Outlook and practice in industry

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This study focuses on the creation of a performance assessment and performance-based rewards framework for CORE. This assessment and reward plan is associated with compensation through a successful pay plan that blends uniquely into the framework of the modern enterprise that is CORE. The study discusses performance assessment, merit pay, as well as employee and community reward pay systems that would refer to the administrative, knowledge, and skilled jobs that are the subject of this analysis. As previous studies showed, analysis in the areas of performance assessment and pay for performance has shortcomings in terms of providing comprehensive guidance to CORE. Combining the available research with current retail-segment practices that take into account the approaches of performance appraisal and merit based systems organizations in this industry apply, their design and administration, the contexts within which these systems are applied, the factors used in evaluating the effectiveness of these systems as well as some additional perspectives. The objective in this section was to identify points of intersection between the mostly exploratory research findings and leading online retail-sector practices.

The team reviewed various information sources relating to industry practice: primary proprietary surveys, a singular type survey conducted and interviews with personnel managers of five selected firms which have appraisal and merit plans that are generally considered as successful. Performance Appraisal Current Practice Our review in the previous reports made it obvious that performance evaluation is critical to successful structuring and implementation of pay for performance systems and achievement of performance improvements, being accepted as well as considered fair and equitable across the organization while enabling the organization to regulate costs prudently.

General Aspects of Performance Appraisal

Structure and Objectives

Improving work performance, tying of pay with performance through merit systems, and communication of performance expectations to employees throughout the organization are the three objectives which will consistently be used to rate the effectiveness of this appraisal and merit pay system while it will use performance appraisal outcomes for validating, selection as well as promotion decisions in the organization

Design Features

Job description, analysis and evaluation provided the necessary foundations for an effective performance appraisal and merit pay system. (Mackie and Wilson 11). The objective work standard approach is a planning and appraisal process where the strategic plans of the organization forms the overall goals which are rolled down to all employee levels through the organization’s hierarchy. The employees together with their supervisors will then take part in setting and continually reviewing individual performance objectives that are aligned to the overall strategic goals of CORE. This performance appraisal and merit pay system involves raters who evaluate employees with reference to performance objectives and success factors. The ratings and factors are combined into a single overall rating. The appraisal rating has three to five functional intervals. (Mackie and Wilson 14).

Administrative Features

The system uses different performance appraisal plans in each employee groups namely executives, managers, professional knowledge workers, operational and clerical employees.

Measuring Performance

The specific appraisal plan objectives are improvement of performance, tying of pay to performance as well as communication of work expectations. These measures of performance appraisal assess an employee’s effectiveness in meeting objectives. The details that are considered in the performance appraisal practice are defined in the elements of appraisal outline table, Table 1 in Appendix A.

Performance Appraisal Ratings and Merit Pay Allocation

To enhance the effectiveness of the performance appraisal plan, it is integrated with the employee pay systems. Consequently, rating from performance appraisal have the major impact on merit based pay increments and rewards so as to send a clear message concerning the significance of merit in this CORE's overall remuneration scheme. The goal is that employees have to better understand the linkage between merit and compensation. The organization's performance appraisal system applies performance ratings in merit pay distribution, while the integrating of performance appraisal with the pay system resulting in an effective plan that makes sense across the whole organization. (Shields and Brown 202).

This performance appraisal and merit compensation system has as its basis a merit-based personnel philosophy and accordingly, CORE will employ, position, grow, advance, recognize, reward and dismiss employees in accordance with the respective support for CORE’s strategic goal. Employees will additionally be continually reminded of this philosophy from their first day of employment till the last.

Plan Model Characteristics

The merit pay plan implementation is achieved using the merit grid in Figure 1 found in Appendix B. This merit grid is applied in establishing merit compensation in line with appraisal performance results, positioning within the compensation range, as well as the available amount of merit compensation budget. The distribution of pay increment percentages in this merit grid also considers the percentage of employees in each performance group in addition to position within the pay range.


Having analyzed the current situation at CORE, identified the problems in their reward system, and reached a conclusion on the recommendations necessary for improving the compensation system so as to maximize performance and other success factors, Report 3 has used as its foundation issues that were identified in Report 1 and 2, and have been used as the basis for Report 3. Solutions have been outlined for the fundamental issues within the current compensation and performance management system and these will work to enable the organization to implement the proposed appraisal and merit pay system that will drive CORE towards becoming more competitive within its market segment.

Works Cited

Mackie, Keith, and Marie Wilson. Rewards, Remuneration and Performance: A Strategic Approach. CCH New Zealand Limited, 2013.

Shields, John, and Mitchelle Brown. Managing Employee Performance and Reward: Concepts, Practices, Strategies. 2nd ed., Cambridge University Press, 2016.

Appendix A

Factors of Performance Appraisal and Merit Pay System

Appraisal Plan Factors

Strategic Objectives

Management Directing

Management Guidance

Education, training and development

Management training

Goal setting

Development plan and feedback

Manager-employee goal setting

Measuring management’s use of the system

Integration of Appraisal with the compensation system


Appendix B


Salary Range Positioning

Rated Performance

Proportion of Employees in Job Group
















Exceeding expectations







Meets Expectations







Needs Improvement






No increment



No increment

No increment

No increment

No increment

No increment

FIGURE 1 Merit Grid

December 28, 2022

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