Merck & Co. is a pharmaceutical company with a history dating back to 1827. In the 1980s, Merck's performance began to lag behind competitors due to disappointing new products, inflation, and currency exchange rates. Merck's performance appraisal system rated employees on a scale of 1 to 5, but outstanding performers felt they were not adequately rewarded. The system lacked clarity and managers avoided low ratings, fearing employee discontent. In response, Merck formed an Employee Relations Review Committee to examine policies and ensure fair application, consistent communication, and a system encouraging productivity and excellence.

1. Case Presentation on Merck & Co. Inc Group Members Shantanu Pandey(2010212) Hardik Sutariya(2010272) Ashika Patel(2010270) Saurabh Singh(2010210) Sunal Kapoor(2010235) Shilp Jain(2010214) Tushar Manghrani(2010243)

3. Performance Appraisal

4. Salary Determination

5. Flaws in Appraisal System

6. Employee Relations Review Committee

8. Expanded in drug manufacturing in 1827.

9. In 1887, opened a branch office in New York city.

10. In 1953, merged with the Philadelphia-based pharma firm.

11. Today, it is nation’s largest provider of prescription medicines.

12. Introduced Indocin, Aldomet, Timoptic, Clinoril and Mefoxin.

13. Annual sales grew from $218 million in 1960 to $6.6 billion in 1989.

15. Ranked first in innovativeness, shareholder value, product quality and financial soundness.

16. Higher than average return on assets.

17. But Merck’s ROA declined in early 1980s and its performance lagged behind by 1983.

19. Supervisors rated employees on a scale of one to five

20. Five designated exceptional performance and one designated unacceptable performance

22. Hay points are determined by individually evaluating each position in terms of the three “hay factors”-know how, problem solving, and accountability. Numerical scores are assigned to each factor according to guidelines provided by Hay Associates, and the sum of these scores defines the Hay points for each position in the organization.

24. Salary revisions are linked to both control point increases and performance ratings through guidelines established by the personnel department

26. Outstanding performers gets salary increase only marginally than those to average performers.

27. No clear identification of outstanding performances

29. Supervisors are reluctant in giving high ratings despite of working hard.

30. Lack of equity as bosses were afraid to give anything less that an average.

33. Examine employee policies and practices to determine if they create and environment that encourages and rewards greater productivity and employee excellence.

34. Determine whether policies and practices are being adequately communicated to employees in a way they can clearly understand.

36. What is required is complete introspection of the process the firm follows time to time which will avoid generation of any ill feelings among the employees