Manuel Manny Rodriguez, MS, BCBA Executive Director, The OBM Network Pay for Performance

Transcription

1 Manuel Manny Rodriguez, MS, BCBA Executive Director, The OBM Network Pay for Performance

2 Are you here because You want to attract top-tier talent You want to motivate and retain talent You want improved performance You want to learn about Pay for Performance

3 What will we cover today? A QUICK REVIEW OF PFP KEY DECISION POINTS 2 MODELS OF PAY FOR PERFORMANCE SOME LITERATURE Q&A

4 A Quick Review of PFP

5 Structured Encourage Desired Behaviors Achieve performance The Word is Pay An investment Still Need Social Reinforcement Pay For Performance, or Performance Based Pay, or Incentive Pay, or

6 Dr. William B. Abernathy Abernathy (1996). Sin of Wages

7 The Total Performance System Profit-Indexed Pay Positive Leadership Performance Scorecard Abernathy (1996). Sin of Wages.

8 Performance Scorecard Profit-Indexed Pay Key Features of the Performance Scorecard 1. The scorecards are a performance improvement tool 2. The scorecards align employee performance goals 3. The scorecards ensure balanced performance 4. The scorecards facilitate cooperation 5. The scorecards are a management information tool 6. The scorecards are a performance management tool 7. The scorecards foster an entrepreneurial workplace Positive Leadership Performance Scorecard Abernathy (1996). Sin of Wages.

9 Performance Scorecards Cascade Org Scorecard Measures Sales/Revenue Expenses Productivity Customer Satisfaction Goal WGT Score 30% 20% 20% 30% Functional Unit Functional unit Functional unit Measures Goal WGT Score Measures Goal WGT Score Measures Goal WGT Score Measures Goal WGT Score Measures Goal WGT Score Measures Goal WGT Score Measures Goal WGT Score Measures Goal WGT Score Measures Goal WGT Score

10 Positive Leadership Profit-Indexed Pay Performance Analysis Performance Improvement Performance Coaching Leadership Grid Positive Leadership Performance Scorecard Abernathy (1996). Sin of Wages.

11 Leadership Grid Profit-Indexed Pay Unsustainable Results Negative, Focused Leadership Optimal Results Positive, Focused Leadership Positive Leadership Performance Scorecard Poor Results Negative, Unfocused Leadership Unpredictable Results Positive, Unfocused Leadership Abernathy (1996). Sin of Wages.

12 Profit-Indexed Pay Profit-Indexed Pay Abernathy (1996). Sin of Wages. Positive Leadership Performance Scorecard Quarterly Salary or Base Pay Basis % X X Organizational Multiplier X Individual Scorecard Performance = X Incentive Pay Example: $3000 X 10% X 3.0 X 75% X $675

13 Dr. William B. Abernathy William B. Abernathy (2014). Beyond the Skinner Box: The Design and Management of Organization-Wide Performance Systems. Journal of Organizational Behavior Management, 34:4,

14 Abernathy 7 Sales/Revenue Expenses Case Flow Productivity Regulatory Compliance Customer Satisfaction Special Projects

15 It s about balance: An ABA Agency Example Billed Hours, Contract Fulfillment (Revenue) Insurance Payments Received (Cash Flow) Utilization (Productivity) Social Validity (Satisfaction) Treatment Integrity (Compliance) CEUs hours completed (Compliance) Employee Retention (Satisfaction) New Data Software Implementation (Special project)

16 Key Decision Points *McPhie, N.A.G., and Sapin, B.J. (2006). Designing an Effective Pay for Performance Compensation System. U.S., Merit Systems Protection Board.

17 Is the Organization Ready for Pay for Performance? Culture? Management commitment?

18 What are the goals of pay for performance? Improve recruitment and retention? Increase individual/organizational performance? Greater fairness in pay? All of the Above?

19 Who should be paid for performance? All employees? Supervisors/managers? Executives?

20 What should be the timing for implementing pay for performance? Stages? All at once?

21 What should be rewarded? Individual, team, and/or organizational achievements? Short-term and/or long-term goals? Efforts vs. outcomes when external constraints exist?

22 How should employees be rewarded? One-time cash bonus? Increase to base pay? Combination, such as control points? Profit share?

23 How much pay should be contingent upon performance? Less than 5 %? Approximately 30%?

24 How should performancebased pay be funded? Existing funding (e.g., general increases, withingrade increases)? Additional funding? Based on profit or % of profit?

25 How can costs be managed? Forced distribution? Reward only top performers (as a percentage of the workforce)?

26 Who makes pay decisions? Supervisors? Managers? Executives?

27 Who provides input on the performance ratings/scores? Supervisors? Managers? Executives?

28 How can agencies facilitate pay system integrity? Improved performance evaluation process? Supervisor and employee training?

29 2 Models of PFP

30 Model 1: Profit Based Pay Profit-Indexed Pay Positive Leadership Performance Scorecard

31 The Basis % and the Organizational Multiplier Quarterly Salary or Base Pay Basis % X X Organizational Multiplier X Individual Scorecard Performance = X Incentive Pay Example: $3000 X 10% X 3.0 X 75% X $675

32 Organizational Multiplier Org Multiplier Controllable Net Income Average Incentive Amount 0 $ 100, $ $ 106, $ $ 112, $ $ 118, $ $ 125, $ $ 131, $ $ 137, $ $ 143, $ $ 150, $ 1, $ 156, $ 1, $ 162, $ 1, $ 168, $ 1, $ 175, $ 1,500.00

33 The Basis % and the Organizational Multiplier Quarterly Salary or Base Pay Basis % X X Organizational Multiplier X Individual Scorecard Performance X Incentive Pay Example: $3000 X 10% X 3.0 X 75% X= $675

34 Model 2: The Budget Approach Profit-Indexed Pay Budgeted Amount Positive Leadership Performance Scorecard

35 PFP Literature

36

37 Additional Reading For Your Pleasure McPhie, N.A.G., and Sapin, B.J. (2006). Designing an Effective Pay for Performance Compensation System. U.S., Merit Systems Protection Board. Abernathy, W. B. (1996). The sin of wages: Where the conventional pay system has led us and how to find a way out. Memphis, TN: PerfSys Press. Abernathy, W.B. (2000). Managing without supervising: Creating an organization-wide performance system. Memphis, TN: PerfSys Press. Abernathy, W.B. (2011). Pay for Profit: Designing An Organization- Wide Performance-Based Compensation System. Performance Management Publications; 1st edition.

38 Additional Reading For Your Pleasure Arco, L. (2008). A Case for Researching Performance Pay in Human Service Management, Journal of Organizational Behavior Management, 14:1, , DOI: /J075v14n01_05 Bucklin, B.R. and Dickinson, A.M. (2008). Individual Monetary Incentives. Journal of Organizational Behavior Management, 21:3, , DOI: /J075v21n03_03 Huber, V.L. (2014). The Interplay of Goals and Promises of Pay-for-Performance on Individual and Group Performance: An Operant Interpretation. Journal of Organizational Behavior Management, 7:3-4, 45-64, DOI: /J075v07n03_04 Smoot, D.A. and Duncan, P.K. (2008). The Search for the Optimum Individual Monetary Incentive Pay System. Journal of Organizational Behavior Management, 17:2, 5-75, DOI: /J075v17n02_02

39 Q&A

40 Manuel Manny Rodriguez, MS, BCBA Executive Director, The OBM Network Pay for Performance