July 9, 1997
by Paul R. Dorf, Managing Director, Compensation Resources, Inc.
By: Paul R. Dorf, The Record
I read with interest the article concerning the new compensation program being introduced by Schering-Plough (July 2). Although there is a definite trend in compensation to tie employee pay to increased productivity and profitability, the program outlined is certainly not the way to proceed.
After 30 years in the field, I am constantly amazed at the lack of concern that companies exhibit regarding their employees' needs or concerns.
The pay program outlined has created a no-win situation, in which employees lose money that can be re-earned, but often is not, and one in which there is a tendency to lower performance standards to ensure that the employees can earn their bonuses. Either way, the company has asked to demoralize employees rather than increase motivation. Since many employees are living "hand to mouth" financially, any reduction in take-home pay can have devastating consequences.
A much better approach would have been to forestall future increase and provide bonuses based on increased productivity. Obviously, this method would take longer for the company to get to its intended financial levels, but it would be accomplished with far less trauma to the employees. This would also provide time for the company to more thoroughly test its systems and procedures. T This is especially true for the performance measuring techniques that are the basis for paying the incentives. Our society seems to demand instant gratification. This unfortunately extends to companies wanting immediate payback on new programs. In reality, the long-term program that is built on trust, confidence, and mutual respect will usually be the most successful.