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point out that between 2004 and 2009, Congress approved performance-based pay scales for the Department of Homeland Security and the Department of Defense. (Perry, 2009) This shift came after Congress had previously abandoned such systems that operated from 1984 to 1991 as being ultimately ineffective. (Perry, 2009) as Perry goes on to point out, the link between pay incentive and the manifestation of desired behaviors is extremely convoluted. On the employee's side of the equation are considerations including employee age, sex, job satisfaction and pay expectations, and on the organization's side of the equation are factors including the fiscal health of the organization, how the performance review is undertaken, and organizational climate, among other factors. (Perry, 2009) Perry lists a number of conclusions indicating that, in the public sector at least, performance-based pay is not a reliable means of activating managerial goals:
"Performance-related pay often has failed to trigger expected intermediate changes in employee perceptions necessary to change motivation… a variety of contextual factors appear to moderate the effectiveness of performance-related pay systems, especially the type of public service industry involved…Performance-related pay may have more effect at lower organizational levels where job responsibilities are less ambiguous, contradicting assumptions that contingent pay plans will be more effective at higher levels of organizations." (Perry, 2009)
Perry suggests that a significant difference between the successes of performance related pay systems in public and private sectors is the element of secrecy. Transparency is demanded in the public sector, whereas examples of successful performance related pay systems in the private sectors also include elements of secrecy. (Perry, 2009) Further, in the private sector, as revenue increases, pay is also able to increase. This is rarely the case in public sector work environments that have a duty to use public funds in a transparently ethical format. Ultimately, Perry et al. conclude that performance-related pay fails to achieve the hoped for the end results.
Performance related pay is intended to motivate employees to contribute more effectively and efficiently to the aims of the organization. Assessing and managing employee motivation is only one part of evaluative framework, but perhaps the most problematic part of the framework given the complexity of employee motivation. Employee motivation seems to be much more of a question in the public sector. Houston questions why the standards of the private sector should set the bar in the public sector as well. The notion that all individuals, including individuals working in the private sector are self-interested actors drives the motivation for undertaking performance related pay systems. However, the assumption that workers are exclusively extrinsically motivated may be flawed, and may be the real cause of the failure of the performance-based pay system in the public sector. That is, it may not be that performance-based pay systems are in themselves problematic, it may be that they are enacted poorly. (Houston, 2009)
Martinez et al. attempt to conceptualize the step that occurs between designing and implementing the performance review and using the gathered information for implementing and managing behavioral changes. In order to understand how to use a given performance review, an organization must understand three things about the review: its context, process, and content. (Martinez) Context describes the environment that lead to the initiation of the performance review; process describes the internal logic of the review, that is, who is involved, and how it is conducted; content concerns the subject matter of the review. Stated more simply, Martinez seeks to understand the why, how and what of the performance review. (Martinez) Managers can intervene in any of these three areas. Intervention can lead to more or less effective reviews, as well as alter the strategic results that are derived from the undertaking of the review. That is, if the review is somehow biased by managerial input, it may illicit broader undesirable consequences. Therefore, it is equally as important for an organization to manage both its ability to meet its own goals, as well as the means by which it determines whether or not those goals are being met. In the case of a university relying upon student evaluations of teachers to assess the performance of teachers and determine teacher compensation based on these evaluations, it would seem to be an unreliable indicator of whether or not institutional goals are actually being met.
Assessment systems can also be met with open resistance. Bourne describes resistance to implementation of assessment frameworks:
(1) resistance to measurement, occurring during design and use phases;
(2) computer systems issues, occurring during implementation of the measures;
(3) top management commitment being distracted, occurring between the design and implementation phases. (Bourne M. a., 2000)
What, then, motivates employees? Anderson finds that economic factors do motivate employees, but that the amount of influence economic factors exercise is limited by the presence of professional standards. If no professional standard is in place, economic factors play a larger role. Further, there are any number of intrinsic factors that motivate employees. If management is to manage efficiently, management must understand these various motivations and recognize the presence of both intrinsic and extrinsic factors. (Houston, 2009)
Reviewing performance of a complex organizational system can be as complex as the system being reviewed. After review of the literature, it would seem that the note at the beginning of this paper, "what you measure is what you get." is in fact a reliable maxim.
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