Benefits And Disadvantages Of Merit Pay Essay

Benefits And Disadvantages Of Merit Pay Essay

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Merit pay is defined as “a term that describes pay-for performance, is defined as a raise in pay based on a set of criteria set by the employer. This usually involves the employer conducting a review meeting with the employee to discuss the employee’s work performance during a certain time period. Merit pay is a matter between an employer and an employee (or the employees’ representative” (Department of labor). In simpler terms it is “an approach to compensation that rewards the higher performing employees with additional pay or incentive pay” (Human Resources). There are many advantages and disadvantages to merit pay and how it is used in the work force. There are certain people that get to receive merit pay “Only full-time staff and administrative employees are eligible to receive merit pay. Part-time employees will not be eligible. Also, full-time employees must have six months of continuous service before becoming eligible for merit pay” (merit pay). Merit pay is known as the system that if the employee does good work but doesn’t follow the system the employees go home ‘empty handed’ or not being praised for the work they have done. Merit pay “increases are an internally focused raise philosophy. Managers rate their employees (or employees rate each other), usually based on performance over the last year” (Payscale). Rating employees based by the work they have done within the last year can create advantages and disadvantages in the system and in the work place.
Some of the advantages of using merit pay include motivation, employee retention, self-determination and differentiation. “To motivate employees effectively, the size of the merit increase must be significant enough to make a noticeable difference to employees” (Baker)...


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...ow they are doing in school whether they are doing well or not, makes it seem like the teacher isn’t doing their part in education. There are many reasons that can decide what happens with the teachers and the students, and how to fix the aspects of their performance. Linking pay to performance can have advantages and disadvantages and there are many reasons for why it can be a good thing to have in the workplace. From motivating employees, to having remarkable bonuses and helps with self-worth in the work place environment. The level of performance given by employees and their judgement on how well they are doing by their employers and their peers can make the merit pay difficult but it’s always the ending result that matters the most. Motivating workers with the merit pay system is always the end result that employers are looking for in their workers and employees.

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