Question

A frequently heard complaint about merit raises is that they do little to increase employee effort. What are the causes of this belief? Suggest ways in which the motivating value of merit raises may be increased.

Answer 1

Concerns of favoritism: The interest of any given employee in several offices is arbitrary and essentially decided by a boss. Some could easily challenge the findings if merit pay were calculated without simple measurables. Even in offices where measurable results are available, results can be challenged. Some may say, for example, that the best-selling salesperson had an advantage, since he had the best sales field.

Uses time and money best used elsewhere: The amount of time and energy that companies spend in attempting to make success tangible for merit pay, including professional growth, metrics, success baselines, and so on, is better spent on providing customer service. Organizations have produced several hundred-page documents that set out what merit means in various occupations. The rewards are still simply not worth all of the time and energy.

Raises can be an important motivator for workers, but workers need to know that raises are a reward for exemplary performance. There needs to be a clear correlation between superior results and higher pay. Employees do need to have enough control in their work so their actions can have a direct effect on their results. This can also affect the scale of the boost. Awarding a few extra cents an hour to hourly workers is unlikely to create substantial incentive for increased effort.

Employees who think they have incentives inside the organization to progress as well as the ability to improve their skills are also inspired to perform well. Posting internal work vacancies means that workers have an opportunity from inside the organization to promote themselves. In addition to promotions, the introduction of incentives such as tuition reimbursement and training programs will provide outlets for empowering their employees. During tough economic times, gestures that demonstrate to employees that their efforts are valued can boost morale, even in the absence of raises.