Re: MBO, Perf Reviews, Incent Pay in a L-O -Reply

Fri, 16 Dec 1994 09:22:41 -0500

Great subject for this crowd Richard. I've been especially
challenged in the last year in this regard. I often wonder if I'm
becoming more difficult due to the new thought patterns LO and
TQM have introduced or if the World is just progressing and what
used to be generally acceptable is no longer. But that's a different

At my company we've traditionally had a bi-annual Evaluation, then
a banding of everyone by position group to determine raises and
promotions and then an individual annual review to work out what
goals to set for the next year, especially if you didn't feel satisfied
with your reward and recognition over the past year.

I'm now pushing a change toward what I think of as a capitalistic
system with synergistic feedback. Basically each is rewarded
based on how well their group does and the group provides
feedback to the individual on how they could better support the
group in acheiving greater returns. To be more specific;

I think that groups should all share in monetary success
equally of an
absolute amount rather than as % of current pay.

In addition there should be 360 degree feedback on a very
dynamic basis
rather than scheduled. The feedback could be structured like
suggestion program.

A common question is What's the group? I think it's whatever
group of individuals has to naturally work tightly and well together
to acheive something that can be the basis for a monetary amount.
For the group I'm in this is probably 200 people.

I'm kind of modeling this after the Entreprenuer model where
you're rewarded commensurate with your success not
managements opinion of you.

Jamey McCabe
Oak Park, Illinois

I'm replying to Jamey McCabe's post in which he discussed
performance evaluations including use of 360 degree surveys and
group reward systems.

First a short intro. I'm a manager at a field office of the Dept of
Energy, planning and overseeing R&D to improve efficiency and
environmental performance of energy systems. I've been involved
in total quality management for several years and have been
involved in "experiments" in process improvement,
"measurements", and performance management. Some of you may
recognize that conducting experiments in a government
organization can be more difficult than in small entrepreneurial
private organizations, although the government reinvention effort
is beginning to change that.

One of the experiments that I've helped design is a performance
management system that includes rewards for team or group
achievement, and a 360 degree evaluation for all employees
including managers. The relative amounts going into individual
bonuses and into group awards are adjustable from year to year.
We have run thru one cycle of group awards, and are just going
into the 360 degree evaluation cycle.

The group awards are decided on once a year by a committee that
has cross-cutting membership. The committee publishes criteria,
reviews nominations, gets customer inputs using a survey form,
and recommends award levels to the our director. We decided on a
very loose team definition- two or more people working on a joint
project. Teams can self-nominate, and sizes range from a few to
more than 30 people. The criteria we used focussed on value and
contribution to our mission. We gave monetary awards to the
team, and each team decided how to split up the money among the

We are just beginning to apply the 360 degree appraisal process to
everyone in the organization, although we have used the
technique in some smaller groups already.

Our new system includes a gainsharing element, but we haven't
put that in place yet. Obviously, this raises a question as to what
is a "gain" for a government organization. My answer is that a gain
is "measurable" (quotes for emphasis) progress toward achieving
the organization's mission. We also have put some effort into
developing measurements, and are running a pilot program under
a little-known law called the Government Performance and Results

I would be interested in how other "TQMed" , "learning-orged", or
"re-engineered" organizations are handling the whole area of
pay-for-performance, performance bonuses, etc. I have never felt I
understood the basis for Deming's exhortations to do away with
performance appraisals and to base pay solely on longevity.

Larry Headley