Performance-based compensation may actually torpedo productivity

October 21, 2002

Few question that PACS has increased radiologist productivity. The question that does arise is whether radiologist pay should be related to productivity. A recent study (Acad Radiol 2002;9:964-970) concluded that productivity-based compensation does

Few question that PACS has increased radiologist productivity. The question that does arise is whether radiologist pay should be related to productivity.

A recent study (Acad Radiol 2002;9:964-970) concluded that productivity-based compensation does more harm than good.

"The carrot-and-stick approach to compensation squelches vital commitments to professionalism and collegiality in the absence of which the organization cannot thrive, and ultimately undermines even the enhanced productivity that its proponents suppose they are buying," said Dr. Mervyn Cohen, chair of radiology at Indiana University School of Medicine.

Backers of merit pay argue that such systems are widely used in other industries and that performance-based pay is fair and enhances performance.

"This is very nearly absolutely wrong," Cohen said.

Failing to compensate radiologists adequately represents a management failure that can harm radiology organizations. But this does not prove performance can improve simply by paying radiologists more, he said.

"There is no evidence that a poorly performing radiologist can be transformed into a top-notch radiologist through performance-based compensation," Cohen said. "Performance hinges on a number of factors other than pay, including skill level and motivation."

Conversely, according to Cohen, merit pay schemes tend to undermine the potential for positive interpersonal relationships and team building. People begin to exploit the system for individual gain at the expense of collective gain.

A University of Illinois study last year (J Occup Health Psychol 2001;6:127-138) found that performance-based pay was actually associated with lower productivity.

"The opposite was true with in-house training programs," said Michelle Kaminski, Ph.D., now at the School of Labor and Industrial Relations at Michigan State University.

Organizations with training courses showed increases in productivity, she said.

Instead of tying radiologist compensation to productivity, radiology leaders should focus their attention on the larger strategic objectives of their organizations to build consensus and a spirit of teamwork. They should provide generous compensation for their members across the board, according to experience and responsibility, Cohen said.

"Those who use incentive systems are never quite happy with them," he said. "This indicates that nobody really has a great system."

While Cohen speculated the majority of radiology departments do base compensation on productivity, many merely have a "base pay + bonus" system, with the bonus being similar for everyone in the department.

"This is a global incentive system - everyone gets some gain if the department does well," he said.