Salary structures are an important component of effective compensation programs and help ensure that pay levels for groups of jobs are competitive externally and equitable internally. A well-designed salary structure allows management to reward performance and skills development while controlling overall base salary cost by providing a cap on the range paid for particular jobs or locations. Both merit systems and incentive pay programs are both designed to motivate employees and improve their job performance. Merit systems are applied to exempt employees in the form of permanent increases to their base pay. Properly designed programs work because they are based on two well accepted principles: increased motivation improves performance and recognition is a major factor in motivation. The plan has to be simple, be specific, be attainable, and be measurable in order to work correctly and for employees to understand the link between profits and performance. Higher management/ HR should also teach supervisors how to do appraisals and how to give feedback, also develop an accurate performance appraisal systems.
This link is to an artlice showing the largest increase in merit pay since the start of the financial crisis, in mid-large sized firms...
We have such a large range in each job role, that it is frustrating that there is such a gap. I suppose it is set up that way to be able to give high raises if needed. Of course, I have friends that work for companies that manage employees that seem to be at the top of the salary scale and never get an increase year over year. It has created lots of bitterness, low productivity and low morale on their teams. Not to mention, the loss of good employees.
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