© Prentice-Hall, Inc., 1998

Chapter Four

Traditional Bases for Pay: Seniority and Merit

© Prentice-Hall, Inc., 1998

Seniority/Longevity Pay

Historical overview Who participates Effectiveness of seniority pay systems Design of seniority pay and longevity pay

plans Advantages of seniority pay Fitting seniority pay with competitive

strategies

© Prentice-Hall, Inc., 1998

Exhibit 4-2

A Sample Seniority Policy for Junior and Advanced Clerk Jobs

$8.60/hr24 months

$7.95/hr9 months

$7.50/hr6 months

Advanced Clerk

$7.25/hr15 months

$6.85/hr9 months

$6.50/hr3 months

Junior Clerk

© Prentice-Hall, Inc., 1998

Merit Pay

Who participates? Elements of merit pay

© Prentice-Hall, Inc., 1998

Performance Appraisal

Basis of Merit Pay Types of performance appraisal plans The performance appraisal process

© Prentice-Hall, Inc., 1998

Exhibit 4-5

A Trait-Oriented Performance Appraisal Rating Form

Employee’s Name:Supervisor’s Name:

Employee’s Position:Review Period:

INSTRUCTIONS: For each trait below, circle the phrase that best represents the employee.

1. Diligence a. outstanding b. above average c. average d. below average e. poor

2. Cooperation with others a. outstanding b. above average c. average d. below average e. poor

3. Communication skills a. outstanding b. above average c. average d. below average e. poor

4. Leadership a. outstanding b. above average c. average d. below average e. poor

5. Decisiveness a. outstanding b. above average c. average d. below average e. poor

© Prentice-Hall, Inc., 1998

Exhibit 4-7

A Paired Comparison Performance Appraisal Rating Form

INSTRUCTIONS: Please indicate by placing a X which employee of each pair has performed most effective during the past year. Refer to the duties listed in the job description for animal keeper as a basis for judging performance.

_____ Bob Brown_____ Mary Green

_____ Bob Brown_____ Jim Smith

_____ Bob Brown_____ Allen Jones

_____ Mary Green_____ Jim Smith

_____ Mary Green_____ Allen Jones

_____ Jim Smith_____ Allen Jones

X

X

X X

X

X

© Prentice-Hall, Inc., 1998

Exhibit 4-8

A Critical Incidents Performance Appraisal Rating Form

INSTRUCTIONS: For each description of work behavior below, circle the number that best describes how frequently the employee engages in that behavior.

1. The incumbent removes manure the unconsumed food from the animal enclosures.

1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often

2. The incumbent haphazardly measures the feed items when placing them in the animal enclosures.

1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often

3. The incumbent leaves refuse dropped by visitors on and around the public walkways.

1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often

4. The incumbent skillfully identifies instances of abnormal behavior among the animals, which represent signs of illness.

1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often

© Prentice-Hall, Inc., 1998

Exhibit 4-9

A Behaviorally Anchored Rating Scale for the Cleaning Dimension of the Animal

Keeper Job

INSTRUCTIONS: On the scale below, from 7 to 1, circle the number that best describes how frequently the employee engages in that behavior.

The incumbent could be expected to thoroughly clean the animal enclosures and remove refuse from the public walkways as often as needed.

The incumbent could be expected to thoroughly clean the animal enclosures and remove refuse from the walkways twice daily.

The incumbent could be expected to clean the animal enclosures and remove refuse from the public walkways in a sketchy fashion twice daily.

The incumbent could be expected to rarely clean the animal enclosures or remove refuse from the public walkways.

7|6|5|4|3|2|1

© Prentice-Hall, Inc., 1998

Exhibit 4-12

The Impact of Equal Pay Raise Percentage Amounts for Distinct Salaries

ANNE BROWN

19961997199819992000

$52,500$55,125$57,881$60,775$63,814

$36,750$38,587$40,516$42,542$44,669

JOHN WILLIAMS

At the end of 1995, Anne Brown earned $50,000 per year as a systems analyst, and John Williams earned $35,000 per year as an administrative assistant. Each received a 5 percent pay increase every year until the year 2000.

© Prentice-Hall, Inc., 1998

Strengthening the Pay-for-Performance Link

Link PA plans to business goals Analyze jobs Communicate Establish effective appraisals Empower employees Differentiate among performers

© Prentice-Hall, Inc., 1998

Limitations of Merit Pay Plans

Failure to differentiate among performers Poor performance measures Supervisors’ biased ratings Lack of open communication between

management and employees Undesirable social structures Factors other than merit Undesirable competition Little motivational value

© Prentice-Hall, Inc., 1998

Linking Merit Pay with Competitive Strategy

Lowest-cost competitive strategy Differentiation competitive strategy