Although U.S. corporations rely heavily on merit pay programs to distribute pay increases to their employees, many undergraduate students, even those who have held jobs, lack exposure to merit pay programs until they take their first human resource management course. The exercise gives students an opportunity to experience how organizations make merit pay decisions. With this exercise, students decide what employee information is job-related and what is non–job-related, ensure their decisions conform to employment law, perform calculations to ascertain the actual dollar amounts of the raises, and consider other managers’ opinions through a group decision-making process. Finally, because this exercise is conducted in small groups, it can be used in classes of any size.
