On 10/29/98 6:41 AM, Fred Nickols at nickols@worldnet.att.net said while
responding to Daniel DeMaioNewton at DDeMaioNewton@sengi.com:
>>* What's wrong with coupling performance reviews to pay increases?
>
>What's wrong with tying pay increases to performance reviews
>is that this practice steadily inflates the salary base.
Actually this kind of inflation occurs only if the performance review is
used to give the typical "merit pay increase" which *does* go into the
salary base. This traditional practice results in paying people more each
year for performance which occured the the previous years when the base
pay increases were earned.
The problem here is the pay system, not the link between the performance
review and pay. An alternative is to give a one-time bonus based on
performance. This must be re-earned each year and thus will not inflate
the salary base.
The only time a base pay increase should be given is when responsibilities
increase, or the market value of the position has increased so much that
not giving an increase will result in higher turnover of employees.
Employees won't like the loss of the base salary increase -- initially.
But when they see the potential for much larger (10%-15%) bonuses than
they could get from a 3%-4% merit increase pool, they come around. The
additional bonus pool comes from not adding the 3% into the base salary
budget each year, thus freeing up 6% in year 2, 9% in year 3, 12% in year
4, etc. >
-- Jack
Jack Zigon Email: jack@zigonperf.com
President URL: http://www.zigonperf.com
Zigon Performance Group Voice: 610-891-9599
PO Box 520 Fax: 610-891-9055
Wallingford, PA 19086-0520 USA Orders: 800-244-2892
> Performance measurement for teams and hard-to-measure work
--Jack Zigon <jack@zigonperf.com>
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