I recently had a discussion with a client about “merit” pay increases. Never mind the current concerns over giving ANY pay increases; we were discussing how to divvy up the dollars. She asked me how, if we budget for across-the-board adjustments, do we also recognize performance…?
Also recognize performance??
Therein lies the problem.
If ALL employees (presumably even low performers) get a pay increase, then your high performers are diluted. Your contentment scale is reversed; lower performers are thrilled to see a pay raise — ANY pay raise — and high performers are ticked off, since there’s only a 1-2% delta between them and the slugs.
My recommendation is always to take care of the people who take care of you (company) FIRST. The remaining money becomes the pool for “all others.” You don’t scrape around for dollars to also recognize performance… you recognize performance first, then you “scrape around for dollars” for all the rest.
But that’s just me…