Case 42
Shouting for Results
Background Information
As Director of Operations for the University Hospital, Fran Jackson felt proud of
any achievements in the employee relations realm. She recalled how happy she felt
six months ago when the employees in the Hospital Workers Union, Local 211, rati-
fied the adoption of a new merit-pay program. True, it was not a landslide victory
(41 percent of the employees in the union voted against it), but it was progress.
From the time Fran joined University Hospital three years ago, she had pushed for a
performance management system that would reward employees for good work. In
that time, she had installed the skeletal framework of such a system in fits and
starts. Then, in the most recent round of negotiations, a full-scale plan was put up
for a vote, and the rest, as they say, was history.
In fact, though, the changes were less sweeping than they seemed. Partly because
of Fran’s initiative, there had been a procedure in place for the past 18 months for
reviewing employee performance, even though there had been no immediate salary
implications. From what she heard from Sylvia Downing, head of Human
Resources, employees were invariably rated highly in the evaluations. Still, as Fran
figured, it was a start.
Under the newly approved plan, supervisors would continue rating their employ-
ees each year on the anniversary date of their employment with the hospital. During
the first year under the full plan, all employees would receive a flat cost-of-living
increase after the evaluation. However, at the start of the second year, employees
would receive a merit increase to their base pay, based on their position in the sal-
ary range and their performance rating. Under the contract, the following format for
salary adjustments was adopted:
Quartile Position in the Salary Range
Rating 1
Outstanding 8% 6% 4% 2%
Very good 6% 4% 2% 1%
Average 4% 2% 1% 5%
Acceptable 2% 1% .5% 0
Not acceptable 0 0 0 0
This format was published in the new contract and was known by both managers
and employees alike. Further, employees seemed to quickly realize that their ratings
in the first year could play a big role in the ratings they received the next year and
that those ratings would make a difference in the raises.
In addition, University Hospital managers and supervisors understood that the
adoption of this program meant that they had more power and were expected to rate

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