Merit pay: viable?
Can an organization really have a meaningful relationship between its merit pay program and motivation of its employees? C. Richard Farmer of Armstrong Cork says yes--if. If the approach to granting merit pay increases is coupled with a salary structure attuned to economic and competitive conditions, and if it is communicated effectively and openly to the employees, then it automatically translates labor market activity, performance, and the cost of living into a meaningful increase. Position descriptions, evaluations, and performance appraisals are some of the tools essential to a viable merit pay program. But besides these definite do's, the author outlines some of the don'ts of merit pay programs, such as centralized administration of the program--policies, programs, and procedures may be centralized, but their administration must be carried out by those close to the individual employees and work units. Above all, the merit pay program must be based on performance, not longevity.
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D006801:Humans; D009042:Motivation; D010559:Personnel Management; D012456:Salaries and Fringe Benefits