Question

Human Resources

Your hospital implemented a new pay-for-performance system about 10 months ago. A preliminary review of the results shows the following. Managers (who earn bonuses based on budget savings) have held back in equipment maintenance and employee training on new techniques in order to save money. Employees perceive little connection between work and pay and feel the system is unfair. Some former high performers have become problem employees. Some employees have received significant increases and others have seen their pay decrease. Many of those with pay decreases are older and more experienced, but are not as adept with newer technology as some of the younger employees. Many of the older employees complain that, because of their experience, they are given more difficult patients. These are symptoms of several problems that are common with pay-for-performance systems. Briefly describe those problems. How might you solve the problem with your managers and their bonus plan? How might you improve the perception of a connection between work and pay? What steps would you take to analyze and address the problem the older, more experienced employees are having?

Answer 1

Briefly describe those problems?

Pay-for-performance system comes with many associated problems when this system is implemented as an overall salary package for employees. This system says that there is no fixed or basic pay, employees will get salary only for their performance. The more you perform, the more you gain. This system has so many drawbacks, because everyone is not comfortable with it. There are many associated problems such as:

• Employees feel that the system is unfair, and perceive little connection between work and pay. There should be at least fixed basic pay.
• Everyone does not get equal pay, leading to a rise of conflicts among them.
• In this system, some employees have seen their pay decrease make them uncomfortable, unsatisfied, demotivated with their work.
• Managers try to save the cost because this is the only way of their earning, and to get a high pay by saving cost, they implement unusual practice & hinders other employees from introducing new techniques.
• High performers also turned problematic for organizations with a pay-for-performance system.

How might you solve the problem with your managers and their bonus plan?

I will develop a training program for all employees & encourage managers to implement on-job training methods which can save the cost. I guide him to implement a 70/20/10 learning & development program which says that 70% learning comes from experience or while doing critical tasks, 20% learning comes from social peers, and 10% learning comes from formal & planned training, also it focuses on Just-In-Time training methods. So, by adopting this method manager can a bridge the gap between the experienced individual & the newcomers, as well as he will save the cost because it focuses on informal training method, that is there is no need of doing extra setup to provide training, hence it has two-fold benefits: One it saves the cost through implementation informal training methods. Second, it creates a friendly work culture.

Also, after such issues I implement a pay-for-performance system as a reward/incentive package which gets added on to the basic salary. In this way, employees get a fixed wage & one who performs well will get a reward in addition.

How might you improve the perception of a connection between work and pay?

Perception of employees plays a key role in development of any organization. To make the pay-for-performance system working, it is necessary that employees perceive the connection between work and pay positively. Motivation plays a game changing role in this. I'll motivate employees to adopt the system, and also encourage them to perform high because their performance will pay them. I'll make sure that employees get sufficient training which helps them to increase their productivity. Once they know how to work, they will automatically work well & earn well. I will also circulate the motivational videos, and messages which show the importance & connection between work and pay.

What steps would you take to analyze and address the problem the older, more experienced employees are having?

I'll listen to the problems of the older, more experienced employees, understand their situation & then address their problem. After understanding that, less familiarity with technology hinders them from earning more, I'll organize an instant training program for them, so that they can learn about new systems. Older employees also complained that, because of their experience, they are given more difficult patients. In this situation, I will motivate them to handle those patients as an opportunity, and ensure that individuals who tackle critical cases will earn more.

I try to create a friendly work environment which lessens the gap between experienced employees & younger employees. I will encourage experienced employees to pass-out their work experience skills to younger employees, and encourage younger employees to help experienced & older employees to get familiar with the new technology. In this way both will fill the gap between each other in a friendly & informal way.

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