While annual performance reviews remain the main method for delivering raises, companies are increasingly adopting proactive performance systems. In these systems, employees develop goals and timelines against which they will be evaluated, and their managers meet with them more often than once a year.
Annual performance reviews are not as effective as delivering ongoing feedback, both positive and negative. Although this takes more effort on the part of management, it yields stronger players on the team.
Too many employees receive ‘surprises’ during annual performance evaluations. There should be no surprises when it comes to communicating about gaps in performance, and these should not be used as reasons to refuse raises after reviews.
ClearRock offers these tips to employees seeking raises and employers and managers considering them:
Choose the right time: Know the state of your company’s business and finances. Employees are more likely to receive raises when operating results are good, rather than when business is slow, or there have been recent or announced layoffs and cutbacks.
Determine your organization’s policy regarding raises: Research whether your employer awards increases only once a year following a performance review, gives bonuses instead of raises in base pay, or rewards only senior-level or high-potential workers. More employers are also segmenting their workforces, with the highest performers getting the biggest hikes.
Document your accomplishments: Substantiate how you have been responsible for improvements in business results or operations, such as higher sales, cost savings, product improvements, better morale, and any additional responsibilities assumed.
Research prevailing compensation for your job: Various websites can help determine where your pay stands within your industry and region. Your company’s human resources department should also have information about salary levels. Have this information ready before you meet with your manager.
Explore asking for alternatives to raises: Employees may want to consider requesting awards that do not enlarge base pay, such as a one-time cash bonus, additional vacation, or the opportunity to work from home more frequently.
Be prepared to respond to a negative answer: If you do not receive what you asked for, determine the reasons why and what you need to do. Work out a plan to achieve desired results within an agreed time frame and to revisit the issue. You then will be able to demonstrate your higher value in future meetings.
Tips for employers considering raise requests:
Ask employees to document why a raise is warranted: Place an emphasis on receiving specific, quantifiable achievements and examples of when they contributed beyond their job duties and descriptions.
Know the compensation levels for comparable jobs within your company, industry, and region: Employees receiving below average or average pay may have the best case for some type of increase.
Consider you may not be able to give employees what they want: Examine other options to a raise in base pay, including bonuses and non-financial awards. Or, increases may not be possible at present because of financial circumstances, their compensation is adequate, or their performance is just average or below standard.
Create a mutual action plan: Formulate objectives that must be met and a time table. Agree to re-examine the situation when financial circumstances improve or after certain benchmarks have been realized. Communicate how much they are appreciated, and analyze their career paths and future opportunities.
Move toward giving ongoing feedback: This creates more occasions to interface with direct reports, learn what each one does, reinforce positive behaviors, and deliver insight into how they can grow in their jobs.
