As Kent County Council steps up its commitment to performance-related pay (PRP), I have to say such schemes are a brilliant idea. The problem is, the practice is often severely lacking. So what are the issues?

Managers’ reticence

Managers dislike having to differentiate between staff. And they positively loathe doing so among what they regard as the swathe of merely good – or even average – employees that keep the business ticking over.

Of course, it would be great to have all top performers in a business. But, life isn’t like that. And even if it were, these brilliant people would soon be chafing at the bit ready to move up, or, more to the point, on. At least they would in the boom years. In these more chastened times, your best bods will get frustrated and bored – possibly causing any range of unanticipated problems for the business.

So the reality is, in many businesses, a good proportion of the work is done by good people. And, yes, some even just average. And when it comes to assessing their contribution, the responsibility rests with line managers. And that asks a lot of the quality of their judgements.

So how long will it be before the question of favouritism and the blue-eyed boy or girl syndrome raises its head again? Not long if experience is anything to go by – because favouritism doesn’t need to be real to cause a problem, just perceived.

Setting the right goals

For PRP to work, the goals have to be long-term and strategic. The problem is, of course, it takes time to deliver on such goals and it can be hard for individuals to see how their inputs are measured. And when grey areas arise, individual payments above and beyond the norm for the group can be irrevocably damaging to morale, co-operation and team work.

Maintaining motivation

When things are going well, high performing employees can get used to their PRP until it becomes routine. So the time it does not come in can be a huge demotivating factor. Similarly, employers need to be sure they can afford to set PRP at a level that does in fact motivate staff.

Budgeting

This works both ways – it’s got to be high enough to mean something, but not so much it blows the bank. For example, the NHS drastically under estimated how many GPs would achieve performance targets and ended up blowing the budget as a result. Its estimate that three-quarters of practices might reach targets, turned out to be 90-plus per cent.

Attractor Consulting (Pay and Motivation at Kent County Council) highlights the problem of organisations tampering with managers’ performance assessments and applying forced distributions and other moderation to make pay results affordable. Such a move can undermine the value of performance appraisal and demotivate both managers and staff.

So can Kent County Council navigate these perils?

Good performance is better driven by mentoring, training and development opportunities than short-term financially rewarded targets. Second generation PRP schemes do seek to link performance appraisal with proper performance management to handle under performers while allowing the stars to shine through. And that is to be applauded. So we can have some hope that KCC will look and learn and benefit from the experience of others. But, without sounding too churlish, the record of local authorities in this respect is not good.

Tags: performance management
Posted by Elspeth Watt
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