Improving performance: what does “Pay for Performance” have to do with it? FICSA Council Turin 2008

What are they talking about? PAY FOR PERFOMANCE performance appraisal Performance management!

Performance Management The process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined. It ends when the employee leaves the organization.

Performance appraisal Employee assessment: 1) The assessment of an employee’s effectiveness, usually as undertaken at regular intervals 2) A face-to-face discussion in which one employee is discussed, reviewed and appraised by another, using an agreed and understood framework.

Performance Management- what determines performance? Organization Work Unit Individual

Links between individual and organizational performance To what extent is the performance of an organization the result of the performance of the staff? To what extent is the performance of a unit the result of the performance of an individual? Can we fairly measure the impact of an individual?

Performance of individuals  Clear terms of reference, work plan, guidance  Level of responsibility corresponds with skill/experience/authority  Tools, time and budget to carry out work  Environment of the staff member Appropriate supervision and relations with colleagues Morale, motivation, ambition Personal factors (health, family, etc.)

Staff ideas about motivating factors Interest and enjoyment of job itself Belief in the purpose of their organization Environment of their workplace Respect/recognition for their work Salary and benefits

Staff ideas about demotivating factors Lack of respect and recognition Lack of fairness and integrity within organization Low image of the organization Boredom – unchallenging work Stress – too much work Pay and benefits insufficient

Performance appraisal ICSC,HR and staff reps believe performance appraisal crucial to improving performance Managers, supervisors, staff avoid performance appraisal Current performance appraisal systems have little credibility

UN trends in performance appraisals Appraisal of managers by staff and clients Grading on the curve – ratings of staff must fit a preconceived pattern Strict enforcement of link between step increase and appraisal  Poor appraisal leads to denial of step  Strong appraisal leads to accelerated step or bonus

Pay for performance focuses on one factor: Motivation Assumes that high performers will be motivated by more money (but they may be performing at their maximum capacity already) Assumes that poor performers will be motivated to change if they are punished (but they may be demoralized by the appraisal, leading to a downward spiral)

Rewards: who, what and how? Who decides who gets award: supervisors or peers? How do they decide? What is appropriate: exceptional performance (one time) and consistently high performance (permanent)

Rewarding high performers Who gets the credit for good performance – teams or individuals? Does this foster cooperation or competition?

What are the rewards? Visible non-monetary (e.g. certificates, awards, ceremonies) Invisible non-monetary (e.g. trips, training) Monetary (e.g. bonuses - one time, non- pensionable) and step increases or promotions (permanent and pensionable)

Hurting or helping poor performers? What happens when a person has a low appraisal? Rebuttal system for disputed appraisal? How does HR know if the supervisor’ s appraisal is fair? If fair, is staff member helped to improve performance?

Pay for performance – should the UN do it? Is this the right strategy to improve performance of UN organizations? Is this the right strategy to improve the performance of UN staff? Can this work in a non-profit, multi-cultural organization?

Zero sum game when budgets constrained Assumes that the number of rewards is fixed Assumes that rewarding some means taking away from others Zero sum game will demotivate staff and undermine teamwork Pay for performance could have the opposite effect that it is intended to have

Conclusions based on UN experiences Question: What does pay for performance have to do with improving performance? Answer: The positive effect, if any, will be very minor considering all the other factors that affect performance. There is a risk of a negative effect. Many supervisors believe that the benefits of pay for performance are not worth the risks.

FICSA: What now? 1. Staff representatives should support improvements in management of performance 2. Staff representatives cannot avoid performance appraisal and should fight for fairness 3. Staff representatives should oppose pay for performance – it is not the solution.