Merit Pay Increase Recommendations for Managers

Figure 1.1. 

Merit pay increments require a strong evaluation to ensure they create a relationship between pay increase and performance in the company (Kang & Shen, 2017). Additionally, they should encourage the achievement of the company’s goals while adhering to the budget increment available in the company. As the HR manager, figure 1.1 shows the merit grid in use to evaluate the performance of our managers. Hardships on market locations can be relatively easy, extending to challenging locations. Easy market locations have high foot traffic leading to an easy flow of goods while difficult market locations have little foot traffic leading to a decreased flow of goods. Sales performance is the ability to meet targets and increase or maintain a high sales level, depending on the market location. The ability to regulate staff turnover is essential because maintaining the familiarity of employees is important in increasing sales. Management skills entail the ability of managers to communicate and handle employees effectively, including leading as an example in work ethic. The score is measured against total merit to determine the amount of pay raise a manager gets and complete the reward system (DeNisi & Gonzalez, 2017). 

Adam Andorfer will get a merit pay increment of $1050. Adam has a score that is above average even if his kiosk is the most difficult to manage among the five kiosks. His ability to keep the kiosks running even when others in the mall are closing makes him the best to manage the kiosk. His sales might be lower in comparison to others but relatively good because the kiosk’s location is in an undesirable part of town. Adam is dealing with high employee turnover due to the location problem, and his desire to continue giving the job best regardless of these limitations justifies the decision of a $1050 pay increment. 

Bob Berghoff manages a kiosk in a relatively easy market. He gets the lowest pay increment of $657. Although sales are relatively high, it is the location factor that contributes to high sales in the kiosk and not Bob’s management skills. Bob has poor management skills and a poor relationship with the employees. His work ethic is questionable, and it does not portray a good work ethic to the employees he leads. With a better work ethic and an excellent location, the kiosk is capable of performing even better than it is currently. 

Carolyn Christof gets a relatively high pay increment of $1138. She has excellent management skills with very low employee turnover. Although she is facing financial difficulties at home, the situation does not affect her relationship with employees and the ability to manage them, portraying good leadership. Additionally, Carolyn can sustain sales levels to meet the quarterly sales goals of the kiosk. Her balance of personal life and work-life shows she is highly adaptable to an environment, therefore, if given a higher sales target, she has the potential to meet the given target to improve sales in the kiosk. 

Dave Daniels gets a relatively low increment of $963. The kiosk he manages is in a moderately good location, although it is struggling. He consistently meets sales goals meaning he can adapt to difficult situations to improve sales. However, Dave’s poor management skills are also affecting the kiosk. He has poor inventory control, which is a great risk at the moment the mall is generally struggling. Given the situation at the mall, the kiosk needs a fully competent manager who will be able to handle any downturns in the future. Dave is yet to prove to the company that he can handle difficult situations, especially under pressure. 

Ethan Edwards gets the highest increment of $1226. Ethan is the best performing manager at the moment. He ensures he meets all sales targets and exceeds expectations. He does not get comfortable given the strong market and finds ways to increase the already high sales. He takes every chance available for the improvement, and his desire for better is a great example to others in the company. Ethan has exemplary management and leadership skills which the company can utilize to improve its overall position. 

There is a need to consider other ways to reward performance. Merit pay increments only consider current performance evaluations, and they do not consider future performance. A well-performing manager today may not be a well-performing manager in the future to justify a specific base salary. There is also a need to recognize immediate achievement with spot rewards such as bonuses. Spot rewards will ensure continuous improvement of the company rather than permanent pay raises, which may strain our future budgets. Pay raises also promote laxity after increments, while spot rewards encourage employees towards greater achievements (Kovach, 2016). 

References 

DeNisi, A. S., & Gonzalez, J. A. (2017). Design performance appraisal systems to improve performance.  The Blackwell handbook of principles of organizational behavior , 63-75. 

Kang, H., & Shen, J. (2017). International Reward and Compensation Policies and Practices. 

In  International Human Resource Management in South Korean Multinational Enterprises  (pp. 141-165). Springer, Singapore. 

Kovach, M. (2016). The Power Dynamics that Facilitate or Inhibit Organizational Success.  Journal of Organizational Psychology ,  16 (2).