ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, August 27, 1996 TAG: 9608270089
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: FRANK SWOBODA THE WASHINGTON POST
IT'S NOT THE JOB, more companies are deciding, but how well you do it, whatever it is. And how well you function not as an individual but as as member of the all-important team. ``What we're looking at is a sea change in the way people get paid.''
The way Sandra O'Neal sees it, it is only a matter of time before annual base wage increases are a thing of the past in the American workplace.
O'Neal heads the employee pay practice section of Towers Perrin, one of the nation's biggest management consulting firms, and she has a new survey to back up her beliefs.
More and more corporations, she says, have begun looking at new forms of compensation that would stop paying people on the basis of the jobs they do and begin rewarding employees for how well they do their jobs.
O'Neal isn't talking about merit pay systems. She says companies have been trying them for a number of years and they really haven't worked. ``All merit pay systems become socialized,'' she says. ``What we're looking at is a sea change in the way people get paid. It's beyond merit pay.''
The type of change O'Neal foresees would base an employee's pay on several measures of performance, starting with the overall performance of the company and including the worker's department, any work team the employee might be involved with and the employee's own performance.
``The job-based world is breaking down. People are being asked to work on teams, and job-based pay isn't facilitating productivity anymore,'' O'Neal says.
She gives this example to illustrate a job-based work force: You're in the airport changing planes and you're starving. The only food available is hot dogs, which are served at the bar. There's a long line at the counter, where one woman is trying to cope with demand. Next to her is a guy wearing a bow tie and vest, standing with his arms crossed. He's a bartender. He doesn't serve hot dogs. In the new world of pay, he will.
``He doesn't understand his job is customer service,'' says O'Neal.
The study O'Neal just completed found that more than three-quarters of 750 mid-size and large U.S. employers have gone through major restructurings in the past three years and are looking at major changes in the way they pay employees.
Fifty-eight percent of the employers are reviewing their compensation strategy and 78 percent are seriously considering some form of competency-based pay system.
The survey also shows, however, that most employers are still just looking - with most retaining traditional pay practices.
The most interesting aspect of the study, according to O'Neal, is the finding that nearly a quarter of the employers are considering the elimination of base pay increases. They may shift to a system where the company sets a total compensation target and uses a variable pay system based on a variety of performance measures.
This is the shift O'Neal sees as inevitable. ``In the new global economy, employers are asking, which should we pay for: mere task performance or end results?'' says O'Neal.
``In the future we will be paid for skills and the abilities we bring to the job and how we apply those skills in the broader work context.''
O'Neal predicts this shift will mean less and less distinction for individual workers and more reliance on a person's ability to perform as a member of a team.
She acknowledges ``there are some huge problems we will be facing as a society'' as many blue-collar workers' pay continues to erode.
She said the change will strip away the traditional middle layer of the work force, the semi-skilled blue-collar worker who for decades has been able to earn a middle-class income under pay systems that all but guaranteed annual wage increases.
``The new motivation [for workers] is a shift in skill values. Variable pay changes behavior,'' she said.
LENGTH: Medium: 76 linesby CNB