Opinion: Merit pay for town employees

dollars signAs the town begins negotiations with unions this year, one question comes to mind: Should workers be paid based on merit?

If merit pay were implemented, workers would receive pay increases based on how well they did their job instead of everyone receiving the same pay increase. Merit pay increases are separate from cost-of-living adjustments, which are usually tied to inflation rates. To pay someone based on merit, a job description is needed that details the responsibilities of the job. A plan is then created to determine how to measure that person’s performance. The goal is performance assessment and reward. It consists of setting employee goals within a time period, following their development and evaluating their performance at the end. Without a performance plan, how does management evaluate performance?

New York State’s Education Department has implemented annual professional performance reviews for teachers and the Saugerties School Board has implemented them for teachers and district staff. While the plans don’t appear to be perfect, they appear to allow for changes and improvements over time. The belief is that these plans lead to better educational outcomes, will help low-performing schools attract teachers and help teacher retention rates.


This sounds like a good idea for all government employees, right? Town employees who do a great job would be rewarded with additional pay. People not making the grade would be paid less. Merit pay provides an incentive to do better. So why isn’t it happening?

The word is that unions won’t allow it to happen. The logic to that argument doesn’t make sense to me. Union enrollments have been declining since the 1970s. It’s one thing to protect employees from arbitrary management decisions; it’s another to protect employees who aren’t performing. If a merit pay performance plan system were in place, it would provide union employees with an incentive to do a better job. It could possibly encourage more people to join a union. It would also allow the unions to negotiate with management to create performance plans that would give employees the opportunity to succeed. No one is entitled to permanent employment, especially if they are not doing the work. Everyone is entitled to an opportunity to succeed at a job.

The other reason being heard as to why performance plans can’t be implemented is that management says it’s too much work. You could say that it’s management’s responsibility to manage workers, including those who don’t perform. Management would say that it takes too much time and effort to get rid of “bad” employees. If performance plans were in place, management would have a tool to monitor an employee’s work and work with them to improve their performance within a time frame. If there is no improvement, there would be grounds for dismissal.

Creating performance plans does take time, work and effort. One of the hardest parts is determining how to measure an employee’s performance. Care needs to be taken so that the plan won’t be “gamed” — measurements created that produce the wrong results. However, the benefit in the long term far outweighs the effort.

While no system is perfect, especially when humans are involved, merit pay with performance plans is a more efficient and productive way to measure and pay employees. It allows employees to understand what is expected of them. It encourages good workers to continue performing at high levels. For low performing workers, it gives them a clear understanding of where they need to improve in order to keep their job. It provides management with a tool to help keep good employees and documents how to work with low performers to increase their performance. It also provides the documentation needed to fire poor performers.

For unions, it provides a level of credibility with the public. It allows unions to work with management to provide an opportunity for employees to succeed and grow. Unions, whether rightly or wrongly, could no longer be accused of existing to protect “bad” employees.

Beth Murphy’s column appears monthly.