External and internal equity.

Essay by dom5858 September 2005

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Implementing pay for performance plans, good management, and incentive plans will motivate personnel to perform at the peak levels necessary to bring about improvement in the bottom line which is what interests most corporations.

Merit pay systems which are based on past performance are flawed by their very nature and do not work effectively as a reward system. These systems provide a supervisor with a means of escape from the proper practice of their authorities, accountabilities, and leadership to subordinates. The merit pay system depends on the reward to produce the effect rather than planning and designing the effect at the outset is a set of goals the individual may strive to complete.

Evaluate pay ranges from outside the organization.

Presently, other organizations use a system that supposedly evaluates employees on various aspects of their professions and goals for the upcoming fiscal year. The evaluation consists of a personal evaluation by scoring on particular items separately by the employee and supervisor.

Finally a meeting is held in which both the employee and supervisor come to agreement over each score and discuss any variances. Once the final score is determined, a mathematical equation is established. From that equation is the result in a percentage that is applied to the employees' base salary. The percentages usually range any where from one to ten percent.

Many times, if one is given a bonus for a job well done, the money is not the motivator, but the recognition is.