I have intentionally changed the subject descriptor from the "Pay for
Performance" thread because the traditional design of a "Pay for
Performance" program in US Corporations works against the teachings of
Deming, Kohn and, I would argue, learning organizations. The clear focus
of Pay for Performance programs is a monetary reward to the individual for
achieving outcomes or objectives. Performance has become another word for
results, or what gets done. There is little or no concern with how it gets
done. The reward is given for individual outcomes, rather than team or
process outcomes. This type of system creates competition and detracts
from cooperation, team work, learning and systems thinking.
There have been some earlier postings on how to improve Pay for
Performance, i.e. how to build a better buggy whip. Although I believe
that the concept of Pay for Performance at the organization level in the
form of profit sharing or gainsharing is often useful, it is time to move
on to different models for individual pay.
Wayne Cox asked about new models. I have been working extensively with
organizations that are developing a compensation system that looks beyond
individual results, to the individual behaviors and competencies that
produce improved team and organizational results. I define Competency
Based Pay as a compensation system in which employees' pay rates and pay
increases are determined by their set of demonstrated competencies.
Competency Based Pay is often described as a method to pay for the person;
not the job. The system does not use job description or the increasingly
archaic concept of job. In a Competency Based Pay system, the individual
is rewarded for their knowledge, skills and domonstrated behaviors (input
and throughput) rather than for their results (output). Those that
actively continue to learn and grow are rewarded with higher earnings.
I have discussed my work with Peter Scholtes and Alfie Kohn. Peter is
reserving judgement but expressed a reservation that it feels dangerously
close to Pay for Performance which he feels destroys teamwork. Alfie
feels I've taken a big step in the right direction but he still can't
support rewarding the individual for learning. He believes this will
destroy the joy of learning. (Incidentally, when I first read Kohn's
"Punished by Rewards", I developed a headache every time I picked up the
book. In effect, he was telling me that most of my life's work was either
useless or harmful. When I told him about the pain he had caused me, he
was delighted; he felt that my headaches were the result of significant
learning.)
-- Regards, Roxanne Abbas