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The Compensation Handbook, Sixth Edition: A State-of-the-Art Guide to Compensation Strategy and Design, 6th Edition by Dorothy Berger, Lance Berger

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9

Making Merit Pay and Bonuses Matter

MYRNA HELLERMAN

Sibson Consulting

JAMES KOCHANSKI

Sibson Consulting

No organization has an unlimited pool for annual pay actions. So what can organizations do to convince their employees that superior job performance will result in superior pay opportunities? How can employers avoid the “one-size-fits-all” pay increases and bonuses that send the message that individual performance does not count? How can employers encourage pay for performance but discourage managers from “gaming the system” for their employees?

Making annual pay actions matter is not easy, but the bottom line is that it is well worth the effort. The key is to improve how an organization thinks and talks about performance. Organizations ...

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