Pay for Performance

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HR 434 Compensation Management 23 February 2012 Pay for Performance What better way to drive people to work harder and more efficiently, you may ask, than to offer them a special carrot: more money for hitting specific company targets? The idea seems perfect. Studies have shown time and again that pay represents one of the most important factors involved in retaining qualified employees, it is little wonder that there has been a great deal of attention focused on how best to compensate employees for their performance in recent years. Moreover, because employee performance and productivity is inextricably related to organizational profitability, these issues have assumed new relevance and importance in the current economic…show more content…
For instance, Risher advises, “While it is effectively a universal practice for white-collar employees in non-government sectors, [pay-for-performance programs] represent a radical and difficult change for public agencies” (p.51). Likewise, Hyde advises that, “Pay for performance has been proposed, debated, and dismissed for over fifty years in public personnel management. Although legal challenges have been filed, pay for performance emerges as the new model for federal human resources pay practice and the cornerstone of federal public management strategy” (p. 3). Nevertheless, beyond the legal challenges involved, there are a number of constraints to the implementation and execution of such initiatives that can make or break their success. This point is made by Kellough and Nigro who report that a pay-for-performance initiative in the State of Georgia known as “GeorgiaGain” has been viewed by many state employees as inherently unfair and wracked by favoritism despite the enormous amount of resources devoted to the program’s design and implementation (p. 447). Likewise, in his analysis of pay-for-performance

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