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Case Study: Seniority and Merit Pay

Definitions of seniority and merit pay systems, strengths and limitations of both, along with examples of usage. This solution is about 500 words. The last paragraph contains an analysis as to when each type of pay system could be utilized.

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Seniority pay plans reward employees for their commitment to the organization by providing a compensable incentive based on length of service. For example, an employee may receive a 5% premium of their base salary added into their total pay, on a monthly basis. Some organizations provide a "flat" amount, such as a monthly or annual premium denoted in dollars ($2,400 per year after 10 years of service). The strengths of this plan is to provide incentive for employees to serve the organization for a long period of time; it creates loyalty and also provides a reward to those who serve for a certain length of time. It is also a way to recognize employees for continuing to improve their knowledge, skills and ...

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Definitions of seniority and merit pay systems, strengths and limitations of both, along with examples of usage. This solution is about 500 words.

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