Making merit pay work

MERIT PAY

Ensuring merit pay fits with clear business objectives is crucial to its successful use, says an IRS study.

The five-page reports examines the different approaches adopted by three organisations:

DAS Legal Expenses, a specialist insurance firm employing 500 people, overhauled its long-standing merit pay arrangements in 2002. The new scheme is based on a quarterly appraisal system built around four core values -- excellence, respect, improvement and co-operation -- with each one broken down, firstly into attainable goals, and then department objectives. A matrix indicates the percentage increase payable for six different ratings.
Carlson Wagonlit, a business travel management consultancy with 1,120 UK employees, appraises staff against key competencies developed by employees.
Isotron, a sterilisation products manufacturer employing 460 employees worldwide, operates a performance-related bonus scheme rather than increments to pay.

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Title: "Making merit pay work: one size doesn't fit all", IRS Employment Review 813/Pay and Benefits, 10 December 2004.

Availability: To purchase this report contact the subscriptions department at IRS in London, tel: 020 8686 9141 or visit www.irsemploymentreview.com

Posted 11 January 2005