The Effect of Merit Pay on Pay Gaps

Published: 2021-06-29 07:00:49
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Article ReviewJessica SmithTexas A&M University – Central TexasSubmitted in Partial Fulfillment ofHRM 516-110 – Compensation ManagementDr. Barbara Lyon, SPHRFall 2015The Effect of Merit Pay on Pay Gaps Narrative SummaryThis article is about rates of wage growth among women and minority groups and their impact on pay gaps. This article focuses on the pay growth of those with more than one disadvantaged identity, and on the impact of merit pay. Recent research indicates that pay gaps for people in more than one disadvantaged identity category are broader than those with a single-disadvantaged identity. It is uncertain whether the gaps are closing and at what rate; nor is it known whether merit pay reduces or aggravates existing pay gaps. These issues are defined as the analysis draws on longitudinal payroll data from a large UK-based organization. The results showed that pay gaps are coming to a  close; although, the rate of progression is slow in reference to the size of current pay inconsistently, and slowest of all for people with disabilities. When the effect of merit pay is recognized, it has been established to have a small positive effect in reducing pay gaps, and this effect is generally larger for multiple-disadvantaged groups. Implications and ConsiderationsMerit pay and pay for performance are related but not exactly identical terms. Merit pay incentive plans reward performance by increasing the employee's salary on a long-term basis. Additional forms of pay for performance reward employees without increasing their salary. All forms of pay for performance are designed to motivate employees to meet their performance goals.I found in this article that the salary amounts or wage rates entered or change provide the company with information for analysis purposes. If you are using Oracle Payroll, they also provide some of the values that payroll calculations use. If you are using another payroll system, they can also provide salary information for that payroll to process. Oracle HRMS and Oracle HRMSi enable you to generate a range of reports to meet your business analysis needs and aid payroll calculations (Woodhams, Lupton, Perkins, & Cowling, 2015). If using a compensation workbench, this feature supplies a number of reports for salary changes, bonuses, and stock options.

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