Top Pay for Top Performance

Bates, S. (2003). Top pay for top performance. HR Magazine.
Berglas, S. (2006). How to keep A players productive. Harvard Business Review.

1. Bates argues that in order to keep top performers satisfied and productive, there should be a substantial difference in the variable pay or merit-based salary increases that top performers and poor performers receive. Based on the available research (which is mentioned in the article), how big of an increase is needed to “catch anybody’s attention”? (1 point)

2. Assume that you were hired last year to work in HR for a large corporation. The corporation hired one of your classmates at the same time. Each of you were paid $40,000 in your first year on the job. You are one of the top performers in your company. Your classmate is an average performer. Your boss explains to you that finances are tight because of the recession, and that there is not a lot of money set aside for merit increases. However, your supervisor wants to reward your hard work. Thus, he/she gives you a 4% salary increase compared to your classmate’s 2% increase. (2 points) a. In dollar amounts: i. How much of an annual gross increase did you receive? ii. How much does this amount to per week? iii. How much of an annual gross increase did your classmate receive? iv. How much does this amount to each week? v. How much more than your classmate do you get paid each week after the raises go into effect? b. How motivated are you to continue to perform at a high level?

3. What are the advantages and disadvantages of implementing a variable pay system that is linked to performance? (2 points)

4. Sometimes, the best performers are not motivated by money alone. What is it that some A players want in terms of compensation? (1 point)

5. What does Berglas recommend for keeping “A players” productive? (1 point)

6. Combine the recommendations from these two articles and create a compensation package for top performers and average performers. You may be creative, but your package should be realistic and should be motivating. (3 points)