The Use Of Merit Pay And Incentives

The Use of Merit Pay and Incentives

The purpose of this paper is to explore the use of Merit Pay and Incentives as motivators for increased productivity. The key focus is the system at

Richmond Memorial Hospital. To do so, one must begin at the beginning…..

The use of financial incentives (financial rewards) paid to workers whose production exceeds some predetermined standard was popularized by Frederick

Taylor in the late 1800s. As a supervisory employee of the Midvale Steel

Company, he had become concerned with what he called "systematic soldiering".

This was the tendency of employees to work at the slowest pace possible and the fact that some of these same workers still had the energy to run home and work on their cabins, even after a hard 12-hour day. Taylor knew that if he could find some way to harness this energy during the workday, huge productivity gains would be achieved (REFERENCE?). Thus was born the concept of motivational and incentive systems.

What is "motivation?" The root word is "move" which would mean that anyone who is moved to do something is motivated. Therefore, sitting on a tack, or at least the pain associated with it is a motivator. For those of us in Graduate

School, we are aware that without a "B" average we will be eliminated from the program. Maintaining that average is our motivator. Attaining the certificate of graduation is our incentive. In psychology, at its most basic, a motivator is that which impels or compels an individual to act toward meeting a need. On a physiological level, thirst, hunger and sex are motivators or drives. They are basic needs which must be met.

Relating this to a hospital environment, it is not base compensation which drives the employee, but what the base compensation can satisfy in a higher level of needs. Money can't buy love, but it can buy some security such as insurance benefits. After basic and security needs are met, compensation is not the motivator, but what compensation represents is (REFERENCE?).

One statement that must be made before continuing is that needs are varied and can occur concurrently or over a period of hours or days, etc. And, needs are mixed. Hunger is a drive: The satisfaction of hunger can take several forms and, usually, when one is hungry one also is a little thirsty. Then, if the book, Tom Jones (AUTHOR, YEAR), was any indica...

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...endations based on sustained performance (REFERENCE?). Another type of pay system is Pro-Pay where employees can receive lump sum merit bonuses once they reach the top of their pay range and is only paid for above average performance (REFERENCE?). Star/Superstar programs are where employees who represent the top ten percent of performers receive lump sum bonuses. Along with a Pay for Performance system, there must also be in place a incentive system. (Grossman, YEAR?). Pay perform & prod (next lines) (INCOMPLETE

SENTENCE) "Many US business owners are finding that turning to incentive programs is a good way to boost productivity and improve morale” (REFERENCE-

NEED PAGE NUMBER FOR DIRECT QUOTE)..

A properly structured incentive-driven system (IDS) provides several methods and levels of compensation. All IDS systems must be tailored to each organization. What works in a hospital may not work in academia (Dressler,

YEAR?). It is usually a mistake to implement an incentive plan without input from employees. Management should use a program design team composed of employees and supervisors. They could work with Human Resources in the development of