Utley Food Markets a Pay-For-Performance

Utley Food Markets

A pay-for-performance system will have several implications for Utley management. The first is that management will need to define "performance." At present, there are no performance measures for the company. Employees do not know what constitutes good performance and that will have to change. A scale will need to be devised wherein rates of pay are pegged to specific performance levels. In addition, it is advised that the pay-for-performance scheme be equitable across all job grades in the organization. In addition, management will need to negotiate the pay-for-performance plan with the union, since it will be unable to address the issue of pay without union agreement.

Management will also need to make many adjustments to the ways in which it evaluates employees. The current system will need to be discarded. Management will need to become familiar with setting and measuring quantitative measures. While the current system may be subject to bias, any pay-for-performance system that is expected to successfully motivate workers will need to be free from such bias. Thus, management is going to need to be prepared to be objective in evaluations for the first time ever.

2. There will be no changes made to the current system. It will be completely eliminated. Not a trace of it will remain. The new system will be built based on quantitative measures that are objective and relevant to the job. The current system contains none of the attributes of a professional performance appraisal system. The employees do not understand what is being measured or how it is being measured. Management does not know either -- evaluations are subjective and arbitrary. The system is wide open for abuse and there is no mechanism by which employees can understand their own appraisals or to contest them. A new system must be completely rebuilt with job descriptions, quantitative measures, appropriate training for management and for the employees, a system for appeals and full transparency.

3. The first step will be for management to design the new system. This will require designing job descriptions that are relevant to the work that the employees do. Once the job descriptions are in place, these will need to be communicated to the employees. The employees must know the ways in which their performance will be measured (Allan, 1994). Then, management will need to design rewards for meeting these measures. The rewards must be relevant to the job description, they must be achievable and they should ideally orient employee behavior towards Utley's strategic objectives. In addition, the system design needs to include a review and appeals process so that employees can contest the reviews should they feel that the review is inappropriate.

Managers will need to be trained on this new system -- they cannot be expected to shift instantly from the previous system given its lack of structure and objectivity. In addition, managers should be measured in part on their ability to implement this new system. The employees will need to be educated about the new system. Managers will need to implement the means of measuring performance so that employees can understand how they are being measured in addition to why.

The third step will be to address the issue with the union. With a designed system in hand, the company needs to make the new system a priority in negotiations with the union. This may require the company to break the union, as union resistance to the current gravy train of blanket raises may be high. If the union agrees to the plan, it must be implemented into the collective bargaining agreement.

The fourth step will be a review of the system. It cannot reasonably be expected that a new system will be totally flawless. A team consisting of management, the union and employees should be gathered to review the system each year for several years until the flaws in the system are entirely eliminated.

4. Most of the non-monetary changes will help to motivate better performance. Workers are often motivated simply by measurement. This is a form of intrinsic motivation whereby workers seek to meet targets and to improve upon their past performance. Intrinsic motivation has been found to improve when task-specific target goals are introduced (Haradkiewicz & Elliot, 1998). That the targets are set to performance appraisals is incidental to this motivation, since the intrinsic rewards are as immediate as the results can be delivered whereas the extrinsic results are theoretical and distant.

Another non-monetary change that will help to motivate better performance is that the company is removing the atmosphere of mistrust and abuse. The current process is subjective and devoid of transparency. The employees therefore have little faith in the system. The new system will be transparent and objective. Employees are likely to be more productive in an environment where there is trust between workers and management.