Human Resources Final

1. A frequently heard complaint about merit raises is that they do little to increase employee effort. What causes this belief? Suggest ways in which motivating value of merit raises may be increased.

There are a couple of reasons as to why there are beliefs that merit raises do little to increase productivity. Merit raises are given to an employee and it is now a part of their salary going forward, unlike bonuses which are only given out once a year and are not reoccurring. What causes this belief that productivity doesn’t increase when merit raises comes down to the fact that the employees won’t necessarily work harder after the fact that the raise has been given. Merit raises can be substantial if done correctly; meaning that giving a 9 or 10% permanent pay raise would absolutely boost that person’s productivity and usefulness to the company. What is happening though is organizations are giving a 1 to 2% pay raise on their salary and treating this as acceptable measure to motivate their top employees, and not surprisingly no significantly greater effort will be given by the employee. Also if there is no differentiation between what an outstanding worker is and what an above average worker is, there will be no way to determine proper merit raises without over or under rewarding. Leading us again to the attitudes of the employee, if finding out that another individual got the same percent raise or better than them for doing less work, motivation will once again is lost. So although there is a belief that merit raises are not conducive increased effort, it can be a reality if not implemented properly. Increasing the motivating properties of the merit raise is possible and one of the more applicable solutions for an organization is merit guidelines. When used in conjunction with the performance appraisal it allows individuals to know exact merit grade increases based on the results of the appraisal. With boundaries tied into the guidelines that all employees are...