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Executive Summary
Pages 1-6

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From page 1...
... Specifically, the Committee on Performance Appraisal for Merit Pay was asked by the Office of Personnel Management to review current research on performance appraisal and merit pay and to supplement the research findings with an examination of the practices of private-sector employers. Our investigation expanded beyond a restricted examination of merit pay plans to include pay-for-performance plans more generally, as well as the organizational and institutional conditions under which such plans are believed to operate best.
From page 2...
... Performance appraisals were viewed in much the same way as tests: they were evaluated against criteria for validity and reliability and freedom from bias; a primary goal of the research was to reduce rating errors. On the basis of evidence in the measurement tradition, the committee presents five major findings: · Organizations cannot use job analysis and the specification of performance standards to replace managerial judgment; at best such procedures can inform managers and help focus the appraisal process.
From page 3...
... Conclusions The search for a high degree of precision in measurement does not appear to be economically viable in most applied settings; many believe that there is little to be gained from such a level of precision. · The committee concludes that federal policy makers would not be well served by a commitment of vast human and financial resources to job analyses and the development of performance appraisal instruments and systems that can meet the strictest challenges of measurement science.
From page 4...
... The evidence on the effects of pay for performance, pieced together from research, theory, clinical studies, and surveys of practice, suggests that, in certain circumstances, variable pay plans produce positive effects on individual job performance. The evidence is insufficient, however, to determine conclusively whether merit pay can enhance individual performance or to allow us to make comparative statements about merit and variable pay plans.
From page 5...
... Although we cannot generalize about which pay-for-performance plans work best especially for the federal government, with its considerable organizational and work force diversity we do suggest that federal policy makers consider decentralizing the design and implementation of many personnel programs, including appraisal and merit pay programs, and supporting careful, controlled pilot studies of a variety of pay-for-performance systems in a variety ~ . 01 agencies.
From page 6...
... The final chapter of the report summarizes in greater detail the committee's findings and conclusions.


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