I'm not a baseball fan but what happened to Joe Torre is a good example of why merit pay will never work.
Here is a man who did a great job for the Yankees for lots of years (not being a baseball fan, I don't know the number of years.) Things did not go well this year. Poof! He's offered an insulting contract and he is gone.
Not knowing anything about baseball, I don't know if there was anything he could have done to change the fate of this year's team. But, I do know that there are many factors that influenced the outcomes, some in his control, some not. Would the promise of a big bonus after he won the World Series have help his team do better? Would the promise of keeping his job have helped the Yankees win? If he was given more money could he have done a better job? I'm guessing the answers to all these questions is no. Joe Torre does not need baseball for the money. He needs baseball for his love of the game. Teachers do not become teachers to become rich (although we would like to live a comfortable life style.) We want to help our students accomplish as much as possible. We are already doing everything we can to help our students succeed. Bonuses are not going to change what we do. Money is not going to make us any more successful than we already are.