Chapter 6: Merit Pay Administration

Over the years, numerous authors have tailed attention to the importance of the administration of merit pay plans (Allan & Rosenberg, 1986; Berger & Schwab, 1980; Hamner, 1975; R. Heneman, 1984b, 2001b; Kellough & Nigro, 2002). Merit pay plans can be eloquently designed, yet ineffective, if they arc poorly administered. In this chapter, attention is given to issues that must be considered to properly administer a merit pay plan. These issues center around what organizations can do to ensure that their merit pay policies are carried out as intended in actual practice. Perceptions of fairness are vital in this regard.