Answer to the Question - Do You Think It Is a Good Idea on the Part of Any Management to Award Employees with Merit Issues Why or Why Not Discuss and Debate. What Factors Should Management Consider in Your Opinion

Each employee will be paid based on their capabilities rather than on the characteristics of their job. This will provide an incentive for employees to develop their skills and move into other roles.

Weyerhaeuser uses a pay for performance system and utilizes a performance management process (PMP) to evaluate employee’s annual performance and that performance rating is used in calculating the individual’s merit pay increase. Over the years, Weyerhaeuser’s pay for performance compensation strategy has undergone several changes and improvements. The company utilizes merit increases where an individual’s yearly increase is based on how well they have performed against objectives. Performance management is directly tied to compensation in a pay for performance system and is based on how well an individual performs during the year against specific, measurable goals is tied to how much they will receive in a merit pay system. According to Milkovich, Newman and Gerhart (2014, p. 337), ‘a merit pay system links increases in base pay (called merit increases) to how highly employees are rated on a performance evaluation.” How well your merit pay system works and is seen by the employees as effective, fair, and a tool to increase motivation and retention is based on how well performance is actually measured and the ability to quantify performance. Though there are challenges with the merit pay system, Heathfield (n.d., par. 9) shares, “even with the limitations that exist in the awarding of merit pay, merit pay is your best opportunity to ensure that your outstanding performers remain with your company and continue to make their

Merit pay is a short-term, pay-for-performance plan, with a typical life span of three to four years, in which employers provide rewards, usually in terms of a raise for past performance, for employees who perform their jobs effectively, which will lead to higher performing employees which will in turn lead to a better work environment and higher overall productivity. The concept of merit pay is most often mentioned in the context of educational and/or government civil service reform. With a merit-based pay system, the employer pays, with the idea that the employer will reward more productive employees with merit increases. This concept came about in an attempt to sustain high performance levels in the workplace linking merit increases, or increases in base pay, to employee performance ratings, which are taken at the end of a performance year, usually by a direct supervisor. Due to the ever increasing changes of supply and demand in business, in order to remain feasible, the merit pay system is expected to change consistently with the needs presented to the companies, whether it be foreign competition, consumer demands, producer limitations, etc.

Good performance is rewarded through timely job promotions, special recognition and in some cases monetary rewards and incentives.

By law, employers must compensate employees for work that is completed. If an employee is compensated by a salary, employees are compensated differently from those that may have an hourly compensation rate. Employees that are hourly employees get paid

We typically do not utilize hiring bonuses, due to the fact that experienced individuals that may be in high demand are paid much more upon being hired due to the fact that a receive increases in the yearly salaries varying on the experience that they have. This ultimately means that an individual with four years of experience will start with at least a 10% increase in their

A well-articulated compensation philosophy drives organizational success by aligning pay and other rewards with business strategy. It provides the foundation for plan design and administration and anchors current and future plans to the company's culture and values (Kaplan, 2006, p.32). Recognizing and rewarding achievement is the cornerstone of the company A’s compensation philosophy. The mission of the company is to attract, select, place and promote all individuals based on their qualifications. The company believes that performance-based compensation helps attract, develop and retain talented professionals. In addition to base pay which based upon local market conditions and targeted to be above market, the company provides the following types of potential compensation to reward performance:

To foster competitiveness and deliver better results, there is a program called STACK where employees are ranked based on the work done and their incentive is decided based on it. Better the rank, better the incentives.

Incentive pay, also known as "pay for performance" is generally given for specific performance results rather than simply for time worked. While incentives are not the answer to all personnel challenges, they can do much to increase worker performance. (Billikopf) Performance pay has various names: merit pay, pay for performance, knowledge-and-skill- based pay, or individual or group incentive pay. (Delisio)

Reward Management (RM) has been defined as the distribution of monetary and non-monetary rewards to employees in an effort to align the interests of the employees, the organisation, and its shareholders (O’Neil, 1998). In addition O’Neil (1998) also suggests that a RM system can serve the purpose of attracting prospective job applicants, retaining valuable employees, motivating employees, ensuring legal requirements relating to direct and indirect rewards are not violated, assisting the company in achieving human resource and business objectives, and ultimately assisting the organisation in obtaining a competitive advantage.

Recognizing and rewarding high-performance is a key recommendation for any approach when managing any merit pay program (HRIS 2012). Merit pay is a compensation system where base pay increases and is determined by an individual’s performance. Using a merit pay plan is a good way for an organization to reward high performance is one benefit when using merit pay programs. The first step in implementing or improving a merit pay program is to have a solid performance management program, and this is another way a merit pay program is beneficial. Merit pay is a way to be successful and effectively implement merit pay with a uplift in salaries, and this is a third way using a merit pay program is beneficial to an organization. There are some drawbacks when using merit pay programs, such as paying some employees more than others. If you pay high-performing workers more than low- performing employees, the high- performers may stay, causing the low- performers to complain or leave the organization. A second drawback in using merit pay program is that employees become less motivated if not paid to their satisfaction. For example, if employees feel they should be making more money for their performance, this causes them to have low self esteem, and want to find employment at other organization. The last drawback associated with

Reward and recognition programs must connect the needs and expectations of the workforce with the company’s overall goals and strategies. A program that reinforces important company values and goals will encourage employees to act in line with such goals and emphasize the importance of achieving these goals. Alternatively, rewards which do not connect with organizational goals may convey a misleading message and encourage employees to act in a manner that does not facilitate the

The final problem that we identified is the incoherence of inclusion of the cumulative merit in the calculation of salaries. In the case-study we can read that the system includes cumulative merit. However it is not clear how it is included in the compensation system. In one hand it is said that they measure performance over time at Vitality but in the other hand it is not accounted for rewarding employees.

An incentive pay program can reward employees who continue to produce superior work or encourage employees who already produce good work to best. Sometimes, use an incentive system when employees are lack of enthusiasm of getting down to work and improving things. If everyone in the same job classification gets the same pay, there is no real incentive to do an outstanding job (French, 1990). Various incentive plans used to motivate all employees such as production staff, sales staff, administrative staff and managerial and professional staff on an individual basis. To be improved employee work performance, the incentive pay programs need to be fairly matched with the employees’ expectation. Properly designed and maintained incentive pay program has the potential to increase employees’ productivity and work performance.

Bonus is a reward that is paid to an employee for his good work towards the organization. It is in addition to his monthly salary and is generally paid annually. Nowadays, it is mentioned in the annual package or CTC (Cost to company) negotiated with the employee at the time of giving him an offer.