1. In your opinion, do you agree that the merit pay and incentive raise process is currently ineffective and if so what suggestions would you make to improve it? I do think the process for merit pay and incentive raises is an ineffective process. In think that merit pay and incentive raises do not necessarily improve employee performance. I work in an environment like this and it can be tricky. On the surface merit pay should be a good thing. However, I have seen many situations where a merit pay system can lead to dishonesty and unethical business practices in the workplace. I think that companies should offer employees fair pay based on experience, talent, and education. Merit pay and incentive raise processes can open the door
I agree with your viewpoints, and I think that giving employees raises is an incentive to work harder. While bonuses in the workplace are dwindling, I also agree that thanking employees with a bonus can motivate them to perform better. Personally, I think that research and development companies offer some of the greatest forms of compensation to employees, beyond an actual paycheck. From my experiences with retail, there really isn’t any additional compensation beyond the hourly wage, depending on the company. I like the point that your brought up about Publix, because I also have friends who work and invest with the company, and it’s a nice
The company uses a merit based pay structure to recognize employee performance. Yearly evaluations of performance are conducted to rate employee’s results of the year compared to previously set goals. Kraft Heinz recognizes employees at every level for outstanding performance. In 2014, over a thousand employees were promoted because of their high performance and the value they added to the organization (Kraft Heinz, "Careers", 2015). Merit-based pay is based on individual performance. This method of pay and raises creates a link between rewards and the employee’s performance throughout the year. A danger of merit based pay, in organizations like Kraft Heinz Co., is that management might give merit based raises/promotions on how they perceive the employee will perform, so they may over or under estimate pay decisions (Judge & Robbins, 2016, pp. 137). However, the end of the year assessments the company conducts to review performance and set goals for the next year would help to reduce this
Basing our structure on jobs clearly defines what it takes for an employee to rise within the organization and provides legal foundation as to why pay differs between individuals. We wouldn’t want to do a person based structure because that would pay employees for the highest level of skill they have achieved regardless of the work they perform. Therefore, person-based structures can become costly and complex. Additionally, pay differences in a person-based structure would be less job-related and legally defensible as well as create more equity issues between employees. In phase 2 we will describe how many pay levels to divide each structure into after seeing the results of our market analysis. However, we believe based on our point distributions in there will be roughly five. Furthermore, we will also clarify in phase 2 the pay
Other affecting factors include things such as labor laws, labor unions, internal equity, and organizational culture and structure. Furthermore, job evaluation is the process of assessing the value of each job in relation to other jobs in the organization. Therefore, the use of job evaluation creates internal equity among jobs. Thus, internal equity ensures that individual employees perceive that their position is treated fairly within a pay program in relation to other jobs in the organization. External factors exist and influence an organization's compensation strategy in the manner in which, when your organization's pay practices are similar to the practices of other organization competing for the same talent is known to be competitive or externally equitable. Equally important, when looking at external equity our focus moves from an administrative value system to an economic one (Bernardin & Russell, 2013). The primary instrument utilized for evaluating external equity is salary surveys. In most cases, many organizations survey benchmark positions. Likewise, benchmarks are well known jobs with many officeholders that are strategically important and are structured in such a way that one would expect to find them in the general
This article examined the necessity of changes required to traditional reward systems in order for employees to remain motivated and productive in the workplace (Lawler & Worley, 2006).The changes that must occur are in response to shifting environmental demands, with reward systems and motivational tactics holding exceptional importance to the ongoing success and longevity to the organization. The article then emphasizes the ineffectiveness of traditional reward systems, such as merit pay. This is largely attributed to how merit pay salary increases are small and become a permanent part of an individual’s pay (Lawler & Worley, 2006). As a result, the relationship between pay and performance is weak and not particularly motivating. As a more effective alternative, companies should look to implement reward systems such as bonuses in the form of short-cycle business periods, as they have shown to be effective motivators as well as flexible enough to compensate for organizational changes. Lawler & Worley (2006) concluded that “traditional reward systems lead to lack lustre performance, and that in order to create a high performance organization, companies must employ different reward systems that motivate performance, reward change, and encourage the development of individual and organizational capabilities” (p.5).
The process helps to reward newer managers for their learning curve achievements and exemplary efforts. According to the Merit Pay increase grid, if your annual salary falls 1st quartile then the merit pay increase will be 12%. In contrast, when the annual salary
The merit increases given are typically based on a subjective appraisal of the employee’s performance (Martoochhia, 2011). Managers must be well trained to accurately assess an employee’s performance or results at the given job function. This responsibility also falls on the company. Companies must clearly outline job functions and responsibilities to make it possible to provide objective data to base an employee’s performance on. Evidence shows that despite the prevalence of merit pay programs, employees still react negatively to these plans. This goes against similar evidence that shows performance pay related programs are good indicators of strong employee performance (Duffy, 2008). If merit based pay is based on performance, why are they so ill-received by employees? The answer lies in the way these employees are evaluated. If evaluated too loosely and seen as automatic, employees are going to become complacent and view these programs as seniority based pay with the same predictable yearly raise, regardless of effort or results. If evaluated too strictly on unclear metrics or unrealistic expectations, employees won’t see it as feasible or worth their time to excel. These employees are also highly likely to not be loyal to the company and quick to seek more competitive employment elsewhere. Luckily, there are initiatives that drive successful merit pay
Pay structures, regardless of the size of the organization, must have two things going for them, which are external and internal equities. In order to give employees purpose to continue to give their loyalty and retention, there must be incentives as paying for education, experience and training, job tenure, demonstrated skills, or a combination of these attributes consistently. Organizations should develop a well written compensation program which includes incentives, and addresses both external and internal equities.
There is a controversial debate going on about whether men and women are equals at the office. Some companies believe that they are treating men and women fairly with no gender bias and equal pay. Others know that these big companies are getting treated unjustly in many different ways in the workplace. Therefore, men and women aren’t getting equal treatment at work because women aren’t getting taken as seriously as men and women’s salaries are much lower than men’s.
I think the overall idea sound great but the performance appraisal system need to enforce at the same standard for all employees. If an employee is consistently performing and producing stellar result, there should be a type of incentive in place to award employees. This type of incentive motivates employees to do their very best to accomplish daily task at a higher level. I think adopting new labor-management procedures at a time when the United States is deeply involved with homeland
The purpose of this paper is to explore the use of Merit Pay and Incentives
On the other side of this argument is the employer. From their perspective they are trying to cut cost and get their money’s worth from their employees. An article by June Lane in Associations Now states that there is five important tips a company should consider when determining a fair compensation. They are equity, purpose, accurate data, job descriptions and more than money (intrinsic). A company that wants quality workers and the ability to retain them will offer their employees a fair and equitable compensation packet. An employer can’t always pay top dollar especially in today’s economy. An employer is in a struggle to keep their employees happy and not bankrupt the company in the process. Employees need to know that compensation is going to be based on the current economic status. Sometimes it can be hard for a company who wants to pay higher wages but don’t have the income to do so. Unions can be a hindrance for a business to deal with. Sometimes they are not willing to budge and the company has no choice but to layoff or close down. This is what happed in my hometown of Detroit, Michigan. My
Merit pay plans establish an effort performance and performance reward link, if an employee’s effort leads to successful performance, the employee is rewarded by the organization. In consideration to group and company performance if the individual performs well, the reward is granted regardless of how well others have performed their jobs or how well the company, as a whole has done.
Increasingly, organizations claim their pay systems are market driven, that is, based almost exclusively on what competitors pay. However, “market driven” gets translated into practice in different ways. Some employers may set their pay levels higher than their competition, hoping to attract the best applicants. Of course, this assumes that someone is able to identify and hire the “best” from the pool of applicants.
Employees have been reported to enjoy the concept the Merit Pay systems but feel that it is not adequately implemented in their workplace. A study was conducted on an organization who had just created a new merit pay system for their employees. The employee 's salary was now broken up into two seperate factors. One factor was their standard base salary while the second factor was an incentive bonus. The incentive bonus was designed to be distributed to employees based on their performance. Their performance was determined by supervisory ratings of the success to which employees achieved their preset goals. Prior to the implementation of this new pay plan, employee evaluations incorporated a combination of merit and seniority that allowed employees to advance through job classifications and pay grade raises based on traditional end of the year annual performance reviews. 4,788 employees who were covered under the newly implemented pay for performance plan in the organization were asked three open ended questions to state how they felt about their plan. Employees 76 percent of them approved of the idea but disagreed with the execution of their organization’s merit pay system. Employees appreciated the opportunity to be judged on merit, the money offered by the plan, and