Performance based pay

[dimpy.handa]

This issue relates to all professions where people work largely individually, such as teaching and medicine, so that individual ability and effort can make a large difference to outcomes. Typically such professionals are employed by the state and paid according to their experience and seniority, rather than by results, and higher rewards are gained through taking on more management responsibilities rather than through improved performance in the same job.

 

[swatiraohnlu]

A fundamental criticism of performance-related pay is that the performance of a complex job as a whole is reduced to a simple, often single measure of performance. For instance a telephone callcentre helpline may judge the quality of an employee based upon the average length of a call with a customer. As a simple measure, this gives no regard to the quality of help given, for instance whether the issue was resolved, or whether the customer emerged satisfied. Performance related pay may also cause a hostile work attitude as in times of low custom, multiple employees may compete for the attentions of a single customer. Where a customer has been helped by more than one employee, further resentment may be caused if the commission is taken by whoever happens to make the final sale. Macroscopic factors such as an economic downturn may also make employees appear to be performing to a lower standard independent of actual performance.

 

[dimpy.handa]

he subjective system empowers an individual or committee to evaluate partner performance and perceived value, and to determine the partner's compensation. In a variation on this, the partner group engages in a mutual rating, or peer-evaluation system.
This system works well for some firms, but is not without its limitations. Perhaps most notably, its subjective nature tends to cloud the correlation between the partner's success (or failure) in furthering firm interests and financial reward.
Seniority has long been a popular method of determining partner compensation. Certain firms will fare well with this method, but again, the system lacks accountability; it does not provide rewards for partners working hard to accomplish firm goals.