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Research Papers on Pay for Performance Systems

Motivating employees is explored in research papers on pay for performance systems. The MBA writers at Paper Masters will discuss any compensation system or performanced based management system that you need discussed.

The concept of “pay for performance” is one seen in various healthcare settings as a means of improving the quality of care provided to patients. Pay for PerformanceAt its core, this approach offers financial incentives to hospitals, physicians, and clinical settings to make improvements in the following important areas:

  1. Quality of care provided
  2. Efficiency of providing care
  3. The overall value to both the insurers and the insured.

When individuals and organizations make changes that improve these areas, financial rewards are provided.

Research has yielded mixed results on whether or not the concept of “pay for performance” is positive in the long-term. One study focused on two groups of clinical settings; one group has their improvements incentivized while the other did not. While the group participating in the “pay for performance” program produced better results in the short-term, after a period of five years there was no clear difference in the performance levels of the two groups. This is likely because both were already progressing toward these positive changes, and the financial incentives just prompted one group to try to get there quicker. Similarly, there are some areas of care that simply cannot be improved upon significantly; one study showed no positive change in rates of death among patients with acute myocardial infarctions whether the clinical setting was using the “pay for performance” model or not. While there certainly are some motivating factors for the implementation of these programs, the return on investment does not seem to reflect the need.

Perhaps the most critical aspect of management is employee motivation. Most organizations constantly search for new ways to improve worker productivity and performance quality. Often, this revolves around an appraisal instrument, technique, or system through which an employee receives feedback with regard to his or her performance. The underlying idea, of course, is that the individual will respond by refining his or her behavior in ways that enhance performance and productivity; i.e. motivation will increase. Unfortunately, bias is often the result of performance appraisals along the lines of gender and race.

Obviously, performance appraisals have a facilitative effect on the efforts of the leader or manager of an organization or work group to provide economic rewards, equity, and participative decision making while establishing a work environment that is conducive to intrinsic rewards. In other words, the primary purpose of performance appraisals is to motivate employees by making them feel valued, by communicating objectives and expectations, and by forming a basis for corrective actions or counseling.

The problem of bias in workplace performance reviews can be solved through Pay for Performance because of the following:

  • Pay for performance creates awareness of a possible motivation problem;
  • Pay for performance allows the employee to obtain a commitment for change from management;
  • Pay for performance sets strict, across the board definitions of a merit system based on the performance review;
  • Pay for performance defines a system of rewards based on performance reviews.

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