READER RESPONSE
Want Better Performance? Pay For It.
The notion that government employees don't respond to financial incentives doesn't match reality.
[Editor's note: This is a response to Ken Miller's February column, Profit Sharing in Government. Following this response is a reply from Ken Miller.]
When I started reading Ken Miller's column, I initially agreed with his argument that the "gift" of job satisfaction, to use his words, contributes to employee performance. But by the time I reached the end, and Miller was "begging [agencies] to put away your pay-for-performance plan and 'dollars for ideas' incentive," I knew I had to respond.
We have all interacted with people who demonstrate work-related excitement and satisfaction, and we all understand that it can provide a high level of motivation. It would be wonderful if that level of commitment could be cloned. It can be a far more powerful source of motivation than money. However, Miller would have us believe that a sense of satisfaction is pervasive in public agencies and can be a consistent incentive.
In my years as a consultant, I've visited thousands of work sites, in both the public and private sectors. In some, there is a palpable sense of commitment to success. But there are plenty of others where the workforce is sluggish and uninterested. My brother talked openly about looking forward to early retirement from his government agency — and he first said that to me at a family picnic when he was age 38! Everybody knows people who feel the same.
Miller would have us believe that job satisfaction — his "profit sharing" — can be a shared source of motivation across an organization. He hasn't talked to my brother. To be sure, there are jobs where Miller's argument is valid. But my experience tells me it does not extend to workers at all levels and functions.
Miller also makes the comment that people "don't work in government to get rich." Actually, that's true for most employees in other sectors as well. But over time the pressures of maintaining a lifestyle, buying a home and sending a child to college make pay more important to virtually everyone. Pay may not have been a priority in career choice for public employees, but I am not convinced it is unimportant.
Employees actually have two separate reactions to pay. The first and most obvious reaction is to the level of pay. That was the focus of the Herzberg research that Miller mentioned in his column. The research point was no doubt valid — we are satisfied or dissatisfied with our pay level. That's no different than our reaction to a purchase like a new car or the service at a restaurant. However, that's not the same as the satisfaction we get from accomplishments. So Miller is right on that point. It may sound like semantics, but the level of pay is not an effective incentive for performance.
However, we also react to the pay increase each year. And the rationale for that increase sends a message. If it's an automatic step increase, it reinforces the notion that performance doesn't matter. That clearly is not good. Obviously, a pay-for-performance policy is intended to send a different message.
Pay-for-performance is by no means a panacea. But it is important to make the point that such a system does, in fact, contribute to better performance. The goal is really not to have employees work harder, although there will be some of that. A well planned pay-for-performance policy should focus on desired results or on behaviors that contribute to results. Then, the policy encourages employees to "work smarter."
Ken Miller and I agree, I think, that most employees want to do a good job. They want to feel they are contributing to their employer's success, and they want to have their value recognized. They will readily accept feedback if it's constructive, ongoing and job-specific. They need the feedback to improve. That's performance management, and unfortunately too many managers and supervisors are not good in that role.
My usual recommendation is that pay-for-performance should be introduced first for managers, and one of the criteria that drives their salary increase is their mastery of the skills needed to manage employee performance.
Even with close attention to the theories and the proven practices, the transition to pay-for-performance is not going to be without problems. No organizational change ever is. But there is a reason why the practice is deeply entrenched in the private sector: It pays off in better results. There are many public jurisdictions where the practice was introduced some time ago and is now accepted in the same way it is in the private sector. Charlotte, North Carolina, has been recognized for years as a well managed city, and the pay-for-performance policy there dates back more than a decade.
Generally, Ken Miller and I are on the same page. But not on this issue.
Howard Risher is a consultant, author and speaker on salary management and performance management, with a focus on nonprofits, higher education, health care, and government. He is the author of the International City/County Management Association report Pay for Performance: The Road to Success, as well as a report published by the IBM Center for the Business of Government, Pay for Performance: A Guide for Federal Managers.
A Reply from Ken Miller
I greatly appreciate Howard's response and his body of work on compensation in government. My column last month on "profit sharing in government" was not intended to disregard compensation as important. As a father of two kids, one with a Hannah Montana obsession, I am well aware that money can matter. The focus of my column was that money is not enough — that routinely, when you ask people what really fires them up about coming to work, it comes to down to a common factor: feeling like they make a difference. For so many of us, that is why we work in government. And for so many of us, we need to spend more time feeling the difference we are making — sharing in the profit.