Monthly Archives: February 2009

Textbook Wisdom on Performance Pay #

It’s probably not as much of a hot topic since the State Board of Ed, in an effort to protect other parts of the education budget during these lean times, held back money for district performance pay programs pushed by our peerless legislature, but I suspect the conversation hasn’t wholly died. I may not be spending my copious free hours hanging out at USOE anymore, but I assure you someone in government is thinking about it.

For those wedded to the idea of performance pay and “differentiated compensation” (and not just in public education) may I offer the following nugget from, of all things, an accounting textbook:

Incentive compensation for employees, such as bonuses, can, and probably should, be tied to balanced scorecard performance measures. However, this should be done only after the organization has been successfully managed with the scorecard for some time—perhaps a year or more. Managers must be confident that the performance measures are reliable, sensible, and understood by those who are being evaluated, and not easily manipulated. As Robert Kaplan and David Norton, the originators of the balanced scorecard concept point out, ‘compensation is such a powerful lever that you have to be pretty confident that you have the right measures and have good data for the measures before making the link.’Garrison, R.H., Noreen, E.W., Brewer, P.C. (2008) Managerial Accounting, 12th ed. McGraw-Hill. p 446.
Internal quote references Lori Calabrom “On Balance: A CFO Interview,” CFO Feb 2001, pp 73-78.

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