01-08-1990 Council Packet - Laserfiche WebLink

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MANAGEiMENT The American Federation of State. County and Munici pal Employees opposes pay for performance as costly and destructive of the teamwork necessary for effective govern ment. AFSCME contends that it fosters individual achieve ment at the expense of cooperative effort. Fred Timmerman, putting the Denver system into place, chooses to meet that argument head on. "There’s nothing wrong," he says, "with a little competition.” But others prefer to look for ways in which pay for performance can be made to foster teamwork as well as individual achievement. One method is gain-sharing: setting a target for an agency or department, such as saving a certain amount of money out of a year’s budget, and then dwiding the savings among the department employees if the gain is made. In many areas of * jvemment. team and individual performance are often close to inseparable, says Scottsdale s Bowers. "There’s no w ly an individual on a three-man pothole patch crew ca. excel in laying down tons of asphalt unless the guys d *ving the truck and running the roller are going to coopera‘e with him. It’s clearly a team effort, yet it’s often equally cit.->r who’s leading the team. ” ay for performance may be a b«- tter way to run a I government, but it is « « » JL not cheaper. I M V S "If you try to promote pay for performance on the basis that you’re going to spend less money on your people, you are bound to fail,” says Roy Pederson, who was city manager in Scottsdale when its pay-for- performance program was instituted. "What you are doing is spending roughly the same amount smarter than under the old civil service system of across-the- board increases.” Rewards, in whatever form they come, are useless unless they are relatively large. Managers who have been offering them under pay-for-performance sys tems generally feel bonuses need to be no smaller than $500 and preferably $1,000 to $5,000. Pay increases have to be at least twice the average percentage increase. Bonuses are reusable dol- lan: They don't increase the employee’s base pay and can be av.'arded to different employees yeai to year. Dou ble-size raises are something else agaia Their impact on m Aurora, Colorado, ia tiving pay for performance another try. ‘It’s not a panacea.' caution* City Manager Jim Grieaemer. a state or local budget varies, depending on how many employees get them and how many employees are denied any raise at all that year. But once given, even a limited number of jumbo raises inevitably bwsts salary costs on a permanent basis. In Biloxi, pay for performance produces a curve. During an average year there. 10 to 15 percent of the city’s 365 employees are rated outstanding enough to get a 5 percent increase. That is offset by the fact that the same percentage of employees gets no increase, a result of unsatisfactory ratings. In the end. costs are no higher than they would have been under a regular step-increase plan. But most systems prefer to leave some sort of cost-of- living adjustmc’it in place for the ordinary employee, thereby making the lev*.'-budget argument impossible to sustain. "You can’t let pay-for-performance dollars substi tute for cost-of-living increases.” says Mary Cronin in Massachusetts. “If your overall system isn’t in good shape, you can’t stick pay for performance on top of it.” Others resist the idea of an imposed curve. "Having to go around to find victims to have a cost-neutral system isn’t a real recipe for success,” says one pay-for-performance manager. The payoff, if and when it comes, does not show up as cash savings. It comes in productivity. Pay for perfor mance is a long-term invest ment. “We’re not like corporate America.” says Cronin. "O enues do not grow e 'ear. and any increases . immedi ately swallowed by the absolute necessities that citi zens have to have----As we have shrinking resources, our ability to manage smartly and correctly and well and with compassion is twice as important as it used to be.” In Aurora. Colorado. Jim Griesemer, whose city has been through the unpleasant experience of launching pay for performance, watching it fail and then trying it again, remains convinced t^t it is worth all the trouble. "Pay for perform ance is a lot harder to im plement than it sounds like,” he says. "It has to be done carefully because you’re changing an e.xisting set of values. It’s not a panacea. But it does indeed have the important advantage of rec ognizing excellence among employees. That’s a value local government can’t ig nore any longer." □ imm 1 >/A £nw pin GOVERNING December 19N9