Pay for Performance Evaluating Performance Appraisal and Merit Pay (1991) / Chapter Skim
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3 The Nature of the Evidence
3 The Nature of the Evidence
Pages 34-44
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From page 34... ...
Rather, it briefly reviews some of the evidentiary issues that arose in pursuing the committee's charge and summarizes the different kinds of research methods and data that have been brought to bear on performance appraisal and pay-for-performance plans. The diverse and fragmentary nature of the research evidence available to us turned out to have important implications for how we carried out the study and formulated our conclusions.
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From page 35... ...
. Accordingly, the kinds of research relevant to our charge also run the gamut: research on the nature of jobs and job performance; investigations into the accuracy and context of human judgment; analyses of the impact of pay on motivation and behaviors; research on how organizational structure and environment influence personnel practices; studies of the effects of performance appraisal and pay systems on organizational functioning; proprietary surveys on attitude and climate undertaken by specific companies; and everything in between.
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From page 36... ...
Criteria for Gauging the Effectiveness of Personnel Practices The Office of Personnel Management wishes to identify performance appraisal and pay systems that "work." However, there are so many conceivable definitions of what works—so many different ways of conceptualizing, measuring, and judging the effectiveness of a given performance appraisal and pay system that it is difficult to render scientific assessments in this domain with confidence. In the course of the committee's review of the evidence, it became clear that there are at least four types of benefits that the theoretical and empirical literatures have posited in discussing performance-based pay systems: (1)
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From page 37... ...
beyond the reach of social science analysis at present. Psychologists do not yet know much about the links between individual performance and group performance; neither psychology nor economics offers much empirical evidence of the effects of improved performance on productivity, although both disciplines have produced some interesting theory (see Hartigan and Wigdor, 19891.
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From page 38... ...
Laboratory experiments looking at performance appraisals or the impact of contingent rewards on behavior are often able to control for confounding factors and measure the relevant variables much more reliably than can be accomplished in field studies of real organizational settings. For example, participants in lab studies exposed to identical stimuli, such as film clips of a person performing a task adroitly and then inadequately, provide highly consistent evaluations of the good and poor behaviors.
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From page 39... ...
Consequently, a considerable amount of information regarding prevailing practices in the performance appraisal and pay-for-performance area derives from three sources: surveys conducted by business associations, consulting organizations, and the like (e.g., the Wyatt Company and HayGroup surveys discussed extensively in Chapter 61; case studies of individual companies by researchers; and knowledge obtained by organizational consultants. This state of affairs raises several possible problems in interpreting the available evidence.
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From page 40... ...
Furthermore, relying on the "excellent company" method to make inferences about the effectiveness of organizational practices is perilous. The mere observation that many organizations with a reputation for success appraise performance or allocate pay in a particular way does not constitute scientific evidence or a basis for prescription- any more than would the fact that most successful companies have male chief executive officers justify the recommendation that women should not be promoted at the top.
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From page 41... ...
Yet one cannot infer from such evidence alone that, say, a given compensation plan is appropriate for other organizations of that size, technology, or industry, unless one is prepared to assume that "what is should be," and that the prevalence of a particular practice among organizations of a given type suggests some adaptive value of that practice. A considerable body of recent research suggests that inertia is a powerful force in organizations; many contemporary structures and practices appear to be residues or carryovers from the circumstances that prevailed when a particular organization was founded, rather than arrangements well suited to its contemporary environment (see Hannan and Freeman, 1984~.
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From page 42... ...
The literature on procedural justice, for instance, indicates that procedures for allocating rewards matter a great deal, quite apart from the actual magnitude of rewards allocated. Similarly, surveys of worker satisfaction and commitment, as well as field research on gain-sharing, employee stock ownership plans, and the like routinely report that such factors as the extent of communication, participation, openness, flexibility, and "humaneness" surrounding employment and reward systems make a strong independent contribution to workers' subjective well-being, attachment, and (in some cases)
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From page 43... ...
in drawing policy inferences from the scientific evidence and prevailing practice and to explain the general approach we take throughout this report in weighing the evidence and drawing conclusions from it. In carrying out the study we built upon our own diversity, which went well beyond simple differences in disciplinary training or occupation, to encompass fundamental differences in approach to issues in human motivation and behavior, the nature of organizations, and the relevant questions to be asked about performance appraisal and pay for performance.
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From page 44... ...
We also recognize that the legitimation aspects of performance appraisal and pay for performance may to some extent work at cross-purposes with other functions of those practices for instance, practices that adhere to some idealized business model might provide the greatest legitimacy to a given agency but not necessarily do the best job of communicating its organizational goals or motivating its employees. The fact that personnel systems have important symbolic purposes, which may in some cases be in conflict with other important objectives, prompts us to be cautious about making suggestions for radical changes in prevailing practice within the federal civil service.
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