XYZ is a telecommunications company. Approximately 25 percent of its staff members are administrative and clerical employees working primarily at its headquarters. XYZ’s management has been concerned about their productivity, particularly since a new data system was installed two years ago. The system was expected to improve service to customers; however, based on surveys of internal and external customers, the results have been disappointing.
The company has created a pay-for-performance system for all of its administrative and clerical employees in order to improve customer outcomes. It already has in place a performance appraisal system. The appraisal system requires a series of individual meetings throughout the appraisal cycle (from April 1 through March 31). During March of each cycle, supervisors must meet with each employee to complete Annual Performance Appraisal Form.docx .
The final scores employees receive will determine the size of additions to base pay. The proposed payouts are as follows:
Score Percentage Increase to Base Pay
5.0 5 percent
4.0 to 4.99 3 percent
3.0 to 3.99 2 percent
Any person who does not post a final score of at least 3.0 will receive no increase and will be placed on a probationary term for 3 months. If his or her supervisor does not determine at the end of the probationary period that the person has remedied the problems identified in the previous appraisal cycle, the person will be involuntarily dismissed.