J Writer 4 | 4 Freelance Writer
Jan 10, 2015 | #1
A fraudulent custom writing order made from a payment card owned by: CH (Dallas, TX).
A Conceptual Overview
Increasing performance within an organization is a topic that has been given much attention in labor and academic research as it is of universal importance to the business world. Quite simply, higher performance is a strategic advantage and how to motivate staff to achieve pinnacle results is a matter of immense consequence. While elements like leadership have been established as being highly important in efficacious organizations, so has employee compensation. How employees are compensated can be considered one of the root elements in how a staff member perceives the organization, their role in the organization and their commitment to the organization. Two strategic plans that have been utilized to establish compensation for organizations, teams and individuals are pay for performance and pay for knowledge. While pay for performance is based on typically agreed upon logic and it is frequently utilized, pay for knowledge is more unconventional. The success of both plans as a motivator, however, do not have universal results. Both methods have positive and negative elements and mixed data proving their efficacy. A review of related data suggests that both programs can be successful if used under the correct conditions with the correct team. Neither, however, are universally adaptable and successful in all organizational application.
Pay for Performance
The theory behind pay for performance is a simple one and one that seems logical within the spectrum of most individuals. Essentially, a team or facility is paid based on their ability to achieve or exceed a given goal. Many government subsidy programs rely on pay form performance by basing grant money and other funding on how well an organization achieves an established goal. For organizations, pay for performance is often a way that an organization seeks to motivate staff members through financial benefits for reaching certain marks. As Carroll stated, "To most people it's a no brainer that we should pay for quality not quantity" (p. 1). While logical, the results on pay for performance differ greatly according to the study and the industry in which it is being adapted. For example, one pay for performance cross section of the business world that has been successful for a long period of time is in sales. Most set ups have higher performing sales teams receiving more benefits or compensation depending on established goals by the organization.
Schools, in contrast, have a pay for performance modality under the No Child Left Behind Act. Schools that do not meet certain performance criteria do not receive certain aid and can ultimately be seized by state/federal authorities until they meet student performance demands. In health care, pay for performance has been controversial. While some studies have demonstrated that it is efficacious, others have demonstrated no improvements compared with conditions without financial incentives (Carroll). Some medical performance related benchmarks have included mortality rates, heart condition control and bypass grafts. The problem with pay for performance lies in the target performance and how much control over that target the individual or team actually has. Quite simply, if the target is unfair or not an accurate measurement of quality, the performance of the organization may not go up.
This phenomenon can be demonstrated within education. For example, if an independent organization began to hold teacher's accountable for individual student performance, it is possible that the quality of education would go up, but it's also possible that it could get worse. In terms of the latter, if classroom teachers began dropping the standards on which they judged student performance, they may be compensated more because they have achieved a goal, however, the students would not be getting a higher quality education. If an organization established a goal of 90% quality on manufactured products for a team and they achieved it but at the same time they lost 25% output efficiency, a full victory has not occurred. Pay for performance rests on the premise that the goals established are in the best interest of the organization and that they can be controlled by the team or individuals expected to meet that goal. In terms of motivation, it is well documented that when individuals perceive goals for rewards as being unfair or unattainable, they will become less motivated thereby counteracting the intended effect.
Pay For Knowledge
Pay for knowledge is a non traditional compensation system in which employee wages are based on the repertoire of jobs that an employee is trained to do (Gupta, Schweizer & Jenkins, 1987). In a traditional compensation set up, the employee is paid based on the job they actually do. In an organization, a janitor would be paid to be a janitor and an engineer would be paid to be an engineer. Under the knowledge plan, a typical employee starts out at a base rate and as the individual learns different jobs within the organization, that pay rate also increases (Gupta, Schweizer & Jenkins, 1987). Continuous learning, therefore, has a financial incentive and theoretically, such an organization would have a more knowledgeable and better trained staff than a traditional one. A payment level plan can be infinite or more often, it has a set number of levels in which a staff member can achieve.
In the modern workforce, it has been found that flexibility and flattened tiers of management are advantageous over traditional rigid job structures (Acona). The pay for knowledge system, in theory, falls within the parameters of what analysts like Acona have suggested is important for a 21st Century organization. Like pay for performance, the actual results of whether or not pay for knowledge works are split and controversial. Unlike pay for performance, however, pay for knowledge has not seem the same level of adaptation as it goes against convention. One major issue with pay for knowledge is that it is not always adaptable to all positions within a company. Pay for knowledge plans are used primarily for production employees and most studies related to such programs are on production employees (Gupta, Schweizer & Jenkins). It has also been noted that lack of support from first line supervision is a common problem with pay for knowledge plan because it can potentially threaten traditional roles. Most research related to pay for knowledge plans suggest that under the right set of conditions and staff, such plans can be highly efficacious.
Conclusions
Both pay for performance and pay for knowledge can be successful. As demonstrated, in sales situations and in situations where established goals and benchmarks are actually within the control of team/staff and a fair measurement of what their job entails, pay for performance can be an efficacious motivator. In some examples, like healthcare and education, however, pay for performance has produced lackluster results. Pay for knowledge, similarly, has shown some success in certain teams and in manufacturing style jobs. In some situations, like complex organizations with many different types of jobs and levels of training to get those jobs, pay for knowledge can become cumbersome and perceptually unfair to staff members. Knowing when to use which program and understanding their strengths and limitations is critical for efficacious adaptation.
References
Acona, D. Managing for the Future. Canada: Thomson.
Carroll, A. (2014). The problem with pay for performance in medicine. The Upshot.
Gupta, N., Schweizer, T. & Jenkins, D. Pay for knowledge compensation plans: Hypothesis and survey results. Monthly Labor Review, 40-45. Newman, M. (2008). Emotional Capitalists. New York: Jossey Bass.
Performance and Knowledge
A Conceptual Overview
Increasing performance within an organization is a topic that has been given much attention in labor and academic research as it is of universal importance to the business world. Quite simply, higher performance is a strategic advantage and how to motivate staff to achieve pinnacle results is a matter of immense consequence. While elements like leadership have been established as being highly important in efficacious organizations, so has employee compensation. How employees are compensated can be considered one of the root elements in how a staff member perceives the organization, their role in the organization and their commitment to the organization. Two strategic plans that have been utilized to establish compensation for organizations, teams and individuals are pay for performance and pay for knowledge. While pay for performance is based on typically agreed upon logic and it is frequently utilized, pay for knowledge is more unconventional. The success of both plans as a motivator, however, do not have universal results. Both methods have positive and negative elements and mixed data proving their efficacy. A review of related data suggests that both programs can be successful if used under the correct conditions with the correct team. Neither, however, are universally adaptable and successful in all organizational application.Pay for Performance
The theory behind pay for performance is a simple one and one that seems logical within the spectrum of most individuals. Essentially, a team or facility is paid based on their ability to achieve or exceed a given goal. Many government subsidy programs rely on pay form performance by basing grant money and other funding on how well an organization achieves an established goal. For organizations, pay for performance is often a way that an organization seeks to motivate staff members through financial benefits for reaching certain marks. As Carroll stated, "To most people it's a no brainer that we should pay for quality not quantity" (p. 1). While logical, the results on pay for performance differ greatly according to the study and the industry in which it is being adapted. For example, one pay for performance cross section of the business world that has been successful for a long period of time is in sales. Most set ups have higher performing sales teams receiving more benefits or compensation depending on established goals by the organization.
Schools, in contrast, have a pay for performance modality under the No Child Left Behind Act. Schools that do not meet certain performance criteria do not receive certain aid and can ultimately be seized by state/federal authorities until they meet student performance demands. In health care, pay for performance has been controversial. While some studies have demonstrated that it is efficacious, others have demonstrated no improvements compared with conditions without financial incentives (Carroll). Some medical performance related benchmarks have included mortality rates, heart condition control and bypass grafts. The problem with pay for performance lies in the target performance and how much control over that target the individual or team actually has. Quite simply, if the target is unfair or not an accurate measurement of quality, the performance of the organization may not go up.
This phenomenon can be demonstrated within education. For example, if an independent organization began to hold teacher's accountable for individual student performance, it is possible that the quality of education would go up, but it's also possible that it could get worse. In terms of the latter, if classroom teachers began dropping the standards on which they judged student performance, they may be compensated more because they have achieved a goal, however, the students would not be getting a higher quality education. If an organization established a goal of 90% quality on manufactured products for a team and they achieved it but at the same time they lost 25% output efficiency, a full victory has not occurred. Pay for performance rests on the premise that the goals established are in the best interest of the organization and that they can be controlled by the team or individuals expected to meet that goal. In terms of motivation, it is well documented that when individuals perceive goals for rewards as being unfair or unattainable, they will become less motivated thereby counteracting the intended effect.
Pay For Knowledge
Pay for knowledge is a non traditional compensation system in which employee wages are based on the repertoire of jobs that an employee is trained to do (Gupta, Schweizer & Jenkins, 1987). In a traditional compensation set up, the employee is paid based on the job they actually do. In an organization, a janitor would be paid to be a janitor and an engineer would be paid to be an engineer. Under the knowledge plan, a typical employee starts out at a base rate and as the individual learns different jobs within the organization, that pay rate also increases (Gupta, Schweizer & Jenkins, 1987). Continuous learning, therefore, has a financial incentive and theoretically, such an organization would have a more knowledgeable and better trained staff than a traditional one. A payment level plan can be infinite or more often, it has a set number of levels in which a staff member can achieve.
In the modern workforce, it has been found that flexibility and flattened tiers of management are advantageous over traditional rigid job structures (Acona). The pay for knowledge system, in theory, falls within the parameters of what analysts like Acona have suggested is important for a 21st Century organization. Like pay for performance, the actual results of whether or not pay for knowledge works are split and controversial. Unlike pay for performance, however, pay for knowledge has not seem the same level of adaptation as it goes against convention. One major issue with pay for knowledge is that it is not always adaptable to all positions within a company. Pay for knowledge plans are used primarily for production employees and most studies related to such programs are on production employees (Gupta, Schweizer & Jenkins). It has also been noted that lack of support from first line supervision is a common problem with pay for knowledge plan because it can potentially threaten traditional roles. Most research related to pay for knowledge plans suggest that under the right set of conditions and staff, such plans can be highly efficacious.
Conclusions
Both pay for performance and pay for knowledge can be successful. As demonstrated, in sales situations and in situations where established goals and benchmarks are actually within the control of team/staff and a fair measurement of what their job entails, pay for performance can be an efficacious motivator. In some examples, like healthcare and education, however, pay for performance has produced lackluster results. Pay for knowledge, similarly, has shown some success in certain teams and in manufacturing style jobs. In some situations, like complex organizations with many different types of jobs and levels of training to get those jobs, pay for knowledge can become cumbersome and perceptually unfair to staff members. Knowing when to use which program and understanding their strengths and limitations is critical for efficacious adaptation.
References
Acona, D. Managing for the Future. Canada: Thomson.
Carroll, A. (2014). The problem with pay for performance in medicine. The Upshot.
Gupta, N., Schweizer, T. & Jenkins, D. Pay for knowledge compensation plans: Hypothesis and survey results. Monthly Labor Review, 40-45. Newman, M. (2008). Emotional Capitalists. New York: Jossey Bass.