Performance Based Wages – Reinforced work ethics

November 27, 2008

Employees Paid Based on Productivity
~James Dunn

One of the basic problems with businesses, is that a good employee is paid the same amount as a lazy employee; this generates hateful relationships in the office workplace. This often leads to good workers becoming complacent and the entire workplace suffers.

The problem is that employees are paid a fixed hourly wage, with little motivation to excel. Employers should cut employee wages to 75% of normal wages. And then pay 50% of their wages as an adjustable bonus (paid monthly).

So for existing employees their wage would be

(Normal Wages x 0.75) + (Productivity x (0.50 x Normal Wages))

Each employee would be interviewed once every 2 weeks to get feedback as to their performance, their present performance factor, and how they can improve their performance factor.

So with an average productivity for an employee, that’s a 0.50 factor. So the employee makes what they made before the system is put into practice. The employee works hard, their productivity rate goes up; they take home more. The employee caught sleeping on the job doesn’t get a bonus for that month, the employee developing a new product gets his full bonus, and others are paid everything between.

How many businesses do you know of that some employees sit around much more often than other employees. Doesn’t that send the wrong message to the good employees? How much better would our hospitals be if neglectful nurses could be reprimanded by more than a stern talking to, that goes in one ear and out the other? You can’t expect a person to remain productive, if they have little motivation to do so.

This system is strongly related to how physicians are paid. Physicians produce to a baseline in billing collectables and then they share in everything they produce above the baseline.

If you are talking about an engineer. Engineers commonly work between 50 and 80 hours a week for negotiated wages. The same holds true for most salaried employees. But from personal experience, the environment is stressful, based upon producing more than the next guy, or the you will be let go the during the next scheduled layoffs. Yes, scheduled layoffs. Some engineers near retirement will lose their job, because they did not accomplish as much new material as a young engineer, or they simply burned out.

However, hourly laborers have a high occurrence of people that just don’t want to be there. They have no direction nor drive. I personally know of nurses, back office assistants, radiology techs, billing clerks, and especially office managers, that no matter how much you pay them, they have no interest in producing more than they can get away with. Which means you constantly find them on personal phone calls, playing games, on the internet, email, magazines, anything but work. How often do you see one person working and others standing around kibitzing. If you fire them, you get more of the same.

There is some inate psychological condition that exists for certain peoples. Others like physicians and engineers are in-general highly motivated and find something “productive” to do even when they are waiting for the next patient or phase of their project to begin. Laborers commonly want the most money for the least work; there are of course exceptions. But I can speak first hand to the poor productivity in the medical professions.

Regarding the Pay by Performance scenario cited above. If an employee maintains a significant below average Performance Factor, would you want to keep them? If they leave, you don’t have to pay unemployment. If they stay, it’s because they can’t find anything better elsewhere. Maybe they have risen to their highest level of competence.

Not all people are created with equal abilities to perform within specific environments. But employers should not be penalized for an employees inate incompetence.

I suspect there are many jobs out there that an untrained or insufficiently educated person holds where they are barely holding on to their position. An employer might choose to fire them and hire someone more competent. Or the same employer might be comfortable with dealing with there present employee and paying them less; which may be entirely acceptable to the employee rather than going back to work at Wal-Mart.

The bonus would be paid once each month with an interview with the employee every two weeks. This allows for on-going constructive critique of employee performance and the employee doesn’t have to wait too long before they get guideance.

Due to the computer that resides within cell phones, there are a large number of mechanisms that can be incorporated to provide performance metrics entered by the user. I can see where an employer would willingly and beneficially provide each employee with a cell phone, which would automatically track when they arrived and left from work, when they left their work area on breaks, manual entry of task accomplishments, tasks being generated by the boss on their computer and text messaged to the employee, …


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