Merck & Co. is a pharmaceutical company with a history dating back to 1827. In the 1980s, Merck's performance began to lag behind competitors due to disappointing new products, inflation, and currency exchange rates. Merck's performance appraisal system rated employees on a scale of 1 to 5, but outstanding performers felt they were not adequately rewarded. The system lacked clarity and managers avoided low ratings, fearing employee discontent. In response, Merck formed an Employee Relations Review Committee to examine policies and ensure fair application, consistent communication, and a system encouraging productivity and excellence.