Merit pay is a compensation system that rewards employees based on their performance and contributions to the organization. Instead of receiving a standard salary increase, employees may earn bonuses or higher pay rates if they meet specific goals or demonstrate exceptional work. This approach aims to motivate employees to improve their productivity and effectiveness. Organizations often use performance evaluations to determine merit pay increases. These evaluations can include feedback from supervisors, peer reviews, and self-assessments. By linking pay to performance, companies like Google and Amazon hope to foster a culture of excellence and accountability among their workforce.