Posted on

The merit issues faced by Employers

In this Assignment the research worker is traveling to look at the scope of virtue issues faced by employers and buttocks whether it is a good thought to honor employees with these virtue issues. The research worker is traveling to speak about the different motive factors from different writers. Then the research worker is traveling to look into the different wage and wages methods that exist followed by the factors that affect the wage determinations. A few illustrations of the different wage and inducement methods in Asia are besides provided. This essay will stop with an in-depth critical analysis and a decision.

Human capital is the most of import plus that any company has ( Leslie. 2003 ) . It, hence, becomes imperative to maintain the employees motivated so as to acquire a better end product inside and outside of the work environment. The success of any company is backed by the difficult work and dedication of its employees at all degrees. Success comes from forbearance, continuity and difficult work. Companies work so difficult to maintain their external client ‘s happy, satisfied and delighted ; nevertheless, they tend to disregard their internal clients, who are an built-in portion of their overall success.

Example 1 “ You have to be really good at happening fantastic people to run your company, decently incentivise and decently actuate them and give them the freedom to travel in front and do good things and do errors ” ( Richard Branson ) . Example 2 Likewise, Steve Jobs and Bill Gates say that, “ We have attracted great people and everything that has been done at Apple and at Microsoft has been done by singular people ” . As such it is of import to honor employees with virtue issues.

Whilst merely few decennaries ago, the tendency was one occupation, or at least one employer for life, the new coevals displays the inclination of remaining for shorter period with one employer. Indeed, the mean stay with one employer has significantly shortened over the old ages, and there is no mark of any rearward tendency in the coming old ages.

Example 3 Our 2010A Resourcing and endowment planningA surveyA reported the overall employee turnover rate for the UK to be 13.5 % .

Coupled with this is the increasing competition, particularly from China and other emerging economic systems, originating from the grim globalisation of trade, which compels companies to cut cost to enable them to remain competitory, andA A … alive!

Example 4 “ Davis ( 1998 ) shows that the addition in unemployment, due to international

trade, in a minimum-wage economic system like the EU is exacerbated in the presence of a flexible-wage economic system like the US. ”


Motivation is the driving force that is required in order to accomplish anything in life. Without motive people give up at the first hurdle. Motivation inspires, instigates and encourages people to make their best. It compels a individual to believe “ when there is a will, there is a manner ” and will do them make anything to accomplish success. “ What are the factors that motivate employees? ” has ever been a really large challenge for the early theoreticians. Different theoreticians have come up with different attacks depicting what does and does non actuate people in a work topographic point, for case, “ Maslow ‘s Hierarchy Of Needs ” , “ Frederick Taylor ‘s Scientific Management ” , “ Victor Vroom ‘s Expectancy Theory ” , “ Herzberg ‘s Two Factor Theory ” , “ McGregor Theory X and Theory Y ” , “ Alderfer ‘s ERG Theory ” and many more. The research worker has taken some of these motivational theories into consideration for the intent of this assignment.

Frederick W.Taylor ( 1911 ) is known as the male parent of ‘scientific direction ‘ . He concluded that every occupation was mensurable and each component of a occupation could be timed. As such, the directors merely had to compensate the employees harmonizing to what they produced. This is the theory that gave birth to the “ piece rate ” method of wage and therefore motivated workers to be more productive.

Frederick Hertzberg ( 1959 ) is another good known theoretician who carried out a large-scale study into motive in the American industry. After thorough research, he came up with the ‘two-factor ‘ theory of motive, which are termed as the “ Incentives ” and the “ Hygiene ” factors. Incentives being the satisfiers and the Hygiene factors being the dissatisfiers.

He found that if an employee ‘s basic demands ( such as a good working environment and a basic rate of wage ) were non met, so that would demo a deficiency of satisfiers. On the other manus, the absence of more intangible factors ( such as acknowledgment and possibility of growing ) would take to dissatisfiers.

Maslow ‘s hierarchy of Needs

Another really good known theoretician working in this field was Abraham Maslow. He came up with the “ Hierarchy of Needs ” in 1940-50s USA.

Figure 1: Maslow ‘s Hierarchy of Needs

Human motive, direction preparation, and personal development are the chief countries covered by this theory ( A. Maslow 1970 ) . Abraham Maslow discusses that people have different motivational degrees. He identified five different demand phases that an employee goes through. Harmonizing to Maslow, the physiological demands ( really basic demands such as air, H2O, nutrient, sex, slumber, etc. ) on this hierarchy demand to be satisfied before the employee could look to the following degree. If these are non satisfied, the employees may experience illness, annoyance, hurting, uncomfortableness and so on.

However, like any other theory, this theoretical account besides has certain defects and so it is advised non to lodge to this theory entirely. These are as follows:

Peoples do non needfully hold to work through these phases one by one. These may be less structured to accommodate their personal demands.

Different people from different backgrounds may hold different hierarchy of demands.

There are other demands which have non been identified, for case, in McClelland ‘s theory where he identifies the demand for accomplishment, association and power.

Example 5- Motivate Your Employees Like Jack Welch “ Follow the former GE CEO ‘s advice and stimulate your staff by assisting them believe in the mission and understand how to accomplish it. ”

Pay and Reward Methods

Money is an of import characteristic that the human resource direction has to look into- after all, it is the chief ground why people work. This is one of the most sensitive and controversial subjects that has been extensively debated at both practical and theoretical degrees.

Milkovich et Al ( 2001: 6 ) province that: “ Employees may see compensation as a return in exchange between their employer and themselves, as an entitlement for being an employee of the company, or as a wages for a occupation good done ”

The different types of wages methods available for directors to take from, are “ Individual inducement plans ” ; “ group incentive plans ” ; and “ profit-sharing programs ” .

A normally used inducement method is aA cashA wages, but there are several other ways of animating employees to execute beyond the call of responsibility.

Some of these inducement programs are discussed below: –

Merit Pay- this refers to a wage rise based on public presentation assessment ( Heneman, 1992 ) . The higher the employee ‘s public presentation, the larger is the addition in wage granted to him.

Example- Now, nevertheless, political leaders such as Barack Obama have supported merit wage for instructors.

Incentives for Professional Employees – The work of a professional employee involves the usage of academic expertness to come up with solutions to the house ‘s jobs, for case, attorneies, physicians, economic experts and so on.A A These employees are normally good paid and hence it becomes really ambitious to plan incentive wage for them.

Piecework Plans – this is a program where the employee is paid a set sum for every unit produced.

Straight piecework maintains a balance between the consequences and the supernumeraries while disregarding the end product. Whereas a standard hr program establishes a fixed unit of clip for completion of a undertaking or occupation. An employee receives the pay for the standard unit of clip for completion of the undertaking without respect to the existent clip needed. For illustration, assume that in an car fix shop the standard clip for replacing a silencer is one hr. Under a standard hr program an employee would have one hr ‘s pay for replacing a silencer, irrespective of the existent clip required.

Recognition-Based Awards – Recognition is one among the several other types of non-financial inducements. Recognition plan normally refers to formal plans, for case, employee of the month plan. Studies show that acknowledgment has a really positive impact on public presentation, be it entirely or in concurrence with other fiscal wagess.

Commission Plan – this is more of a consequences based program ; therefore, this helps houses in pulling high-performing people who know that difficult work leads to high wagess.

However, a major disadvantage of this program is that it discourages employees from looking after less income bring forthing occupations like providing for little histories, look after loyal clients, and forcing slow traveling points.

Bonus Pay – for this program to work a specific mark is to be set. It is of import that the employees understand and appreciate this mark set. Before this inducement plan is created, it is of import to transport out a survey on the section which they are be aftering to give the inducements to.

For case, if the direction is believing about giving an inducement to the histories collectible section, so they will hold to see the figure of bills that are generated in an mean month. Based on this figure, the inducement can be provided for transcending that figure.

Employee Stock Ownership Plans ( ESOP ) – Under this program, the company offers its ain portions to a trust established to purchase portions on behalf of the employees. This motivates the employees as they are acquiring a portion of the house ‘s success through equity engagement. This purchase is largely funded by loans through Bankss for which the company takes duty. ThisA planA costsA small or nil to the company as the loanA principalA is reimbursed from theA dividendA paymentA to the employees, while on the other manus, the loanA interestA is aA tax-deductible disbursal.

hypertext transfer protocol: //

Scanlon Plan – This inducement program came to be in 1937 by Joseph Scanlon.A A The basic features of this program include: competency, doctrine of co-operation, engagement system, individuality and sharing of benefits expression. It besides works as a cost savingA productivity-incentiveA planA where any economy ( perA unitA ofA end product ) is compared with an in agreement uponA standardA labor costA and is shared every bit between theA workersA and theA house.

“ Scanlon Plans ” have been often used by assorted public and private companies for many decades.A They are a combination of entire work force instruction, leading, and widespread employeeA engagement with a wages system linked to group and/or organisation performance.A

hypertext transfer protocol: //

Net income Sharing

This is a variable wages policy whereby employees are given an income based on the profitableness of the full organisation or selected fractional monetary units ( Florkowski, 1987: 622 ) . “ Net income sharing gives the house ‘s directors some flexibleness to cut down its labor costs when resources are scarce and net incomes are low by cut downing employee net incomes, as an option to utilizing layoffs ” ( Gomezaˆ?Mejia and Balkin, 1992 ) . This program helps in set uping a sense of occupation security among the employees. There are three basic types of profitaˆ?sharing programs are ( 1 ) hard currency, ( 2 ) deferred, and ( 3 ) combination cash-deferred programs ( Kruse, 1993 ) .

hypertext transfer protocol: // # ixzz12jmsQpjA

Derive sharing Plan

This is a groupA pay-incentiveA planA which is designed with the chief purpose to motivateA workers to better the end product of theirA workgroupA through a more efficient usage ofA resourcesA ( energy, A labour, stuffs and so on ) . Any savingsA are so distributed to all the membersA of the group by utilizing aA formulaA which measuresA the current improvementsA against pastA resultsA or aA benchmark. However, gain sharing can merely achieveA significant betterments with the engagement of the top direction.

Advantages of deriving sharing:

Helps companies achieve a sustainable upgrading in cardinal public presentation steps

Wagess merely for betterment in public presentation

Payouts are funded by and large from nest eggs generated by the program

Matchs employee ends to organisation ends

hypertext transfer protocol: //

The difference between Gain sharing and Net income Sharing


Addition sharing

Net income Sharing


To drive public presentation of an organisation by advancing consciousness, alliance, teamwork, communicating and engagement.

To portion the fiscal success of the entire organisation and promote employee individuality with company success.


The program normally applies to a individual installation, site, or stand-alone organisation.

The program typically applies organization-wide ; companies with multiple sites typically measure organization-wide profitableness instead than the public presentation of a individual site.


Payout is based on operational steps ( productiveness, quality, disbursement, service ) , measures that better the? line of site? in footings of what employees do and how they are compensated.

Payout is based on a wide fiscal step of the organisation? s profitableness.


Additions and ensuing payouts are self-funded based on nest eggs generated by improved public presentation.

Payouts are funded through company net incomes.

Payment Target

Payouts are made merely when public presentation has improved over a historical criterion or mark.

Payouts are typically made when there are net incomes ; public presentation doesn? T necessary have to demo an betterment.

Employee Eligibility

Typically all employees at a site are eligible for program payments.

Some employee groups may be excluded, such as hourly or brotherhood employees.

Payout Frequency

Payout is frequently monthly or quarterly. Many programs have a year-end modesty fund to account for shortage periods.

Payout is typically one-year.

Form of Payment

Payment is hard currency instead than deferred compensation. Many organisations pay via separate cheque to increase visibleness.

Historically net income programs were chiefly deferred compensation programs ; organisation used net income sharing as a pension program. Today we see many more hard currency programs.

Method of Distribution

Typically employees receive the same % payout or cents per hr fillip.

The fillip may be a larger % of compensation for higher-level employees. The % fillip may be less for lower degree employees.

Plan Design & A ; Development

Employees frequently are involved with the design and execution procedure.

There is no employee engagement in the design procedure.


A back uping employee engagement and communicating system is an built-in component of Gainsharing and helps drive betterment enterprises.

Since there is small linkage between? what employees do? and the? fillip, ? there is an absence of attach toing employee engagement enterprises.

Wage for Performance Plan versus Entitlement

Additions are generated merely by improved public presentation over a preset base degree of public presentation. Therefore, Gainsharing is viewed as a pay-for-performance enterprise.

Net income sharing frequently is viewed as a entitlement or employee benefit.

Impact on Behaviors

Gainsharing reinforces behaviours that promote improved public presentation. Used as a tool to drive cultural and organisation alteration.

Small impact on behaviours since employees have trouble associating? what they do? and their? bonus. ? Many variables outside of the typical employee? s control determine profitableness and the fillip sum.

Impact on Attitudes

Heightens the degree of employee consciousness, helps develop the feeling of ego worth, builds a senses of ownership and individuality to the organisation.

Influences the sense of employee individuality to the organisation, peculiarly for smaller organisations.

At-Risk Variable Pay Plans – Under this program, portion of the employee ‘s hebdomadal wage is put at hazard so as to assist the house to run into its fiscal ends.

Factors Affecting Pay determinations

There are many factors impacting Wage that have to be taken into consideration. These are as follows: –

Legal considerations: –

The Fair Labor Standards Act ( FLSA ) – prescribes criterions for the basic minimal pay and overtime wage, affects most private and public employment. It requires employers to pay covered employees who are non otherwise exempt at least the federal lower limit pay and overtime wage of one-and-one-half-times the regular rate of wage. ( http: // )

Minimal Wage

Hours of Work

Equal Pay Act ( EPA ) : – TheA Equal Pay Act 1970A is an Act of theA United Kingdom ParliamentA which prohibits any less favorable intervention betweenA menA andA womenA in footings of wage and conditions of employment. It was passed by Parliament in the wake of theA 1968 Ford run uping mechanics strikeA and came into force on 29 December 1975. The term wage is interpreted in a wide sense to include, on top of rewards, things like vacations, pension rights, company fringe benefits and some sorts of fillips. The statute law has been amended on a figure of recent occasions to integrate a simplified attack underA European Union lawA that is common to all member provinces.

( hypertext transfer protocol: // )

Union rank: – The Davis-Bacon Act ( 1931 ) and Walsh-Healy Public Contracts Act ( 1936 ) require federal contractors to pay employees no less than the prevailing rewards in the country. The prevailing pay is set by the Secretary of Labour and is greatly influenced by relevant brotherhood contracts in the country. This shows how labour brotherhoods influence the pay degrees set by the companies.

Company policy: – Company policy, is one of those subjective forces that ‘s best understood and harnessed to your advantage. Many believe that the employer has the power. Their grounds include the fact that the employer is the one paying the wage, the employer has the pick of other campaigners, the employer has already decided the salary classs and sets, the director has senior status or place power etc. Yes these are all beginnings of power, and yes they all demand equal regard and research. ( http: // )

Competitive scheme: – An effectual wage policy is an of import facet of a company ‘s overall competitory scheme. Merely as organisations compete to sell their merchandises and services, they besides compete with one another for talented employees. Toward that terminal, a competitory wage policy is the basis of an organisation ‘s human capital investing scheme. How a company competes depends on three enrolling market conditions:

The extent to which qualified employees are available in targeted recruiting markets.

The aggressiveness of other employers viing within those same recruiting markets.

The company ‘s clout in the market place to enroll qualified employees ( e.g. , fiscal resources to pay employees, perceptual experience

( hypertext transfer protocol: // )

Equity: – This is the factor where people evaluate the equity of their wage as compared to other people.

A individual will compare his or her ratio of perceived results ( e.g. , wage, benefits, etc. ) to perceived inputs ( e.g. , instruction, attempt, experience ) to the ratio of a comparing other.

If the individual ‘s ratio is higher, research suggests that rationalisation will happen to account for the sensed overpayment. If the comparing other ‘s ratio is higher, the individual may try to reconstruct equity by cut downing one ‘s inputs ( e.g. , working less ) , increasing one ‘s results ( e.g. , inquiring for a rise ) , or go forthing the company.

Three types of employee societal comparings of wage are particularly relevant in doing pay-level and occupation construction determinations.

Employees make external equity wage comparings, which focus on what other organisations pay for approximately the same occupation. These comparings influence determinations to fall in and stay in the organisation. A market-pay study is used by organisations to analyze the degree of other organisations ‘ wage.

Internal equity wage comparings focus on what employees within the same organisation, but in different occupations, are paid.

Employees make internal equity wage comparings with others executing the same occupation.

Some illustrations of PAY AND INCENTIVE PLANS in ASIA

The political construction, province of economic development and cultural tradition vary from state to state, and so is the instance for the Asiatic states. As such, there are besides differences in their wage and wages patterns.

China: A A With economic reforms, the pay system is undergoing alterations. The construct of performance-pay is deriving support.

Hong Kong: A Pay and benefits are negotiated based on market forces.

India: A Link between wage and public presentation is being established in the steel sector.

Dutch east indies: A Performance-based wage is deriving credence in the private sector.

Japan: A the one-year Spring Offensive is a pay finding procedure in the private sector.A A The procedure plays the function of puting a national leading pay lift criterion.

South Korea: A Collective bargaining is the most common method for finding wage in nonionized companies. While senior status remains an of import standard, performance-based wage is deriving credence.

Malaya: A Pay and benefits are determined by dialogue between employers and their employees.

Philippines: A There have been some alterations in the compensation system.A A Some companies are associating wage with public presentation.

Singapore: A The authorities is promoting a flexible pay system.

Taiwan: A Group-oriented public presentation wage and comparatively equal fillip are the norm.

Siam: A Large companies guarantee an one-year wage addition that will fit the rising prices rate, irrespective of public presentation of employees.

Viet nams: A MNCs are associating wage with public presentation, particularly for gross revenues and technology professionals.

Critical Analysis

In the face of the above mentioned state of affairss, direction is required to invent rather a figure of tools to minimise this highA labor turnover, kind of halting it, and besides ways and means to increase productiveness.

However, it is widely known that despite use of the best equipment and province of the art engineering within the workplace, there is no warrant of making the desired aims if the work force is non motivated.

As such, direction demands to happen advanced ways towards retaining their employees, particularly the gifted one, and besides doing them go more committed and motivated, and, therefore, go even more productive.

Still, in their quest towards accomplishing the set aims, they besides need to analyze both the positive impact/s every bit good as the possible failings or contrary effects.

Whilst, execution of a merit issue is certainly a possible incentive both towards retaining gifted employees, and actuating them, the challenge remainsA A the puting up of a proper public presentation assessment system, which would enable just appraisal of the public presentation of each employee.

Indeed, whilst this is instead consecutive forward in some organisations with non much assortment of operations and classs of employees, this exercising becomes rather complex where activities are more diversified. Still, this hurdle should in no manner intend that such a system should non be implemented.

However, the other challenge would be to besides guarantee that it does non thwart the “ empty-handed ” employees, out of misinterpretation of the assessment system, thereby taking to the perceptual experience of unjust intervention vis-a-vis their co-workers. As such, any such tools need to be implemented after a thorough account of its operation to employees, depicting each standard, and the weightage of each one of them.

There are a assortment of tools that can be applied to retain employees and/or make them go more productive, still, whatever has succeeded within one company, need non needfully be every bit much successful in another 1.

Indeed, many facets need to be taken into consideration when make up one’s minding upon and finally planing the tool selected. The civilization of direction and that of employees and/or trade-unions within the organisation, the actuating factors of persons, the company objectives, the type of operations, the fiscal position of the organisation, the nature and strength of competition will decidedly be decisive factors.


Pay and virtues are a really of import portion of any industry. During the procedure of this research, the research worker has come across assorted theories of motive. He understood what theories are relevant and in what state of affairs and how the direction can utilize the apprehension of the above to honor their employees. Employees are internal clients and so holding cognition about what they like and what non will give the direction an upper manus while covering with them. Management can plan “ Aureate Handcuffs ” in order to retain cardinal employees by giving them the right inducements.

During the procedure of this research the research worker has besides been able to place the different types of virtues that can be awarded in order to actuate the workers and farther develop their productiveness. The research worker has come across the virtues for single, for experts, for gross revenues people and for squads. The research worker has besides clearly addressed the assorted issues that may be faced when planing these inducements.

The research worker has hence come to the decision that virtue issues are justified and hence should be considered when motive of the employees has to be addressed.

Mentions: –

Human Resource Management: An Asiatic Perspective ( 2ndA edition ) atA http: //

Lesieur, Fredrick G.A The Scanlon Plan A Frontier in Labor-Management Cooperation, Cambridge: The MIT Press, 1958.

Masternak & A ; Associates ; All rights reserved.

Reprinted here with permission.

Masternak, Robert. L. “ Gainsharing Programs at Two Fortune 500 Facilities: Why One Worked Better. “ A National Productivity Review, Winter/1991/92.

Masternak, Robert. L. “ How to Make Gainsharing Successful: The Collective Experience of 17 Facilities ” A Compensation & A ; Benefits Review, September / October 1997.

Masternak, Robert. L. and Camuso Michael. A. “ Gainsharing and Lean Six Sigma – Perfective Together ” A WorldatWork Journal, First one-fourth 2005.

Masternak, Robert. L.A Gainsharing: A Team-Based Approach to Drive Organizational Change.A Scottsdale: WorldatWork, 2003.

Robert McLean, A Performance Measures in the New EconomyA ( The Premier ‘s Council of Ontario, Ontario, Canada, 1995 ) , 3.

Rucci, Kirn, and Quinn, “ The Employee-Customer-Profit Chain at Sears, ” 89.

Steven P. Kirn, Anthony J. Rucci, Mark A. Huselid, and Brian E. Becker, “ Strategic Human Resource Management at Sears, ” A Human Resource ManagementA 38, no. 4: 329-336 ; and Anthony J. Rucci, Steven

P. Kirn, and Richard T. Quinn, “ The Employee-Customer-Profit Chain at Sears, ” A Harvard Business ReviewA 76, No. 1 ( January-February 1998 )

Leslie A. Weatherly Human Capital-The Elusive Asset, Measuring and Managing Human Capital: A Strategic Imperative for HR ( 2003 )

hypertext transfer protocol: // v=-Ri1UzEmNRU ( Richard Branson )

hypertext transfer protocol: // v=_5Z7eal4uXI ( Bill Gates and Steve Jobs )

hypertext transfer protocol: //

Ludo Cuyvers, Michel Dumont, Glenn Rayp, and Katrien Stevens-Wage and Employment Effects in the EU of International Trade with the Emerging Economies, University of Antwerp ; Ghent University

Abraham Maslow-Motivation and Personality, published in 1954 ( 2nd edition 1970 ) .A

hypertext transfer protocol: //

Alan Price, Milkovich et Al ( 2001: 6 ) , Chapter 19 ofA Human Resource Management in a Business ContextA – published by Thomson Learning

Christopher M. Lowery & A ; N.A. II Beadles & A ; M.M. Petty & A ; Gordon M. Amsler & A ; James W. Thompson, An empirical scrutiny of a virtue fillip program. ( Statistical Data Included ) , Journal of Managerial IssuesA – Spring, 2002

hypertext transfer protocol: // _Merit_pay_for_teachers

Leave a Reply

Your email address will not be published.