Final answer:
Merit adjustments are based on effort and performance, while incentive payments are tied to specific goals or outcomes. Both forms of rewards can motivate employees and are used in combination for employee recognition and motivation.
Step-by-step explanation:
Merit adjustments and incentive payments are both forms of rewarding employees in a work setting, but they differ in terms of the criteria used for determining the amount of the reward. Merit adjustments are typically based on the effort and performance of an individual, with the reward amount being determined by factors such as the quality of work, meeting targets, and demonstrating skills. On the other hand, incentive payments are usually tied to specific goals or outcomes, such as achieving sales targets or completing projects within a certain timeframe.
For example, in a sales department, a merit adjustment might be given to a salesperson who consistently exceeds their monthly targets, while an incentive payment might be given to the entire team if they collectively achieve a certain revenue milestone.
While both forms of rewards can motivate employees, they have different purposes and can be used in combination to provide a comprehensive approach to employee recognition and motivation.