While recently conducting a program on my Employee Process Evaluation Program, the group was discussing merit pay. One of the members of the group posed the following question, “Why evaluate performance if you are not going to give an employee a salary increase?”
HR CONTRARIAN POINTER: If the only purpose for evaluating performance is to provide a monetary reward, then we are in trouble as organizations.
In my mind, the purpose for an evaluation is to ensure that the employee is meeting the expectations of performance as outlined by management and to provide the employee with an opportunity to present his/her comments and ideas relative to the performance expectations. By tying compensation to the evaluation of performance, we detract from the central purpose of an evaluation.
One of the main problems with merit pay programs is that they are subjective rather than objective and are tied to personality rather than performance. The result is that the merit pay plan becomes a de-motivator.
There are numerous ways to compensate exceptional performers while recognizing the performance of the “average” employee. But first managers MUST identify the expectations of performance for each employee. Without this level of specificity, any type of reward program will be looked at with suspicion if the “teacher’s pets” appear to receive all the benefits.
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