For a merit-pay plan to be effective, which of the following is necessary?
A) Employees must be involved in its development.
B) The organization must have valid and reliable measures of what merit entails.
C) The performance measurement system must not differentiate too greatly among employees.
D) It must focus on pay for knowledge.
E) It must result in relatively equal merit raises among employees.

Question

Quizplus · Accepted Answer

A key component of a merit-pay plan's effectiveness is having valid and reliable measures of what merit entails. This ensures that the appropriate employees are recognized and rewarded for their achievements. While involving employees in the development of the plan can increase buy-in and motivation, it is not necessarily a requirement for effectiveness. Ensuring that the performance measurement system is fair and not overly differentiating among employees can also contribute to the plan's success, but again, it is not as crucial as having valid measures of merit. Focusing on pay for knowledge or resulting in relatively equal merit raises may not necessarily improve the plan's effectiveness.

For a Merit-Pay Plan to Be Effective, Which of the Following