Merit Pay at Carroll University - Winners Take All Essay

carefully planned out and considered, the total closure or failure of the organization could be at hand in the near future. In our modern age, employers know that salary is not the only factor that should be considered and that salary alone will not lead to better or more highly profitable workers alone. This is why compensation planning is important and why pay should have some connection between performance and compensation. This is why the human resources department should consider many monetary and non-monetary factors when considering how to properly compensate and motivate employees (Dessler, 2013).

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

One of the main issues with merit pay for teachers is found in the manner in which it is measured. Most of the new performances pay laws and union contracts measure “effectiveness,” at least in part, by looking at the students’ test scores from one year to the next. One test score cannot paint a full picture of a student's accomplishment. Teachers unions have historically opposed merit pay, arguing that test scores are not an accurate measure of student achievement (Turner, 2010, para 15). Most teachers will report that a test will only show part of the picture. Standardized tests do not reflect life lessons, effective citizen traits, or character building traits that were taught that year. All of these traits thrive in an effective teacher’s curriculum.

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.

Hess. Merit pay systems create unhealthy competition between educators which should be working together to ensure that the best possible educational is being given to every student. If one observes an effective educational institution in operation, one will notice those institutions that are highly rated are essentially partnerships between various educators with various teaching styles and personalities teaming together to impart wisdom on young minds primed for educational molding. The general concept behind merit pay systems makes this type of partnership unattainable. In an article published in Education Week Kim Marshall stated that “When individuals are rewarded, collaboration suffers”. Educators become more concerned with outperforming their counter parts to gain pay raises then working together to educate young minds.

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:

Small State University is facing the dilemma of how to allocate the $17,400 that the state agreed to give to the management department. Each qualified candidate’s employment information is given to help determine the merit raise decision. Before the decision can finalize, research and analysis will be conducted. A case solution will include the implementation of management approval, budget recommendations, communication and essential steps of the new policy to the university, and fair distribution of merit raise.

This paper will examine setting the stage for strategic compensation and bases for pay. There are three main goals of compensation departments: internal consistency, market competitiveness, and recognition of individual contributions. Internally consistent compensation systems define the relative value of each job among all jobs within a company. (Martocchio, pg. 22, 2011) With this system companies want employees to be paid more based on their qualifications and responsibilities. They believe someone with less experience should be paid differently. To determine such evaluation companies use job analysis in order to provide job descriptions. The job evaluation is to determine pay according to a particular position. Market-competitive

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)

With beginning teachers usually earning entirely less than other college graduates, the profession is at loss of top-notch, quality people who tend to find jobs seeking more money. Almost 50 percent leave the profession within 5 years, lured by higher pay and prestige elsewhere in the booming U.S. economy (World, 1999, par. 7). Starting teachers average a $25,735 salary in the United States compared to an engineer earning $56,820 or a physical therapist earning $56,600 (Engineer, 2000, par.1). And what signal does it send out about the value of good teachers and a good education when a 45-year-old teacher with a master’s degree earns $45,000 a year and a 25-year-old out of law school often starts at $80,000, considering a six year education for a master’s degree and a seven year education for a law degree (Greenhouse, 2002, par. 4)? A teacher is also given no compensation for the long hours spent basically in overtime work. The teacher’s day does not end when they leave school because if lesson plans, grading, or planning is not completed, it will have to be finished on their own time. Accountants, paralegals, and engineers all are compensated and get paid overtime for work that does not get completed in a regular day or if they want to stay and

O’Neil (1998) suggests six minimal criteria for the design of a performance based pay system. The first of these criteria is that the reward system should be self-funding, that is, the performance increases should as a minimum offset the cost of the rewards provided. The second criterion is that the distribution of the rewards must be consistent, fair and justifiable. In addition reward plans must be transparent and clearly communicated. The third criterion

In relations to Dr. Carl Jones and Dean Smith’s merit processes, the university has a policy to provide pay increases based on merit. To meet that objective, Dr. Jones has created a robust systems of metrics to evaluate his staff based on specific criteria. Dr. Jones process includes a weighted point system with 40 percent based on teaching, 40 percent based on research and 20 percent based on service. As chair of his department, Dr. Jones provided his recommendations for salary increases based on his detailed criteria to the Dean who approved them.

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

Although research generally confirms that pay-for-performance plans can influence greater outcomes, it is unclear how effective different pay plans are relative to each other (Park, 2012). Like most things in business, compensation is something that requires evaluation, study, assessment, strategy, modeling and integration.  Achieving a pay for performance culture does not happen without paying attention to the behaviors, activities, rewards and motivations that have to be linked and reinforced through a well engineered and successfully executed process.  Actually if that process does not tie rewards to shareholder financial objectives, employ the proper mix of compensation elements, result in meaningful dollars, embrace performance that employees can impact and are effectively communicated and reinforced, then the results it produces will likely fall short (Vision Link Advisory Group, 2013).

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.