FREE ESSAY ON THE COMPETITIVE EDGE OF NEW PAY SYSTEMS

THE COMPETITIVE EDGE OF NEW PAY SYSTEMS

The competitive edge of new pay systems
The United States has been in an economic boom for the last eight years. One of the
results of this economic expansion is the low unemployment rate. The unemployment rate is
below five percent, and in some regional labor markets even lower than that! This figure
holds steady across all labor markets (with the exception of the high technology sector,
which has so few available workers, it has been lobbying congress to raise the limits on
non-U.S. citizens working in the United States). A Company can no longer offer mediocre
benefits and sub-par working conditions while expecting to retain top quality employees.
For Human Resource professionals, this challenge is worthy of study. 
The general trends in pay are to provide not only a fair salary, but also providing added
benefits like flextime and strong medical benefits. Incentive pay and pay-for-performance
is on the rise. The more important emerging question is how does the HR professional
implement compensation plan that rewards the employee who is going above and beyond,
while at the same time improving the performance of an employee not doing as well?
Performance appraisal is a topic that has been around for quite some time; however,
employees are not too happy with the current state of affairs when it comes to
appraisals. (Davis and Landa, 1999 p 18) The old way of appraising employees with a paper
intensive and top down orientation in communication are falling by the wayside.
Appraisals that allow customers, employees and managers to rate each other are becoming
more and more popular. Companies like Disney and Honda are installing appraisal systems
that do just that. 
Human resource professionals are learning how to leverage technology to assist their
organizations in being able to appraise performance in just such a way. Otis Elevator
Corporation was able to do just that by leveraging its existing investment in technology
(specifically the internet and its own intranet) and using a third party to bring a sense
of trustworthiness to the process. For Otis elevator " using a contractor also meant that
performance evaluation would be administered by an objective third-party…Managers
only trust it if they are confident of its objectivity and confidentiality. A third-party
system has obvious advantages in these respects." (Huet Cox et al. May 1999 p. 94) The
level of consensus at Otis is very high that it is a program that works. It actually can
help shape behavior in a positive way. 
There are a host of companies introducing off the shelf software products to help a
company install and maintain an appraisal process that can be trusted by all the
participants as well as improving behavior through the appraisal system. If an employee
knows that she or he is going to be rated not only by their manager, but also their peers
and customers, they may begin to see areas in their own behavior they can improve upon. 
Using an intranet and the Internet is defiantly the state of at in this area. This is
partly due to the fact that most companies did not have connection to the Internet, as
well as a sophisticated enough intranet system to help with the appraisal process. As
more and more companies are investing in these technologies, more and more of them will
see the benefit in using the intranet as a communication tool. 
My organization does not do these things particularly well. However, all the pieces are
in place for some type of similar appraisal process to be implemented. We regularly
survey our customers (the students) and we have an intranet already set up. Currently,
their manager gives the employees of the University of Phoenix an appraisal twice a year,
although it is no longer tied to pay. If we could combine the information we already have
at hand, and use it to get more accurate appraisals and a better understanding of where
to improve our behavior, I think we all would be more satisfied. 
Bibliography
References
Crofts, Pualine (1998, January 8). Focus on pay trends. People Management v4 i1 p51
Davis, Tom and Landa Michael (1999, Sept/Oct). A contrary look at employee performance
appraisal. Canadian Manager v24 i3 p 18-21
Huet-Cox, G. Douglas and Neilson, Tjai and Sundstrum, Eric (1999, May) Get the most form
360-degree feedback: put it on the Internet. HR Magazine v44 i5 p 92-99
Emmerling, John (1999, March 1) Incentive compensation: a trend or a tsunami? Advertising
Age v70 i9 p26