<P> Merit pay is performance - related pay, most frequently in the context of educational reform or government civil service reform (government jobs). It provides bonuses for workers who perform their jobs effectively, according to easily measurable criteria . In the United States, policy makers are divided on whether merit pay should be offered to public school teachers, and other public employees, as is commonly the case in the United Kingdom . </P> <P> Merit pay's roots lie in behavioral psychology and incentive theory . These theories are based in the belief that people are rational and react to incentives and that you can increase performance with the correct catalyst . </P> <P> One example of a system that uses merit - pay is the Teacher Advancement Program (TAP) created by the Milken Family Foundation in 1999 . TAP is currently in place in more than 180 schools all across the United States . In this program, salary raises are based on some aspects of teacher performance, measured by a combination of observations and student test scores . TAP teachers can advance their career in three ways: (1) remain in the classroom and become a mentor to others, (2) leave the classroom and become a master teacher, or (3) advance to administration through traditional means . This program is focused on helping teachers improve performance by learning from others . Teachers are put into small groups that--for a few hours each week--collaborate about what's working in the classroom . The opportunity allows teachers to build skills that will improve classroom learning . </P>

A firm would most likely use merit pay as an element of a(n)