Performance appraisal and pay-for-performance start at the top.

In summary, while performance appraisal has always been present in health care, it is taking on a new dimension. Evaluative criteria based on personality traits are being replaced by quantifiable, specific, job-related factors. Performance appraisal in many organizations is no longer an abstract, generalized concept, but is predicated on specific, predetermined corporate or institutional goals for which the CEO is held directly responsible and accountable. In other words, the activities at the lowest level in the organization have direct impact on the highest levels. While pay-for-performance is still more common at the management level, an increasing number of institutions are applying the concept across the board. It is imperative that first-line supervisors understand how their own performance is appraised and their compensation determined before trying to explain a new concept to their subordinates. Even more important, the first- and second-line supervisors should have direct input into the development of new pay programs for their subordinates.