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The pressure for improved results, along with labor market shortages and the aging of public sector workforces, is pushing public sector employers to adopt new policies to make themselves more attractive to qualified job candidates. Traditional thinking has focused on the value of the job, but as “knowledge jobs” become increasingly important, local governments are under greater pressure to change traditional employment practices. The idea that an employee’s value depends on what he or she knows and can do is gaining acceptance. Using pay for performance is a way for local governments to compete for talented employees.
Pay for performance enhances a local government’s prospects for recruiting and retaining new employees who can perform at high levels. High performers generally want to have their value recognized and want to be rewarded for their accomplishments.
Transitioning to a new pay for performance policy will trigger a change in the way managers and employees think about their compensation, their working relationships, and the way they approach their jobs. If there is an underlying concern that the employee appraisal process is unreliable, or if the organization has not created a culture in which performance is a priority, resistance from employees and supervisors can make the transition very difficult. The key to success is the process used to implement the change in policy, especially the communication. This report discusses implementation and suggests strategies to encourage managers and employees to accept performance-based compensation.
Howard Risher is an experienced consultant, author, and speaker on salary management and performance management, with a focus on nonprofits, higher education, health care, and government. He is currently working with the U.S. Department of Defense on its transition to a market-sensitive, pay-for-performance system. William Wilder retired as human resources director for the city of Charlotte, North Carolina. Previously he was chief of classification and pay for the state of Florida. Currently he is a human resource and management consultant and
the owner of Wilder Consulting.
(2007, vol. 39, no. 6)
