WorldatWork
May 8, 2007

"Through my experience, and basic research, these [base-salary] merit increases do not motivate performance at all," says WorldatWork Faculty Member John Rubino, CCP, CBP, GRP, president, Rubino Consulting. He cites several reasons for their failure.

• The budgets that most companies are using to fund these programs are very small. Recent studies show a 3% or 4% pool that's used, Rubino said.
  
  
• Merit increases are a zero-sum game. The more one employee receives, the less another employee will receive. Rubino provides this example: "If you have a particular department head or manager who has only 10 employees, let's say this year all 10 employees exceed their goal. If this manager were to give each of these 10 what they deserve, odds are they're goiing to bust the budget."
  
  
• By using these programs, companies are paying for the job, not for the individual in the job. This is why many organizations are looking at alternative means, including incentive and variable compensation programs, as well as other work-life initiatives that truly do reward the individual.

Rubino presents the workshop, Where's the 'Merit' in Merit Increase Programs? What are the Alternatives? during the WorldatWork Total Rewards Conference & Exhibition this week.