ST. FRANCIS PHASES IN MERIT PAY PLAN OVER TWO YEARS: HOSPITALS BASE PAY RAISES ON PERFORMANCES

St. Francis Medical Center is moving to a performance pay plan and away from across-the-board wage hikes for its approximately 1,300 full- and part-time employees.

"It is true merit pay," said Bob Owen, human resources director at the Cape Girardeau hospital.

Owen said the new pay plan is being phased in over the next two years.

Southeast Missouri Hospital in Cape Girardeau has had a modified merit system for years.

"We have had a merit review system in place for at least 18 years," said Jim Wente, administrator at Southeast Missouri Hospital.

"I think we are doing something very similar to what they are doing," he said.

At Southeast, the hospital's more than 1,300 full- and part-time employees are eligible for pay adjustments based on annual performance evaluations, said Wente.

In addition, the hospital annually looks at adjusting different pay grades based on market conditions. Wente said the hospital has 46 different job classifications.

Owen said that more businesses nationwide are going to pay-for-performance plans as they look for more efficient ways to do business and reward those who contribute to those enterprises.

"The medical field was probably one of the last of the industries to actually come on board with that," said Owen. "For a long time, the health care industry didn't think it applied."

Owen maintained that it's more equitable to pay employees on the basis of their performance as determined by an objective evaluation than by across-the-board pay hikes.

Owen said the new pay plan at St. Francis gives employees an incentive to excel in their jobs.

"An employee that gives 110 percent and does high-quality work should receive more of a pay increase or bonus than the employee who comes to work every day and just does his or her job, nothing more and nothing less," said Owen.

"Given the opportunity, people will give you their best," he said. "I am a firm believer in that."

Last year, employees essentially received a 3 percent across-the-board pay hike, said Owen.

But, he said, there will be no such pay hikes this fiscal year, which began Wednesday. Instead, the pay increases will be based on performance.

Owen said this is a "transition year" for the hospital in implementing the new pay plan.

St. Francis will use its current evaluation form in assessing employee performance this year while working to develop new evaluation standards for each department.

"The key is the assessment instrument," he explained. "That is what we are developing."

Owen said about 65 percent of the departments at St. Francis have criteria-based standards.

"We are going to take this year to fine tune them and to develop the standards in the other departments."

The hospital is in the process of educating employees about the new pay plan.

Owen said it is important for employees to be involved in developing the standards by which their jobs will be evaluated.

The new performance evaluation system should be in place by July 1993.

By July 1994, the entire pay performance system should be in place and working, said Owen.

"We are willing to show that the more you give, the more you get," he said. "That doesn't mean we are indiscriminately throwing money around."

St. Francis has an annual payroll of about $26 million. Changing over to a performance pay plan won't mean a major increase in personnel costs, he explained.

And, he said, it could improve efficiency. "We hope we see some efficiencies in labor so that we may end up doing more with the same number of people."

If that occurs, he said, some positions left vacant by retirement, for example, may not have to be filled in the future.

"We are just going to try to work smarter," said Owen.