Reference no: EM132763177

The clear trend is for companies to move away from rewarding employees solely on the basis of seniority and toward rewarding employees based on measurable accomplishments. To be successful, merit pay programs must be founded on well-designed performance appraisal systems that accurately measure performance. In addition, rewards should be commensurate with past performance. One of the most significant challenges for companies is to ensure that employees are given the opportunity to actually be rewarded for performing at exemplary levels.

Perhaps one of the greatest challenges for most companies is to ensure that employees perceive a connection between job performance and the rewards that they receive.

Another challenge is for companies to balance the level of risk employees will bear, particularly given the fact that U.S. employees have become accustomed to receiving pay and regular "permanent" increases according to seniority or merit pay systems.
Organizations focus attention on pay-for-knowledge and the reasons companies should adopt such pay systems. There are a varieties of program design and how such programs relate to merit and incentive pay programs. Exploring the advantages, as well as disadvantages of pay-for-knowledge pay programs and the fit of these programs with a company's competitive strategy are a serious consideration for adopting pay-for-knowledge pay programs in order to keep up with technological innovation and to compete internationally. Perhaps the greatest challenge for companies is to ensure that employees are given the opportunity to apply newly-learned skills in productive ways.

Question

-Human capital theory has been advanced as a rationale underlying seniority pay. Identify two individuals you know who have performed the same job for at least three years. Ask them to describe the changes in knowledge and skills they have experienced from the time they assumed their jobs to the present. What did you learn? Any surprises?
-There is currently a tendency among business professionals to endorse the use of incentive pay plans. Identify two jobs for which individual incentive pay is appropriate and two jobs for which individual incentive pay is inappropriate. Be sure to include your justification.
-Pay-for-knowledge pay programs are not suitable for all kinds of jobs. Based on your understanding of pay-for-knowledge pay concepts, identify at least three jobs for which this basis for pay is inappropriate. Be sure to provide your rationale based on your readings this week.