TRANSPORTATION DEPARTMENT ADVANCES

PERFORMANCE-BASED PAY

"Define and implement a system of performance-based pay for all state employees." Murphy Commission, "Making Arkansas' State Government Performance Driven and Accountable," September 1998¹

(September 2017) The Arkansas Department of Transportation (ArDOT) has advanced a performance-based pay program, a reform first recommended in 1998 by the Murphy Commission, a Policy Foundation project.

The performance-based program, known as Achieving Career Excellence, or ACE, "stresses enhanced training opportunities for our employees, improved communication between employees and supervisors, job-related goal-setting, and pay increases tied to achieving those established goals."²

Reform Timeline

ArDOT staff has researched performance-based pay for years.³ The state Highway Commission considered the idea in August 2015, and authorized proposals at their September 2015 meeting. ArDOT Director Scott E. Bennett explained, "The Department is considering implementing a Performance-Based Pay system to replace our current promotion-based career advancement system."⁴

ArDOT newsletters described the new policy last year.

"In the fall of each year, employees will complete a self-evaluation using the same evaluation form that will be used by the manager the following spring. This will promote communication and greater understanding of expectations between employees and managers, as well as identify gaps that may exist before the formal evaluation takes place ...The first performance-based pay raises will be implemented in June 2018 based on the spring 2018 performance evaluations."⁵

The August 2016 newsletter explained the performance-based system would use ratings such as exemplary; exceeds expectations; fully successful; needs improvement; and not meeting expectations.

The October 2016 newsletter noted more than "1,700 employees have accessed ACE to create an employee profile, search the talent view, enroll in training via AHTD university and/or sign off on their new job descriptions."

Rationale for New Policy

An ArDOT publication⁶ describes the rationale for performance-based pay includes the following factors:

· Creating a performance management culture;

· Redesigning our job descriptions to include the competencies needed to effectively perform the functions of the job;

· Selecting and configuring a performance management system which is competency-based, goal-oriented and inspires employee growth and development;

· Selecting a learning management system which interfaces seamlessly with the performance management system, to provide employees with the resources they need to reach their performance goals and also to prepare themselves for future advancement;

· Selecting a compensation management system which also interfaces with the performance management system, to ensure fair and equitable distribution of performance-based salary increases within the funding constraints established by management and/or the Commission;

· Training supervisors how to conduct performance appraisals in a fair and equitable manner which focuses on future growth and reduces stress.

Conclusion

The Arkansas Department of Transportation and its employees deserve recognition for advancing performance-based pay as a management system.

--Greg Kaza

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¹ The Policy Foundation report described four reforms that Arkansas state government could implement to save taxpayers millions of dollars. These were performance-based budgeting; performance-based pay; activities-based costing; and independent audits. The study noted, "For the last several years, pay-for-performance systems have become widespread in the Unites States. The vast majority of private sector firms operate under a system in which compensation and advancement is tied directly to an individual's personal and professional ability to effectively accomplish the job to which he or she is assigned. The Federal government has also implemented performance-based pay for members of its Senior Executive Service. And at the state level the concept of paying employees based on performance is gaining momentum. Georgia, Colorado, Michigan, California, and Idaho are among the leaders with programs such as Colorado Peak Performance and Georgia Gains setting the pace for other states."

² ATD communication to Policy Foundation, June 9, 2017

³ Ibid.

⁴ Bennett communication, "Proposal for Performance-Based Pay system," Aug. 26, 2015

⁵ ArDOT Newsletter, June 2016

⁶ ArDOT, "Making the case for performance-based pay"