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A life spent making mistakes is not only more honorable but more useful than a life spent in doing nothing.
-- George Bernard Shaw
 

 

Tuesday, December 5, 1995

Performance

Yesterday’s Wall Street Journal carried a front-page story titled “Unstable Pay Becomes Ever More Common.” The article explained that not only is job security probably the most worrisome problem for Americans these days, there is yet another factor that even the survivors of job cuts have to be concerned about. According to the story:

"Now cropping up is another feature of the restructured American workplace, one that applies to the survivors: growing wage insecurity or instability."
Instead of seeing their paychecks grow every year, workers are now facing base salary freezes. Pay increases are being linked directly to productivity or profit gains.

The bottom line is that workers are no longer being paid just to show up. More than ever before, pay is being determined by performance.

Now while I’m sure there are a lot of problems involved in actually measuring performance for different types of workers, for the most part this trend toward performance-based pay is a very positive development. Positive for workers, for consumers, for company profits and for the economy as a whole.

The complexity of modern life often serves to disconnect workers from the ultimate fruit of their efforts. Back a hundred years ago, the relationship between the work and the reward was much more evident than it is today. If you were a farmer, you plowed and planted and nurtured your crop, and at harvest time you had your reward. This served to reinforce a strong work ethic. Today, the rewards are much more subtle. The insurance form processing clerk never personally sees the lives that are saved and the diseases that are cured by the health care workers whom her work supports. The worker in a semiconductor factory might build a computer chip that’s used in a computer that’s bought by a newspaper reporter who uses it to write a story on a toxic waste dump that’s poisoning children, and as a result of the story the dump is cleaned up and an enormous amount of disease and suffering is avoided. How can the computer chip worker ever possibly imagine what the fruits of his labor might be?

Performance-based pay makes us all entrepreneurs. It re-establishes the link between work and reward, and that has positive implications throughout society.

While it may be unsettling for some, not being able to count on a reliable paycheck, it is a tremendous opportunity for those who are willing to work hard and to make a commitment to excellence.

— Ralph Marston

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