Pay and Performance

Jeffrey Pfeffer Testifies to Congress About Evidence-Based Practices. Here’s a good couple excerpts (thanks Esther!):

“The idea that financial incentives are the way to solve organizational
performance and service problems is one of the most dangerous “half-truths”
of management. The evidence for widespread dissatisfaction with such pay
plans is pervasive. Both employee and company survey data suggest that the
likelihood of success is low and the odds of problems and dissatisfaction
are high.”

“Although the list of high commitment or high performance work practices
differs slightly among authors and studies, most such lists include: a)
sustained investment in training and development, including job rotation,
both formal and on-the-job training, and a tendency to promote from within
as a consequence of the successful internal development of skill and people;
b) an egalitarian culture in which formal status distinctions are
downplayed, salary differences across levels are less than in the general
economy, and in which people feel as if their contributions are important
and valued; c) delegation of decision making responsibility so that skilled
and developed people can actually use their gifts and skills to make real
decisions; d) high pay to reduce turnover and attract the best people,
coupled with rewards that share organizational success with its members; and
e) employment security and a policy of mutual commitment, so that the
workforce does not fear for the outcomes of events over which it has no
control and instead, feels reciprocally committed to the employer.”

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