U.S., Canadian executives share concerns about performance pay
"It is critical to gain insight into how executives with two similar but different systems, in two different countries, could share the same experiences, and what that means for the future of such performance management systems," said Carol Bonosaro, president of the U.S. Senior Executives Association.
Both SEA and its Canadian counterpart, the Association of Professional Executives of the Public Service of Canada, surveyed executives last year to gather their views on performance-based personnel systems.
Executives in both countries expressed support for the principles underlying the systems, but signaled concern about the lack of transparency and effective communication in implementing them. Both groups also voiced some dissatisfaction with pay components of the systems, and signaled that pay-for-performance has little effect on the quality of their work or innovation.
Eighty-six percent of respondents to the U.S. survey said performance-based systems and higher pay had no effect on their job performance, or that of their peers. In Canada, 74 percent of executives said performance management programs have made no difference in the quality of their work.
Fifty-six percent of SEA respondents said their level of motivation had not changed due to the implementation of a performance-based personnel system. In the Canadian survey, 61 percent of respondents said personal values and job satisfaction provided stronger incentives for quality work than pay-for-performance programs.
The United States launched a new personnel system for Senior Executive Service members in January 2004. The overhaul entailed more meticulous ratings of job performance and moved executives to broad pay bands, providing added flexibility to reward high-achieving executives. It also provided a higher overall pay cap.
The Bush administration instituted the system with the idea that it would serve as a basis for further legislation to extend pay-for-performance to rank-and-file federal employees.
Bonosaro said her organization supported the system at first, but "the survey results demonstrate that something has been lost in translation as [it] has been implemented."