250-300 word response in APA format with 3 scholarly resources in response to
Insuring Merit Pay and Other Incentives Administered Fairly
Gomex-Mejia et al. (2016) define merit pay as “a pay-for-performance plan, which increases base pay, usually once a year” and often determined by supervisory performance appraisal (p. 334). Other types of pay-for-performance plans are individual bonuses and awards such as paid vacations and televisions. These pay plans are based on the production and motivation of the employees and insuring that these types of pay plans are administered fairly can be a difficult task for an organization. Majority of employees respond well to merit pay and other incentives. However, according to Salimaki & Sini Jamsen (2010) “research has demonstrated that the implementation of merit pay programs can suffer from a number of barriers related to the performance assessment and pay allocation that may impede its intended usefulness” (p. 230).
One way that an organization can make sure that their pay-for-performance system are administered fairly is to make sure that each individual employee’s contributions can be noted on annual reviews. Ensuring that merit pay and other pay-for-performances are administered fairly must also have proper annual reviews that detail the reasons why or why not for the pay raise. Data from the organization should be used in determining if an employee deserves a pay raise or not. This data can be taken from customer service questionnaires and patient surveys in the medical field. Other ways to ensure that organization will have a fair pay-for-performance system is to involve their employees in the design of the system. “Incentives should link to the organizational goals, informal feedback should be frequently provided to employees” (Gomez-Mejia et al., 2016, p. 354). Pay should not be linked to criteria that are important to the organization, but rather to the employee/group themselves.
Gaining popularity, employers are implementing healthy living incentives, which “offers financial rewards to attain worthwhile goals that are not directly related to performance objectives” (Gomez-Mejia et al., 2016, p. 333). These healthy living incentives offer employees a motivator in order for them to obtain goals they have set for themselves and need a push at in achieving. Mujtaba and Cavico (2013) discuss one major reason for employers offering financial incentives for healthier employees; health insurance costs (p. 193). Unhealthy employees are a major financial stress factor to organizations because it drives the price of health insurance up, costing the organization money. Organizations offer these healthier living incentives because they also care about their employees. Philippians 2:4 reads “Do not merely look out for your own personal interests, but also for the interests of others” (Philippians 2:4, ESV). This biblical scripture explains the importance of caring for others. By implementing healthier living incentives for employees, organizations are showing their care for their employees and their devotion to their health.