Merit Systems

Paper Summary:

This paper discusses the concept of merit pay: If you pay high-performing workers more than low-performing ones, the former will stay and keep producing at a high level, while the latter will leave or have incentive to improve. Through a literature review, the paper looks at the advantages and disadvantages of the system including studies of employee motivation. The paper also examines the use of merit pay in an education environment and the rivalry it creates between faculty members.

From the Paper:

"But by taking up so much of a pay increase budget, and by diluting the message of a raise, employers dull the potential impact of merit pay. For example, if all employees are guaranteed a raise of at least $.25/hour with top performers getting raises of up to $.50/hour (a common formula), the difference between a high performer and an acceptable performer comes to three percent for an employee earning $7.50 an hour. Maybe the symbolic reward of knowing they are regarded as a high performer and therefore got the highest possible raise is enough for the employees who earn it. So, what about all the others? Were they expecting a 50 cent raise too? What will happen to their motivation over the next year? Does three percent really make a difference?"

Sample of Sources Used:

• Colter, Carolee. "An empirical examination of a merit bonus plan." AllBusiness.com. Spring 2002. The Gale Group Inc. 12 March 2006. <http://www.allbusiness.com/periodicals/article/183081-1.html>.
• Curtis, Fred and Sandra Jamieson. "Some thoughts on merit pay systems." AAUP Online. 8 June 2000. Drew University. 13 March 2006. <http://www.depts.drew.edu/aaup/merit.htm>.
• Miller, Lynette. Personal Interview. 10 March 2006.
• "Urban Institute Study of Merit Pay Systems." PSEA Interactive. The NEA. 12 March
• 2006. <http://www.psea.org/article.cfm?SID=165>.

More papers on Merit Systems:

• Comparison Essay # 113438 : "Merit Pay and Automatic Pay"
• Research Paper # 109108 : "Merit Pay for Teachers"
• Essay # 57086 : "Merit-Based Raises"

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