Blog

Pay raises for time served or enhanced value?

Most organizations provide for pay raises on what I call “Time Served”. We all have seen these types of programs – after six months you will have an evaluation and an adjustment which is within a fairly tight range. What I have found is that great people are demotivated by time served compensation plans. Why? Time served plans are based on the lowest common denominator.

It is consistent, relentless, wearing you out and taking the same big bite out of your profits every day. Too many people think it is just a cost of doing business. They can’t do anything about it. They have tried without any luck. The converse of Peter Drucker’s quote is also correct. If you can measure it, you can manage it.

“Managing people is a complex challenge. Maybe you'll get lucky and figure it out once, but whatever you did this time won't generate the same result next time.”                                – Theodore Kinni, Inc. magazine

It is a crazy thought isn’t it? Why would anyone be against lower turnover? Every time I help someone with their turnover there are individual employees and groups of employees who are actively working against reducing your employee turnover. Let’s look at a couple.