209
EXERCISE 28
PERFORMANCE MEASUREMENT, MERIT PAY, AND DUE PROCESS
Other than containing health care costs, the most critical factor facing compensation professionals
(consultants and practitioners) is what can be done to make their compensation programs more rewarding
to employees. Almost every organization is in some way attempting to increase the motivational value of
Undoubtedly, innovative individuals will use their brains to develop new ways of packaging the
hundreds of compensation components described, or at least identified, in Compensation Management in
a Knowledge-Based World, Tenth Edition. If there is such a thing as a basic checklist to follow for
implementing a stimulating, productivity-centered, performance-focused compensation plan, the
following guide may be a good first cut:
1. Be sure your base pay (wage and salary) program is competitive—+/-5 percent of the market.
2. Provide a benefits package that again is market competitive as far as holidays and vacations, time
3. Make the best possible use of 401(k) plans for retirement programs.
5. Develop Work Unit/Team Incentive Plans. If performance cannot be measured at the individual
6. Establish, when possible, individual incentive plans. If an organization does not have good
7. Monitor carefully the compensation plans provided to each major group of employees. Maintain
a high degree of equity (fairness) among the various plans.