...Reimbursement and Pay-for- Performance Edward G. Walker HCS531 May 26, 2014 Tracey Lane Reimbursement and Pay-for- Performance This paper will define Pay-for- Performance; I will explain how reimbursement is affected by Pay-for- Performance approach. I will discuss how system cost reductions impact the quality and efficiency of healthcare. I will discuss how Pay-for- Performance, effects healthcare providers and their customers. I will discuss the effects of Pay-for- Performance and the effect it will have on the future of healthcare. First we must understand what reimbursement and pay performance is. Pay-for-performance is referred to as an umbrella term with performance initiatives that are designed to improve efficiency, quality of the health care system. Pay-for-performance is a reimbursement plan that links payment to quality and effectiveness as an initiative to improve the quality of healthcare and reduce costs. Reimbursement is what the insurance company will pay to the provider and the reimbursement may be only a partial amount of what the actual charges. (Health Affairs, 2012) How is reimbursement affected by the pay for performance approach? This reimbursement method is a where some providers and hospitals pay better than other healthcare facilities for the same service. Their patients appear to have better health outcome results. The two main objectives are; (1) To increase the overall quality of health care that a patient receives. (2) To encourage...
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...“The Case of the Unpopular Pay Plan” “The Case of the Unpopular Pay Plan” discusses how the company Top Chemical decides that they need to change their current pay plan to more closely resemble their quality control program. Currently their pay plan is set up where employees receive raises based on seniority. The senior management would like to change the pay plan to complement the quality program. In the quality program employees are on teams. The proposed pay plan would reward employees whose teams were making beneficial contributions towards quality, profitability, and new ideas to increase speed, unit cost, and improvements. Some of the top management disagrees with the new pay plan claiming that having to rely on other groups within the company to get a pay raise is unfair and beyond their control. While others agree that each employee’s pay should be a reflection of how well the company is doing as a whole. Some commentators had the following perspectives about this pay plan: Maggie Coil, vice president of compensation of Motorola, thinks that the employees of Top Chemical should have some input on if and how to change the pay plan since they are the majority that will be affected and by allowing them to be part of the process of designing and implementing the pay plan, it will make it more accepted. Donald Berwick, associate professor at the Harvard Medical School and Harvard School of Public Health in Boston, thought the new pay plan is moving in the right...
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...our employees for the work they perform on a daily basis. Salary and hourly compensations are easy and constant ways of paying the employees of our companies. Salary and hourly compensation can be a set wages employees will earn based on their job description. This wage will not change based on seniority or merit. The stability of this type of compensation system is appealing to employees as they are aware of how much income they will receive on a regular basis. Hourly based pay has very little room for opportunity of growth for the employees. Commission/productivity based pay also known asperformance based pay is a relatively common and popular approach to compensation where the employee is paid by the employer based on their job performance; this inspires them to do their best work on a daily basis and gives the employees control of how much they make to maximize their own income. With quality performance and high productivity, employers are able to increase profit and become more competitive. Longevity Pay is the last recommendation of compensation we as a company can consider for our...
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...organizations where you have worked. What have been the consequences of those philosophies and approaches? FYI-Use fig. 11.2 362-365. The City of Austin is huge on entitlement philosophy. I see cases all the time where a person with minimal skills but, with a lot of seniority is making as much as the supervisor or those in higher title positions. They back this up by giving seniority pay at the end of the year based on your total number of years in service that begins at five years and goes up at seven, ten, and fifteen years. As seniority increases you also have anniversaries that you begin to accrue more vacation time per pay period as well. The performance philosophy is only seen in promotions and on paper. Our performance reviews have 5 ratings with satisfactory in the middle and two levels above and below. The two higher levels above you can receive but, they never have the funds to give any true incentives accept for the title of receiving that on your review. Using these philosophies has caused those who would otherwise perform very well, to “join the others” in simply doing the bare minimums in their jobs. They do tend to give those whose performance is better more opportunities to learn and more responsibility. But, again, with no real rewards, most do not stay at this level long with no real reward for a job well done. 2. You have been named Human Resources Manager for a company that has 180 employees and no formal base pay system. What steps will you take to develop such...
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...makes up about half of the parent company’s revenue and about two thirds of the company’s profits. Last year Frito Lay Inc. generated 48 billion dollars in revenue and employed over 48,000 people. The current role that I hold in the company is Route Sales Representative (RSR). This role consists of what they coin the “heart of the company,” and generates a major share of the company’s revenue. An RSR’s position consists of selling merchandise to the customer, delivering the product, stocking of the product as well as customer service. During the last 10 years the company has changed the pay structure that determines the compensation that each RSR receives. In doing this they have also increased the workload and amount of expectations that have been placed on the shoulders of the employees. During all of the events that were involved with the pay changes, the morale and drive of the employees continued to drop. On a daily basis you can walk into the office and see an obvious lack of interest in the day-to-day operations, growing lack of concern in increased duties or committee involvement, and an obvious decrease in motivation. Language such as: “wish I wasn’t here,” “this place is beating me up,” “this isn’t what I get paid for,” and “they don’t pay me enough to do this” are all voices...
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...Incentive Pay Incentive Pay is an important compensation that keeps employees wanting to perform to the best of their abilities for the company. Getting paid for specific performance results is probably in my opinion one of the reasons I would stay with a company. If I feel I am doing above and beyond what is asked of me and the company is receiving revenue based on my performance, I feel I should receive incentive pay. With my current employer, management employees are compensated for their performance for the previous fiscal year. My company has what is called a Management Incentive Program that pays employees for specific performance results made by the company. Employees have a choice to receive their incentive pay as a stock option, check for incentive pay or they are able to receive half in stock option and half as a check. This is a good incentive pay because on top of that, employee receive a half month bonus based on their individual performance in the company. One article I researched and found about incentive pay was the Delta Airlines employees earning $6 million in incentive pay for performance last year. In 2009, Delta Air Lines announced it would add $6 million to employees’ paychecks for meeting the February operational performance goals. Delta’s monthly incentive payouts are based on U.S. Department of Transportation (DOT) data, as well as the company’s own internal goals. During the month of February, Delta employees worked to deliver...
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...Is linking student feedback forms to individual lecturers' pay a means of enhancing teaching excellence or a disastrous prospect? I think if we put ourselves in the shoes of the teachers, our answers will differ from if we were outsiders, research in this area shows that students judge lecturing and teacher’s performances not just based on content and academic values but also based on personal feelings, race, grudges and gender. In my opinion, it’s a disastrous choice to put the teachers’ pay in the hands of the students, because students don’t really understand the value and the impact of their feedback, specially spoiled kids, who has protective powerful parents. Teachers will start losing jobs at this point because their destiny is in the hands of their students. Most teachers would agree to have less salaries with more job security, better benefits, adequate materials and facilities, and being legalized to do what they were trained to do and teach, using up to date, proven methods, instead of being under the pressure of having some kid control their pay check. a. Specify realistic and measurable performance criteria or performance indicators. 1. To me the biggest performance indicator is what have the students learned from the class, however am not talking about the entire student but the majority of them, because some students, no matter how much effort you put into teaching them, still they don’t learn anything. 2. Teacher’s preparation and knowledge. 3...
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... THE PERFORMANCE EFFECTS OF PAY DISPERSION ON INDIVIDUALS AND ORGANIZATIONS MATT BLOOM University of Notre Dame Pay distribution research is relatively scarce in the compensation literature, yet pay distributions are viewed as critically important by organizational decision makers. This study is a direct test of the relationship between one form of pay distribution—pay dispersion—and performance conducted in a field setting where individual and organizational performance could be reliably observed and measured. Findings suggest more compressed pay dispersions are positively related to multiple measures of individual and organizational performance. Among those who design and administer compensation systems, pay distributions have been an important issue for a long time, yet they have been studied relatively infrequently in the compensation research literature (Gomez-Mejia & Balkin, 1992; Meyer, 1975; O'Reilly, Main, & Crystal, 1988). The term pay distributions refers to the "array of compensation levels paid for differences in work responsibilities, human capital, or individual performance within a single organization" (Milkovich & Newman, 1996: 45). Although there seems to he agreement that pay distributions influence individual and organizational performance, there is little agreement over how or why they matter (Gerhart & Milkovich, 1992). In fact, there has been disagreement in the theoretical literature about the proper distribution of pay for some time: Should pay distributions...
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...Incentives are ‘extra’ benefits given to employee in recognition of high quality performance. Incentives also ensure employee-loyalty to organization. In a way, incentives inspire employees to put in ‘extra’ effort in ‘work performance’. This management practice reduces ‘employee turnover and provides continous ‘harmonious’ workplace environment. This strategy is also implemented for new recruitment. Sometimes, organizations may not offer high ‘remuneration’ to attract best talent in business; but the ‘extras’ like additional accommodations, facilitations and flexibility offered attract talented employees. The practice is based on human psychology that forms individual preferences and choices; and makes employees feel ‘important’ and with sense of dignity. The employer organization can offer “direct financial, indirect financial and non financial compensation” to the extent that will prove beneficial to all concerned. (Compensation Systems: Design and Goals). This paper discusses forms or manner in which incentives are offered by employers and how incentives affect, impress and prompt employee response. Challenge, struggle and chaotic times are upon society, affecting not only the indivuals but the organizations as well. During these times, the need to achieve meaningfulness, career balance as well as a purpose is a strong neccessatiy for both the organization and the individual. Compensation and pay are highly mistaken as being one in the same when in fact compensation is more...
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...Haveyoul SIX DANGEROUS MYTHS ABOUT PAY BY JEFFREY PFEFFER pays an average C average of $21.^2hourly wage of $18.07. ^^^^ second pays an an hour. Assuming that other directemployment costs, such as benefits, are the same for the two groups, which group has the higher labor eosts^ • • • • An airline is seeking to compete in the low-cost, low-frills segment of the U.S. market where, for obvious reasons, labor productivity and efficiency are crucial for competitive success. The company pays virtually no one on the basis of individual merit or performance. Does it stand a chance of successl • • • • A company that operates in an intensely competitive segment of the software industry does not pay its sales force on commission. Nor does it pay individual bonuses or offer stock options or phantom stock, common incentives in an industry heavily dependent on attracting and retaining scarce programming talent. Would you invest in this company} • • • • ONSIDER TWO GROUPS of Steel miiiimills. One group Every day, organizational leaders confront decisions about pay. Should they adjust the company's compensation system to encourage some set of behaviors? Should they retain consultants to help them implement a performance-based pay system? How large a raise should they authorize? ARTWORK BY CRAIG FRAZIER SIX DANGEROUS MYTHS ABOUT PAY In general terms, these kinds of questions come down to four decisions about compensation: • bow mucb to pay employees; • bow mucb emphasis to...
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...yTHE IMPORTANCE OF PAY IN EMPLOYEE MOTIVATION: DISCREPANCIES BETWEEN WHAT PEOPLE SAY AND WHAT THEY DO Sara L. Rynes, Barry Gerhart, and Kathleen A. Minette A majority of human resources professionals appear to believe that employees are likely to overreport the importance of pay in employee surveys. However, research suggests the opposite is actually true. We review evidence showing the discrepancies between what people say and do with respect to pay. We then discuss why pay is likely to be such an important general motivator, as well as a variety of reasons why managers might underestimate its importance. We note that pay is not equally important in all situations or to all individuals, and identify circumstances under which pay is likely to be more (or less) important to employees. We close with recommendations for implementing research findings with respect to pay and suggestions for evaluating pay systems. © 2004 Wiley Periodicals, Inc. It is easy to overestimate the frequency with which adults actually go to the opera and underestimate the frequency with which they watch TV cartoons on Saturday mornings, based on their self-reports. (Nunnally & Bernstein, 1994, p. 383) Rynes, Colbert, and Brown (2002) presented the following statement to 959 members of the Society for Human Resource Management (SHRM): “Surveys that directly ask employees how important pay is to them are likely to overestimate pay’s true importance in actual decisions” (p. 158). If our interpretation...
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...& People: Tutor: XXX Prepared by: Stephanie Gartrell Student ID: XXX Due date: 6 November 2013 Leadership & People: Tutor: XXX Prepared by: Stephanie Gartrell Student ID: XXX Executive Summary Designing and implementing a compensation package that rewards all staff according to performance, and succeeds in appealing to their individual motivations is an enormous challenge for any organisation. Some find it easier to simply pay a percentage increase to all staff, irrespective of their performance. A literature review was undertaken to determine both the current and historical views of performance management. A vast amount of material has been written in journal articles and textbooks. All point to the complexity of the issue and the apparent inability to find a solution that will suit all. For the last 100 years, HR specialists, psychologists and economists have been collaborating to try and develop a system which would have broad appeal for both staff and employers. Many theorists contributed to the discussions, asserting that individual motivations for pay were based on the theory of agency, goal, control, expectancy, or reinforcement. Performance management systems are necessary to enable companies to enable them to attract, retain and motivate the best calibre of employees, thereby assisting companies to achieve their organisational goals. However, different people are motivated by different things. Some by money or other tangible rewards and...
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...perspectives certainly do affect the view of compensation. Our textbook discusses in pages 2-5 (Milkovich et al) that society in general may "view pay as measure of justice" (pg. 2). The example used in our textbook refers to the pay gap between men and women in society. It is stated that the pay gap is narrowing but it still persists compared to various other OECD countries. Economists have concluded that various factors may have contributed to this gap. For example: human capital, demographic characteristics, and job characteristics. What this may mean is that "women are more likely to study health and education, whereas men are more likely to study engineering and other technology fields" (Mikovich et al, pg. 3) Women are also more willing than men to adjust their work location and hours in order to take care of young children and elderly parents, and to do most, if not all, of the "unpaid" housework. From the manager's point of view, compensation directly influences their success in two ways. According to Milkovich et al on page 4, it is a "major expense." Managers need to think of and be aware of both global and local competitive pressures when making compensation decisions. Moreover, managers need to either minimize or optimize pay in a way to influence employee behaviour and to improve organization performance. This is the second way that compensation influences their success. As Milkovich et al states "The amount and the way people are paid affects the...
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...discriminating against women? If so, explain what it is and if not, explain why not. I do believe that there is a reasonable basis for believing that Consolidated Chicken is discriminating against women because of the discrepancy that Sam found between the pay of women and men who performed the exact same job in the plant. He found that the women made only about 60% of what the men earned. He also discovered that while all of the office jobs were occupied by women, their pay was almost at the bottom of the pay grade. In the case of the office jobs, it may be difficult to claim discrimination because all of the pay is low and there are not any men in the area to which pay can be compared. The Equal Pay Act of 1963 (DON’T KNOW HOW TO CITE LAW) indicates that compensation discrimination can only be applied to jobs that are within the same establishment. Therefore, the pay for the office staff cannot be compared to the pay of office staff at other businesses to determine if they are underpaid. On the other hand, pay discrepancy among the women and men in the plant do appear to be discriminatory based on the premises of the Equal Pay Act of 1963 (DON’T KNOW HOW TO CITE LAW), which states that men and women must be provided equal pay for equal work within the same business. Therefore, with all things considered, it appears that this case definitely constitutes discrimination against women. 2. Is there reason to believe that women could file an equal pay lawsuit? If so, explain the reason and...
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...level definition of expectancy is what managers expect from their employees. But as we look around in the world we live in today, expectancy goes even deeper than that. One definition of the expectancy theory that is used is, “That the strength of our tendency to act a certain way depends on the strength of our expectation of a given outcome and its attractiveness. (Victor Vroom)” (Robbins & Judge, 2013) When I read that at first, I really didn’t grasp what the definition really meant. But, as we consider how employees are motivated, we can define the expectancy theory as not only what managers expect from the employees, it is also why employees are not motivated to do the jobs that they are assigned. When we take a deep look at the workplace today we can see some employees just do what it takes to get by in their given job. As we explore how the expectancy theory pertains to relationships on the job, we can learn some techniques to improve employee performance by using different types of motivation. There are three ideas that pertain to relationships in the expectancy theory of motivation. They are effort-performance relationship (Expectancy), performance-reward relationship (Instrumentality), and reward-personal goal relationship (Valence). The effort-performance relationship asks the question that if the employee puts forth the effort, will the employee believe that he or she will be able to complete the task satisfactorily? The performance-reward relationship asks if the...
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