The impact of merit pay on job performance

The concept behind increases salary merit is that if rewards productive employees increases larger than the less productive, then it will be the most productive and produce, and the least productive are encouraged to improve or advance. This seems to be a simple and effective system, however, the actual implementation of a system of merit-based increase requires two methods for assessing fair and managers who are willing to be honest and objective in evaluating employee performance and poses with the award.

impact of merit

Systems increased by age or regulation systems cost of living
Alternatives to merit pay systems include companies that have chosen to avoid potential liabilities associated with merit pay systems and just give raises associated with promotions, some companies reward adjustment for annual cost of living raise that generally applies to all employees.

Advantage
If implemented correctly in the corporate culture, payment systems can help maintain productivity and high morale and low turnover. According to the website retail grocer Cooperative when evaluating systems employees and managers are just doing their job and have no favorites during evaluations, people feel as valued members of a team. It is possible to achieve significant overall increases productivity without potentially problematic changes to operations or buying expensive new equipment.

Disadvantages
The merit pay systems can also be a source of negative mood, and can even lead to loss of productivity if not applied correctly. This is especially true at the lower end of the wage scale, where resentment at not getting the maximum possible often lead to productivity problems that eventually impact. The merit-based systems can also lead to an overly competitive work environment if management pushes employees or if you are too aggressive with setting goals.

Dedication of resources
Systems pay for merit usually cost the company at least a little more in terms of payroll, and often require a lot of management time to implement and monitor the evaluation process for employees. And the key to the process is that if you’re not willing to spend the extra money to make a difference in the remuneration of employees reasonably important high performance, you’re not much motivating employees, and is unlikely to see many benefits system merit pay.