| Abstract: | Organisations have choices about methods of pay, and employee pay adjustment preferences are an important consideration in this decision‐making process. Of particular organisational interest currently are pay systems that seek to link increases with individual performance, usually referred to as merit pay. Researchers have shown that pay adjustment systems that are incompatible with employee preferences can be costly for organisations, and have identified a range of demographic factors that predict support for merit adjustments. This article extends this line of research by investigating the impact of a performance appraisal system and a range of situational factors on the level of support for merit pay in a large public sector research organisation in Australia. The study finds that higher levels of perceived job security are associated with support for merit pay, while good promotional opportunities are associated with lower levels of support. Those who saw the outcomes of the current performance appraisal system as fair were unlikely to support merit pay. |
