Merit Pay

What is Merit Pay?

 

‘Merit Pay’ refers to a payment mode in which the employees’ compensation is based on their performance in the workplace. It is more commonly used in the education sector.

 

The main advantages of merit pay are that it increases the effectiveness of the employees as well as motivates them to work harder. It will also help the company understand the employees who are more efficient in their work, which will help them develop training programs for those who perform poorly.

 

A major disadvantage of this system is that it considers only performance as the sole metric for providing the pay and ignores other key factors which help an individual complete their job successfully.

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