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  • September 1990 (Revised November 1991)
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Merck & Co., Inc. (B)

  • Format:Print
  • | Language:Spanish
  • | Pages:8
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Abstract

In late 1986, Merck revised its performance review and pay practices. The most important change was a shift from an absolute rating system to a forced-distribution system in which managers are forced to adhere to a given distribution of performance ratings. Other major revisions included revised rating categories, revised performance categories, and a shift in the timing of performance evaluations. A discretionary award program was also introduced. The objective is to have students discuss the costs and benefits of the revised performance plan, paying particular attention to the relative performance evaluation aspects of the new plan. Is it better than the plan it replaced? Is pay more closely related to performance under the new plan?

Keywords

Performance Evaluation; Compensation and Benefits; Pharmaceutical Industry

Citation

Murphy, Kevin J. "Merck & Co., Inc. (B)." Harvard Business School Case 491-006, September 1990. (Revised November 1991.)
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More from the Author
  • Remuneration: Where We've Been, How We Got to Here, What Are the Problems, and How to Fix Them By: Michael C. Jensen, Kevin J. Murphy and Eric Wruck
  • The Trouble with Executive Stock Options By: Brian J. Hall and Kevin J. Murphy
  • Relational Contracts in Strategic Alliances By: George P. Baker, Robert Gibbons and Kevin J. Murphy
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