). At worst they are personal characteristics (such as a good personality).

    A rating scale that is most suitable to this situation is the behaviorally anchored rating scale (BARS). This type of scale is job-specific, or at least occupationally specific (driving a forklift). The factors and the degree statements are arrived at through a complex system in which a group of experts who know the content of the job sort out behavior statements.

    Where there are common factors and a summated score, the task is easy (if not always accurate) since all employees can be placed upon a single ranking, making the performance axis complete. If constant errors are prevalent in the rating process, the responses may need to be statistically spread out on the scale. The best results can be obtained if (1) unambiguous descriptions of factors and degrees are developed, (2) evaluations are not shared with the ratee, and (3) the raters have been trained.

    Custodian

    Person is a custodian for a large, nationwide hotel chain. The custodian's duties are to vacuum the ...

    Solution Summary

    The solution discusses the theory of pay for performance.

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