Psychology Of The Workplace - Merit Pay

Front 1

What 2 conditions must be met for merit pay to motivate an employee?

Back 1

Pay must have positive valence
Performance appraisal must be perceived as accurate

Front 2

What are the 4 main types of merit pay systems?

Back 2

Standard hour (i.e. time saved) e.g. mechanic takes only 1 hour but charges 1.5 hours
Amount produced ('piece rate') simply count no of widgets produced
Suggestion system (cost savings) - if a suggestion is implemented, everyone rewarded
Profit sharing - employees get a bonus based on profits

Front 3

What is a disadvantage of the 'time saved' (standard hour) merit pay system?

Back 3

Quality might suffer

Front 4

Disadvantage of profit sharing merit pay system.

Back 4

Not tied to performance, so employee could be working butt of but if company not doing well, they still don't get rewarded

Front 5

Disadvantage of piece rate (amount produced) system of merit pay?

Back 5

Quality might suffer
Someone working on old equipment can't produce as much as someone on new equipment

Front 6

Disadvantage of Cost Savings (suggestion system) approach.

Back 6

What is the group is already streamlined and working efficiently? Nobody can benefit as much.

Front 7

What are two types of pay innovations?

Back 7

All-salaried workers
Pay-for knowledge

Front 8

Advantages and disadvantages of all-salaried worker pay system?

Back 8

Advantages:
Lessens 'us' versus 'them'
Induces employees to more readily work toward org objectives
Results in greater loyalty and commitment

Disadvantages:
When people change from hourly, and have to work overtime they don't get more pay so they think its management's way of getting more out of them for less

Front 9

Advantage of pay for knowledge approach?

Back 9

For employer, if I want people to do things that aren’t in their job description, or transferring them to another site, paying for knowledge might be one way to do this.
Flexibility
Increased job security
Tendency to be more satisfied

Front 10

Disadvantage of pay for knowledge approach?

Back 10

Costly for employer in terms of training and compensation