Chapter $12-$ Pay for Performance and Financial Incentives

Congratulations! You were just hired as the HR business partner for a McDonald's franchise in Middle Tennessee that includes $10$ stores. You are responsible for all the HR$-$related activities. The stores were all down about $15\%$ in profits this past year due to the economy. The owner tells you that she's considering doing a $2\%$ across$-$the$-$board merit pay increase this coming year instead of trying to reward the strongest performers with more maningful increases $($and giving low performers nothing$).$ You determine that this $2\%$ adjustment means an average increase of $$0\mathrm{.}20$ per hour or about $$5$ per week for around $80\%$ of the employees.

a$.$ Identify at least two concerns you have about the owner's plan to give everyone a $2\%$ merit increase. Keep in mind the purposes of merit pay, what you have learned about motivation, and how$/$why pay and incentives can backfire $(5+$ sentences$).$

b$.$ Propose at least three alternatives, based on what you have learned in this chapter, for the owner to consider instead of the merit increase. Think about how that $2\%$ of payroll budget could be used to reward$/$recognize$/$incentivize employees more effectively than a $2\%$ increase $(5+$ sentences$).$