Merit system raises vs. Performance raises - Essay Example

MERIT SYSTEM RAISES VS. PERFORMANCE RAISES Growing Home Southeast is a social service agency founded in 1979 residing in St. Paul in Minnesota. Subject to constant growth since 1994 the agency increased its staff by 50 employees to cover the needs of the more than 2000 clients. The organization annual monetary increased is valued at roughly 3.7%. The former might appear a rather optimistic estimation other parameters therefore need to be taken into consideration to clarify such increase. The organization has undergone changes that increased the monetary value and required the employment of extra staff to cover their needs.

Key steps are the main reason to have resulted in the expansion and estimated increase of the annual monetary value contrary to the reduction of annual monetary in the field (Bernanke, 2006). Firstly, the expansion of services of the Agency to South Carolina, secondly, the acquisition of Family Resources, Inc. of Beaufort, SC, which also resulted in staff increase. Finally, it is the strategies that are followed to sensor the environment for needs and adapt to provide solutions following even a restructure in organization hierarchy or proper use of information (Choo, 2001).

Growing Home Southeast complied with the former by monitoring client needs to increase productivity and acquiring new skills. Growing Home Southeast is recommended to adopt the merit raise program to further increase productivity. The merit pay program is based on salary increase according to employee productivity and effectiveness (Silva, 1998). As one increases so does the other. Salary increments are not removed if productivity reduces employees therefore, are constantly motivated to achieve high performance.

Bearing in mind such a payment program, it is implied that the selling product is appealing to the customer; not even the best marketing approaches can guarantee effective purchases of an indifferent product. Merit pay system is a performance-based system falling under this wider category. The motivation behind performance-based pay systems is the motivation to produce more effective employees, actively involved in the organization's profit making process (UNIS). the employer therefore is not paid for the post they hold rather for the contribution to the better performance of the organization.

Other categories of performance-based systems provision: for common sharing of the company, employee performance, under which the merit-based system falls, and profits sharing. Contrary to performance-based systems skill-based pay is based on the knowledge employees possess as a rewarding criterion. The initiative to the establishment of the former criterion is the fear of losing valuable staff to the company, focus is drawn away from the position an individual holds then to the skills it brings to the company.

The first positive effect of the skill-based system apparently is the motivation infused to the staff as to increase knowledge, secondly, employees are becoming a multidimensional, flexible tool to the company on the other hand however, the employee may be "over-utilized" to fill in many positions at the time. Competitiveness increases within the organization and among similar organizations in the field on the other hand however the employers need to raise funds to train the staff with the desired skills which may never be utilized by the employee.

Human services are more likely to adopt the performance-based payment system since such agencies rely heavily on the caretaker-client interaction; performance in this case is measured by the customer satisfaction (MSH). The client in this case pays for the quality of services rather than the quantity. ReferencesChoo, Chun Wei. 2001. Environmental Scanning as Information Seeking and Organizational Learning. Information Research.http://choo.fis.utoronto.ca/IR/choo/choo.htmlMSH. Using Performance-Based Systems to Improve Health Programs.

http://erc.msh.org/mainpage.cfmfile=2.1.11f.htm&module=finance&language=English Silva, de Sriyan. An Introduction to Performance and Skill-Based Pay Systems. http://www.ilo.org/public/english/dialogue/actemp/papers/1998/srspaysy.htm#C10The Federal Reserve Board, Testimony of Chairman Ben S. Bernanke 2006-07-26http://www.federalreserve.gov/boarddocs/hh/2006/july/testimony.htmUNIS, (2006) Performance-Based Pay System, Hazard Pay Increase for Local Staff among Issues Raised, as Fifth Committee Debate Continues.

http://www.unis.unvienna.org/unis/pressrels/2003/gaab3588.html