Performance at Precision/Case Study #1
Jackson Smith has his work cut out for him in his task to implement a merit pay program that would tie to Precision’s performance appraisal process. According to Martocchio, a merit pay program assumes that employee’s compensation over time should be determined by differences in job performance. In other words, employees earn permanent merit increases based on their performance. The overarching challenge to overcome is that merit pay is considered an entitlement by the employees at Precision since everyone has received the same percentage increase across the board regardless of performance. Jackson is likely to experience strong resistance to the change, especially by those who are low performers. Additionally, the supervisors clearly are not trained in giving effective performance appraisals as most employees are rated as average and employees are only provided feedback one time per year.
Another big hurdle is the lack of job descriptions. Without having a job description that clearly states expectations, a merit program cannot be established that would tie to the performance appraisal process as pay increases would continue to be based on the subjectivity of the supervisor.
I believe that Precision wants to make a commitment to develop a pay plan that will motivate and reward group behavior. Gaining acceptance of the program will be crucial in creating a unified organizational culture. Precision clearly realizes that they need to make changes in their pay structure if they want to remain competitive. In order to do so, their employees need to be productive, efficient and innovative.

There are several steps that will need to happen to ensure that Precision’s proposed plan will meet its stated objectives. Since we’ve made an assumption that Precision realizes that these changes must be made to remain competitive,