January 2016
Intermediate to advanced
480 pages
20h 58m
English
2 Explain the merit pay approach to compensation.
Merit pay programs assume that employees’ compensation over time should be determined, at least in part, by differences in job performance.9 Employees earn permanent merit increases based on their performance. The increases reward excellent effort or results, motivate future performance, and help employers retain valued employees. Merit increases are usually expressed as a percentage of hourly wages for nonexempt employees and as a percentage of annual salaries for exempt employees. In 2014, employees earned average merit increases of 3.0 percent across all industries, and the projected average increase for 2015 was 3.1 percent. 10 This average increase did not vary significantly across ...