Merit Pay: Everything you need to know

Introduction

Employees perform at various levels of success. Individual differences in innate skills, experience, motivation, and conscientiousness are credited for how people in a similar role can produce results that differ considerably.
This is what necessitates performance appraisal. The buck does not stop with just having a picture of which employees outperform others. Vroom's theory of expectancy posits that people will be motivated if these two conditions are met.

1. Workers believe that their concerted effort will lead to successfully reaching targets or achieving goals.
2. They will be rewarded for their success.