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Performance Based Compensation Study Performance Based Compensation Study

Performance Based Compensation Study - PowerPoint Presentation

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Performance Based Compensation Study - PPT Presentation

p resented by Santa Clara County Leadership Academy 2013 Mainini Cabuto Frank Comin Katie DuPraw Michael Jurich Marie Notari Maria Oberg Team Project Sponsored by Ed Shikada San Jose Assistant City Manager ID: 532352

based performance pay compensation performance based compensation pay literature agencies review city merit local performers increases project opportunities managers public san program

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Slide1

Performance Based Compensation Study

p

resented by

Santa Clara County Leadership Academy 2013

Mainini Cabuto

Frank Comin

Katie DuPraw

Michael Jurich

Marie Notari

Maria ObergSlide2

Team Project Sponsored by:

Ed Shikada, San Jose Assistant City Manager

Beau Goldie, SCVWD Chief Executive Officer Project Description:Evaluate opportunities for performance-based compensation programs among public agencies in Santa Clara County. Begin with an assessment of current practices within the County and beyond and evaluate notable program elements and opportunities for sharing among agencies.

Performance Based Compensation – Project BackgroundSlide3

Pay-for-performance:

emphasize performance as the deciding factor in defining pay increases

no guarantee that employees will receive a pay raisepermit companies to compensate top performers well above average and to provide cost-of-living adjustments or no increase at all for below average performers.Performance Based CompensationSlide4

Literature Review

Pros

Statistically - most effective method for motivationPromotes healthy competitionCompensates high achievers and aides in retention ConsMay cause conflict among employeesMay lead to team disintegrationMay be challenging to adequately distribute merit pools

Performance Based Compensation – MethodologiesSlide5

Elements of Success

Culture

Rigorous evaluation systemEffective and fair supervisorsTrainingFundingSystem of checks and balancesOngoing system evaluation

Performance Based Compensation – Literature ReviewSlide6

PayScale 2013 Compensation Best Practices Survey

Performance was the #1 reason for pay increases

56% of respondents reported performance based pay increases as the sole reason for pay increase60% said employee retention was a top concern

Performance Based Compensation – Literature ReviewSlide7

Kelly Global Workforce Index

51% of respondents say that performance based pay would motivate them

Largest concentration of workers receiving performance based payNorthern New Jersey and Memphis, TN – 33%Portland, OR – 32%Tampa, New York City, and Raleigh Durham NC – 31%Industries with highest rate of performance based payFinancial servicesTravel and leisure

Retail

Business services

Performance Compensation – Literature ReviewSlide8

Survey

17 local public agencies.

4 private local companies. Received a total of 13 surveys, 12 of which were from public agencies. The survey from the private firm was incomplete.Performance Compensation – Literature ReviewSlide9
Slide10

San Jose

Performance based pay is currently utilized with the City of San Jose’s Management Performance Program staff. Involving line staff has not gained any traction but the City is continuing to explore the opportunities.

SunnyvaleLimited to merit raises based on scheduled performance reviews and raises only provided to employees who have yet to reach their highest salary allowed for their position. Merit raises cease once the highest salary is reached.

Once had a robust "pay for performance" plan that applied to managers only, allowing exemplary performers to earn up to 20% over their "control point". The Program was eliminated for many reasons, including disenchantment on the part of managers.

Local PerspectivesSlide11

Jeffrey Pfeffer

“If the senior managers at a company really want to improve performance, tinkering with the pay system isn’t the way to go about it… Addressing the underlying culture and quality of management is

.”Daniel Pink“It’s not all about the money. Scientific research shows that people are motivated by autonomy, mastery and purpose.”Tom McMullen

“When an employee’s extra efforts are not reflected in rewards and recognition, it erodes performance and commitment to the organization.”

Expert perspectivesSlide12

Survey indicates that very few local agencies currently use performance-based compensation.

Literature review suggests that, to be successful, performance-based compensation requires

Clearly defined and job-specific appraisal measuresWell-conducted performance appraisal interview processEquitable decisions regarding merit increases for different levels of performance Each organization must determine for itself, given its unique circumstances, whether performance based-compensation is appropriate.

ConclusionsSlide13

Questions?