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A Cool Tool For This HR Fool
By Ron | November 3, 2008
Last time I told you that I would provide a simple tool which helps getting closer to Paying for Performance. Note, this tool is just part of a Performance Management System. It is so basic and so obvious, you may be wondering why I am even bringing it up. Well, Tom Peters said one time, we tend to overlook the obvious, so here goes…
When I devised this simple process (I’m sure I plagiarized it from somewhere!), I selected my best manager, Al, (who also happened to be a good friend of mine) and tried it out with him.
Let’s say that Al had 4 employees in a particular job category of “Production Operator.” The job category spanned 3 job classifications (Associate Operator, Intermediate Operator and Senior Operator) which had 3 salary ranges. The beginning of the first salary range is $10.00 an hour and the top of the 3rd salary range is $50.00 an hour. I asked Al to chart his employees on a basic line graph with the title on the vertical axis = “Dollars/EE Level” with the values ranging from 0-60. The title on the horizontal axis was “Employee.” I told Al to rank his employees 1 through 4. He did so and placed his lowest ranked employee as Employee A on the chart, as shown below, by salary rate (first red dot), the next highest as Employee B and so on. Al had his four employees on the chart shown on the red line. We created the yellow line on the chart as a salary comparison point of reference. The yellow line was a guide as to what the employees should be paid as compared to each other’s performance within the job category.
Al then had a Salary Administration Plan, or, better said, a “Pay for Performance Plan.” Over time, he slowed down on granting Employee A salary increases and accelerated Employee D’s salary so that eventually, his four employees came closer to the yellow line.
As you know, the reason individual salaries tend to deviate from the yellow line is because of miscalculated new hire rates (we really don’t know how our new employees are going to perform) and/or poor salary administration by prior managers.
Again, this tool could be just one part of your Pay for Performance process. The managers I have worked with generally liked it because it made sense and it was easy to keep up.
Topics: HR |