Question

What is a merit pay plan and how well do such plans generally hold up against the standard method of pay for employees? please attach a web reference (actual article, not just link) to support the claim.

Answer 1

Merit pay :

Merit pay, merit increase or pay for performance, is performance-related pay, most frequently in the context of educational reform or government civil service reform (government jobs). It provides bonuses for workers who perform their jobs effectively, according to easily measurable criteria.

Merit pay is an approach to compensationthat rewards the higher performing employees with additional pay or incentive pay.But, all-in-all, merit pay is the best way to reward the employees that you most want to keep. Merit pay sends a powerful message about what you want to see from employee performance and contribution.

It is used to recognize and reward employee efforts and contributions and confirms what you most value from employees.

Making the range of the available merit pay public allows your employees to see where their increase falls in the merit pay ranges established by your company pay plan. This reinforces the actions and the behaviors that you want to see more of and increases the likelihood that employees will strive for the best merit increase for the next company year.

When employees hold conversations with their supervisors about their top merit increase, they learn all of the contributions and actions that are most valued by the organization. This is tremendously affirming and reinforcing. It is also a great opportunity for the manager to affirm what they value in each of their reporting staff.

With employees who received less than the top increase, the supervisor has the opportunity to describe and discuss exactly how the employee will need to improve his or her performance to qualify for the top merit increase during the next cycle of raises.

Here's more about why you might want to consider merit pay and the disadvantages and challenges inherent in a pay system that focuses on merit increases.

how well do such plans generally hold up against the standard method of pay for employees..??

1.Merit pay helps an employer differentiate between the performance of high and low performing employees and reward the performance of the higher performers. This is a retention effort because no employer wants to lose the organization's best performers.

2.Merit pay, unlike profit sharing or similar bonus pay schemes, allows an employer to differentiate between the performance of the company as a whole and the performance and contributions of an individual. While many merit pay programs also provide an overall reward that is distributed to all employees, to promote such values as teamwork, coworker positive relationships, and effective customer service, a portion of the available compensation is reserved for their strongest performers.
3.Merit pay also provides a vehicle for an employer to recognize individual performance on a one-time basis. This is useful for rewarding employees who may have participated in a one-time project such as implementing a new HRIS or opening up a new sales territory.