Paragraph Pay for Performance Enhances Employee Management at Scripps Health Scr
ID: 434309 • Letter: P
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Paragraph Pay for Performance Enhances Employee Management at Scripps Health Scripps Health is a long-standing and prominent Reorganizing the compensation policies of the nonprofit health-based organization that is based organization was one of the primary areas targeted in the greater San Diego area. The organization for improvement by the firm's leadership. Part of experienced a severe financial downturn that led this redesign process involved periodic reviews of to increased employee discontent and turnover, as job content, the use of annual appraisals to enhance well as the exit of the firm's CEO. In an effort to communication, and the assessment of experience fix these problems, CEO and President Chris Van and education to properly adjust compensation Gorder implemented a new strategic plan that was amounts. Further, the organization strives to offer used to enhance how the employees were treated. competitive compensation that rests at the 65th The new strategic plan contained several com percentile of the relevant labor markets, which posi- ponents that encouraged employees to work more tions the firm squarely in the middle between the effectively in their jobs. For example, administra top and bottom levels of competitive compensation. tors were to utilize a more participatory leadership The company also tests the pay markets twice a mong staff members, year so that it can remain competitive with regard and a natural extension of this approach was the to compensation. Finally, workers can tap into extra development of a physician leadership cabinet that money based on ratings given vis-à-vis the annual improved how personnel interacted with each other, performance appraisal sessions, if employees do well and that strengthened firm coordination through on their performance reviews, they can earn as much widespread communication. Top managers also 5% of their salaries as merit-based compensation." focused on improving individual satisfaction and productivity by enhancing work efficiency levels.QUESTIONS A major part of these more streamlined opera- tions stemmed from implementation of a beneficial performance management plan. In particular, this satie plan outlined how managerial talent would be employee satisfaction and motivatio developed, employees would be recognized for a job well done, and motivation would be orchestrated based pay systems should be developed based through a competitive compensation approach 1. Discuss how this case illustrates how compen- sation can be used as a method for improving 2. Identify some of the ways that performance on the experiences at Scripps HealthExplanation / Answer
1. Discuss how this case illustrates how compensation can be used as a method for improving employee satisfaction and motivation.
The compensation package that an employee earns has an implication upon the social standings of an employee through the relative status and position within an organization. However, the compensation package alone is not enough to motivate an employee to the highest levels possible. Taking that into account, companies will pay employees a fair wage while taking into consideration the wage scale paid inside and outside the company. By offering a fair compensation package to employees based upon their performance and appraisal reviews, they can encourage employees to stay longer with the company by ensuring the employee has its basic needs met in terms of financial security.
2. Identify some of the ways that performance-based pay systems should be developed based on the experience at Scripps Health.
Notably, the biggest issue at Scripps Health was the lack of employee retention – this was due to the fact that they had a financial downturn and the change in management did not help. With that information in mind, performance compensation should be combined with the development of the employee and evaluation of their performances – such as offering incentive-based programs to improve their education and technical skills that pertain to the company’s job skills. One thing about utilizing a performance-based system, they need to have an appraisal system in place that will assess and measure an employee’s progress.
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