Management and Organizational Studies 3342A/B Chapter 11: CHAPTER RECAP
Document Summary
Pay for performance plans are a move towards pay that varies with some measure of individual or organizational performance. Out of the pay strategies, only base pay and across the board pay don"t fit under pay for performance plans. Specific pay for performance plans: short term: merit pay: a merit pay system links increases in base pay to how highly employees are rated on a subjective performance evaluation. At the end of the performance year, the employee is evaluated, usually by the direct supervisor. This determines the size of the increase added on the base pay. Some argue it"s expensive, biased, and doesn"t achieve employee or corporate performance. Trying to pay for performance requires three things. There must be some definition of performance. There must be a continuum that describes different levels from high to low on the performance measure. There must be decisions regarding how much of a merit increase will be given for different levels of performance.