Should Organizations Offer Merit Pay Increases

The current competitive market place means organizations must achieve high performance for them to remain profitable and competitive in the market. However, the greatest challenge would be how to attain and sustain such high performance levels. One such way is through merit pay, which serves as a source of employee motivation, while paying for their effort (Schwab & Olson, 1990). However, such a merit pay must offer a mechanism, which allows for its review over a certain time interval. Therefore, I strongly disagree that organizations should offer merit pay on an “as expected basis” each year.

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The general cost of living has increased significantly in the past few years and this has placed more pressure on individuals, organizational employees and companies. If such companies offered merit pay, they are more likely to cut down on the losses that result from non-performing employees, and increase their performance through a reward for the high performing employees. Merit pay is a good idea that ought to be implemented, but it should take into account many factors such as the changes in the cost of living and the overall changes in the world economy. Moreover, such pay should provide a mechanism into which a review can be done after a specific time interval.          

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Although merit pay on an “as expected basis” each year may actually be seen to take into account the efforts of the employees, they may become a burden to an organization. The lack of it review coinciding with huge company turnovers over the years may make employees to feel unappreciated and thus may leave to look for companies that offer better employment terms. Therefore, it is important that organizations implement merit pay, which must be reviewed after specifically set time interval in order to take into account the changes in the economy and the cost of living.

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