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Chapter Four
Traditional Bases for Pay:
Seniority and Merit
© Prentice-Hall, Inc., 1998
Seniority/Longevity Pay
Historical overview
 Who participates
 Effectiveness of seniority pay systems
 Design of seniority pay and longevity pay
plans
 Advantages of seniority pay
 Fitting seniority pay with competitive
strategies
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© Prentice-Hall, Inc., 1998
Exhibit 4-2
A Sample Seniority Policy for Junior
and Advanced Clerk Jobs
$8.60/hr
24 months
$7.25/hr
15 months
$6.85/hr
9 months
$7.95/hr
9 months
$7.50/hr
6 months
Advanced Clerk
$6.50/hr
3 months
Junior Clerk
© Prentice-Hall, Inc., 1998
Merit Pay
Who participates?
 Elements of merit pay
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© Prentice-Hall, Inc., 1998
Performance Appraisal
Basis of Merit Pay
 Types of performance appraisal plans
 The performance appraisal process
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© Prentice-Hall, Inc., 1998
Exhibit 4-5
A Trait-Oriented Performance Appraisal Rating Form
Employee’s Name:
Employee’s Position:
Supervisor’s Name:
Review Period:
INSTRUCTIONS: For each trait below, circle the phrase that best
represents the employee.
1. Diligence
a. outstanding b. above average c. average d. below average e. poor
2. Cooperation with others
a. outstanding b. above average c. average d. below average e. poor
3. Communication skills
a. outstanding b. above average c. average d. below average e. poor
4. Leadership
a. outstanding b. above average c. average d. below average e. poor
5. Decisiveness
a. outstanding b. above average c. average d. below average e. poor
© Prentice-Hall, Inc., 1998
Exhibit 4-7
A Paired Comparison Performance
Appraisal Rating Form
INSTRUCTIONS: Please indicate by placing a X which employee
of each pair has performed most effective during the past year.
Refer to the duties listed in the job description for animal keeper
as a basis for judging performance.
_____
X Bob Brown
_____ Mary Green
_____
X Mary Green
_____ Jim Smith
_____
X Bob Brown
_____ Jim Smith
_____ Mary Green
_____
X Allen Jones
_____ Bob Brown
_____
X Allen Jones
_____ Jim Smith
_____
X Allen Jones
© Prentice-Hall, Inc., 1998
Exhibit 4-8
A Critical Incidents Performance Appraisal
Rating Form
INSTRUCTIONS: For each description of work behavior below,
circle the number that best describes how frequently the
employee engages in that behavior.
1. The incumbent removes manure the unconsumed food from the animal
enclosures.
1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often
2. The incumbent haphazardly measures the feed items when placing them
in the animal enclosures.
1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often
3. The incumbent leaves refuse dropped by visitors on and around the
public walkways.
1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often
4. The incumbent skillfully identifies instances of abnormal behavior among
the animals, which represent signs of illness.
1. Never 2. Almost Never 3. Sometimes 4. Fairly Often 5. Very Often
© Prentice-Hall, Inc., 1998
Exhibit 4-9
A Behaviorally Anchored Rating Scale for the
Cleaning Dimension of the Animal Keeper Job
INSTRUCTIONS: On the scale below, from 7 to 1, circle the
number that best describes how frequently the employee engages
in that behavior.
7
|
6
|
5
|
4
|
3
|
2
|
1
The incumbent could be expected to thoroughly clean the animal
enclosures and remove refuse from the public walkways as often as
needed.
The incumbent could be expected to thoroughly clean the animal
enclosures and remove refuse from the walkways twice daily.
The incumbent could be expected to clean the animal enclosures
and remove refuse from the public walkways in a sketchy fashion
twice daily.
The incumbent could be expected to rarely clean the animal
enclosures or remove refuse from the public walkways.
© Prentice-Hall, Inc., 1998
Exhibit 4-12
The Impact of Equal Pay Raise Percentage Amounts for
Distinct Salaries
At the end of 1995, Anne Brown earned $50,000 per year as a
systems analyst, and John Williams earned $35,000 per year as an
administrative assistant. Each received a 5 percent pay increase
every year until the year 2000.
1996
1997
1998
1999
2000
ANNE BROWN
JOHN WILLIAMS
$52,500
$55,125
$57,881
$60,775
$63,814
$36,750
$38,587
$40,516
$42,542
$44,669
© Prentice-Hall, Inc., 1998
Strengthening the Pay-forPerformance Link
Link PA plans to business goals
 Analyze jobs
 Communicate
 Establish effective appraisals
 Empower employees
 Differentiate among performers

© Prentice-Hall, Inc., 1998
Limitations of Merit Pay Plans
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Failure to differentiate among performers
Poor performance measures
Supervisors’ biased ratings
Lack of open communication between
management and employees
Undesirable social structures
Factors other than merit
Undesirable competition
Little motivational value
© Prentice-Hall, Inc., 1998
Linking Merit Pay with
Competitive Strategy
Lowest-cost competitive strategy
 Differentiation competitive strategy

© Prentice-Hall, Inc., 1998