Question

Using your textbook and other scholarly resources, compare and contrast merit-pay and longevity pay compensation systems. Then, determine how pay satisfaction affects motivation and job satisfaction.

• Which compensation system do you think is best?
• Should individual employees doing the same job be compensated differently to maximize motivation and job satisfaction?

Justify your answers using your research.

Answer 1

Longevity pay is an agreement between the company and the employee to give annual compensation to him or her. The pay will depend on the position the employee holds. The payment is often made above the pay scale as compensation for the work.

Merit-Pay system is a raise in pay depending on a set of criteria set by the company primarily depending on his or her performance.

The pay has a great role to play in employee motivation and satisfaction. When we get what we deserve, i.e., the result of our hard work and labour, there cannot be anything more satisfying than that. It further motivates the employee to work even harder.

According to my perception, Merit-Pay system is the best. People here get paid for their credibility and hard work. The more you are serious and dedicated to your work, the better you perform. And the better you perform, the higher is your salary.

Yes, individual employees doing the same job should be compensated differently to maximize motivation and job satisfaction. If there is an employee who is not very serious about his work and there is another who is very dedicated and hardworking. If both of them receive the same amount of increment, it will definitely demotivate the one who worked hard. He or she will have the feeling that he or she didn't receive the reward of their good work.