Perhaps one of the most challenging aspects of managing a company is to provide a performance evaluation technique that does not frighten employees. The fear in my organization, among those marginal performers, is that the evaluation may cause their being fired. "One of the most controversial tools for boosting performance is ranking employees and dismissing the laggards. Proponents argue that the practice stretches star employees.(Marchetti 2005 16). Those at the bottom of the performance scale tend not to be as motivated as they might be, simply because the fear of being poorly evaluated stifles their determination to improve.

             While there are many companies which automatically provide a cost of living raise to their employees (sometimes due to labor contracts), the idea of providing bonuses or merit awards also can cause some serious problems, and such "merit raises" often cause more conflict within a business than they solve in the way of increased productivity and/or efficiency. Here is one author's proof: "It's clear that employers' compensation systems aren't making the grade. Only 10 percent of organizations describe their merit pay programs as "very effective," according to an employee attitude survey conducted in 2002 of 335 companies by Hay Insight (the research and survey arm of Philadelphia-based HR consulting firm The Hay Group), WorldatWork and Loyola University of Chicago" (Wells 2005 76).

             One problem with many businesses today is that management is too lenient, too worried about hurting someone's feelings. In today's competitive world, where every worker must pull his weight or make way for someone who can, such leniency may be costly. Wells (2005) suggests something called "tough love.":.

             "By contrast, adopting--and enforcing--the get-tough approach to merit pay has clear advantages: It doesn't waste increasingly precious salary-budget dollars, it sends the right message that improvement is imperative, and it doesn't fund under-performers at the expense of high-performing employees" (Wells 2005 78).