Why merit increase programs fail

Article Abstract:

Compensation programs that reward employee performance with pay increases might be better replaced by skill-based pay systems. Monetary rewards can decrease the motivational value of intrinsic rewards such as the fulfillment derived from the work itself. The pursuit of performance-rating scores as well as money deprives employees of the satisfaction produced by providing either a valued service or product. Skill-based pay systems on the other hand, is compatible with various kinds of jobs such as those that require teamwork. However, clear objetives are needed for the success of such a program.

Analysis

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Base salary increases and merit bonuses: an approach to annual compensation increases

Article Abstract:

A study is conducted to examine the effectivity of a two component system for annual merit compensation. The system involves a base salary component which considers employee experience and contributions and a one-time merit bonus component as a reward. Results show that such a system helps firms minimize reduced fixed pay while rewarding employee development. In addition, the system allows companies greater control over fixed costs.

Wage payment systems, Bonuses, Pay structure

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A slight alteration of fit: managing compensation plan change

Article Abstract:

Corporate executives involved in compensation need to remember that their plans have to respond not only to the occurrence of change but also to the expected outcome of change. They need to realize that changing systems can cause newer problems and thus they should be ready with solutions for these. They should also bear in mind that the pay system has to change in accordance with managerial and organizational change.

Methods, Management, Organizational change

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