This paper is going to discuss individual pay for performance evaluation method through a study of an organization that recently adopted the evaluation method. The organization selected to help in the discussion of the method is Tennessee State Employee Association. The association recently adopted the pay for performance method since the system was running by June 20 2016. The system was to make sure that individual employees were paid on a basis of ratings that citizens posted on the organization’s websites. The employees would also gain salary raises based on the ratings. The system has been applauded as many believe that rewarding employees for their commitment to the job is an efficient way to keep them motivated to provide competent service and encourage lazy employees to be productive. Moreover, it reaftirms the scripture verse that states that “whoever works his hand will have plenty of bread, but he who follows worthless pursuits lacks sense” (Proverbs 12:11, The New King James Version).
While pay for performance is generally used to motivate employees into being8 productive, Tennessee State Employee Association had specific reasons as to why it introduced the reward system into the organization. Among them, According to Brian Merritt, president of the association, the organization sought to link its compensation approach to culture and business strategy. In this sense, the compensation strategy would increase the performance of the state’s employees and consequently improve the state’s economic standing. Moreover, the association sought to qualify the billions of dollars that are spent each year as payment to the state’s employees, thereby, by tying the performance of the labor force, the association could qualify the spending as worthwhile. Another reason is for the purpose of retention and engagement of high performers into the labor-force of the state. This is since the method motivates employees to work harder for their pay. Lastly, the organization was driven by the need to stay ahead of times since most organizations and companies in the present world have already adopted the pay for performance method due to its numerous benefits.
The organization used several steps in its new payment and reward system. For eligibility into the new system, employees must have worked for 12 consecutive months for the state from or prior to 1″ October, 2014. Firstly, the previously paid basic salary is used as a base salary. Then, another portion is added to the salary. This bonus portion is the one directly affected by the new system. The portion is treated as a raise to the base salary and is calculated by reviewing the ratings that an employee gets. If an employee gets a rating of Valued, Advanced or Outstanding, their base salary is to be increased by 3% and their bonus by 0%, 2% and 3% respectively. The bonus is then summed to the base salary. The system was implemented via a phased online installation of the rating site and a direct actualization of the system. This is because from 23 September 2016, the installation of the system began and employees could access their ratings, however, the awarding of the raises was adopted on January 2017. The system has produced effective results. For example, the performance ratings of employees became better after the adoption of the system. The number of ‘Outstanding’ ratings increased from 1.6% to 2.4% while that of ‘Advanced’ increased from 28% to 36%.
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