You will create a
proposal for implementing a merit pay plan for a group or department in your
organization or for one you’ve worked for in the past. Your work will include
a chart and a couple of paragraphs explaining your reasoning.
Examples of charts
to use in this assignment are attached. Explanations for the choices in the
chart should be written in essay format (single or double-spaced).
Be sure to read the
announcement that explains the difference between a bonus program and a merit
pay plan.
Your plan should
clearly identify measurable team goals, the rewards to team members for
achieving the goals, the amount of the reward (actual dollars or percentages),
and the promised time between the measurement of the goals and the disbursement
of the reward. Explain why the goals are important (connection to the
organization) and why the dollar amount and timing are significant enough to be
motivating to the workers.
Hello
let me clarify what is expected.
Background
The term Merit Pay is interpreted
differently by HR practitioners. Technically, Merit
Pay is a form of pay-for-performance (P4P),
originally known as performance-related pay PRP, a type of comp philosophy to reward
employees for their contributions (performance) rather than their longevity or
position. For year, companies had given raises which were based on the
cost-of-living (called COLAs – Cost of Living Adjustments) or based on a
person’s time in the job (90 day raise, 6 month raise, annual raise) and these
had nothing much to do with how well the employee was doing his/her
job. It was only senior management who had any part of their
compensation tied to their performance, or actually, the performance of the
company.
Then, in the late 1980s or 1990s, I
saw a surge in the practice of paying for performance spread to workers outside
of senior management and, by 1989, 44% of American companies had extended P4P
to non-management employees (Economist, 2009). This “merit pay” took the
place of what people knew of as a raise and was added to a person’s base
salary. It was/is a raise but based-on-performance, not on the
cost-of-living or longevity with the organization.
Expectations
For purposes of this assignment,
however, Merit Pay means a bonus based-on-performance and not a raise added to base salary.
You will be creating a chart with at least 3 clearly defined goals, the amount
of the reward (actual dollars or percentages), how the goal will be measured
& the promised time between achievement and payment of the reward (merit
pay). You should explain the choices you made in a 1-2 paragraph essay
preceding or following the chart.
As the reading material states, for
performance based plans to be effective, they need to be SMART (see article
below for more info) and
Fairly simple
Staggered in difficulty so a person continually has
something more to strive for
Tied to a business related objective
Substantial enough in reward to motivate
Paid out as close to achievement as administratively
reasonable
See the examples posted in the course
reading and attached here. Be sure to include all of the components and
offer some reasoning/explanation for what you propose in a couple of paragraph
accompanying a chart or outline. Announce_Wk5_Merit Pay
Plans_Examples-R.docx
Let me know if you have any questions.
References
The Economist. (2009).
Performance-related pay. Online extra. Retrieved from http://www.economist.com/node/14301231
Additional article of interest
Haughey, D. (n.d.). Smart Goals.
Project Smart. Retrieved from
https://www.projectsmart.co.uk/smart-goals.php
Kruse, K. (2013). 8 Secrets to a
Perfect Bonus Program. Forbes. Retrieved from
https://www.forbes.com/sites/kevinkruse/2013/05/01/bonus-program/#3c1c3ee72a13
