The Use of Merit Pay and Incentives

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The Use of Merit Pay and Incentives

The purpose of this paper is to explore the use of Merit Pay and Incentives as motivators for increased productivity. The key focus is the system at Richmond Memorial Hospital. To do so, one must begin at the beginning….. The use of financial incentives (financial rewards) paid to workers whose production exceeds some predetermined standard was popularized by Frederick Taylor in the late 1800s. As a supervisory employee of the Midvale Steel Company, he had become concerned with what he called "systematic soldiering". This was the tendency of employees to work at the slowest pace possible and the fact that some of these same workers still had the energy to run home and work on their cabins, even after a hard 12-hour day. Taylor knew that if he could find some way to harness this energy during the workday, huge productivity gains would be achieved (REFERENCE?). Thus was born the concept of motivational and incentive systems.

What is "motivation?" The root word is "move" which would mean that anyone who is moved to do something is motivated. Therefore, sitting on a tack, or at least the pain associated with it is a motivator. For those of us in Graduate School, we are aware that without a "B" average we will be eliminated from the program. Maintaining that average is our motivator. Attaining the certificate of graduation is our incentive. In psychology, at its most basic, a motivator is that which impels or compels an individual to act toward meeting a need. On a physiological level, thirst, hunger and sex are motivators or drives. They are basic needs which must be met.

Relating this to a hospital environment, it is not base compensation which drives the employee, but what the base compensation can satisfy in a higher level of needs. Money can't buy love, but it can buy some security such as insurance benefits. After basic and security needs are met, compensation is not the motivator, but what compensation represents is (REFERENCE?). One statement that must be made before continuing is that needs are varied and can occur concurrently or over a period of hours or days, etc. And, needs are mixed. Hunger is a drive: The satisfaction of hunger can take several forms and, usually, when one is hungry one also is a little thirsty. Then, if the book, Tom Jones (AUTHOR, YEAR), was any indicator, food and drink enhance the sexual drive ((MAY NEED TO TELL A BIT ABOUT THE PREMISE OF THE STORY AND HOW IT RELATES IN CASE SHE HASN'T READ IT). Sooner or later, one has to rest...and so it goes. But, do note that a number of needs or motivators may be "acting" at the same time. In hospital settings, especially those that are undergoing restructuring needs are highly varied. The same employee who is driven by a salary motivator may now be driven by a long term security need as a motivator (REFERENCES??).

Many times, if one is given a bonus for a job well done, the money is not the motivator, but the recognition is. Initial motivation can occur with the use of bonus or profit sharing. However since bonuses and other such incentive compensations occur perhaps as little as once a year, there must be other motivators at work to get an individual to work towards established goals. This is an important concept which must be understood in order to have any incentive compensation system work for the company and individuals (REFERENCES???). Implementing pay for performance plans, good management, and incentive plans will motivate personnel to perform at the peak levels necessary to bring about improvement in the bottom line which is what interests most corporations (REFERENCE?).

With flatter organizations, and in most cases fewer employees, companies need to motivate their remaining employees to make a value-added contribution, take ownership, and be held accountable for their work (REFERENCE?). Historically, employees have been rewarded...
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