50 Case Studies for Management and Supervisory Training

213

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

st

2

nd

3

rd

4

th

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