#1 goal this year: get pay raises right!

There’s a vicious cycle that happens in organizations across the globe. Each year, employees eagerly anticipate getting their performance reviews completed so that they can start benefitting from a much-deserved pay raise. But when the results come in, they are left wondering why they are being handed such a pathetic salary increase? It’s enough to make a good employee walk out the door. Sadly, many do just that.

Money is a Big Issue with Employees

According to a Harris Interactivec survey conducted on behalf of CareerBuilder, in which more than 3,000 employees were asked what makes them stick with their current employer and what would make them leave, inadequate salary is reported as being a large part of the problem. The survey results were:

  • 58 percent of the employees said they planned to change jobs within a year
  • 66 percent said they were unhappy due to concerns over salary rates
  • 65 percent said they did not feel valued by their employer
  • 37 percent had been passed over for a work promotion
  • 39 percent indicated that they felt like they were underemployed
  • 28 percent of them had not received a salary increase in the previous year

It’s clear from this survey that when an employee works hard and is committed to the success of the organization, they feel personally insulted over not receiving a salary increase that they believe to be fair. In fact, this is exactly what can put them over the edge and make them leave a job for greener pastures.

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Boosting Employee Engagement and Retention

Maintaining a great workforce starts with giving all employees the opportunity to advance in whatever career path they desire. For some, just getting by is their goal. For others, flying higher and landing into positions of leadership is the objective. In either case, efforts should be made to engage all employees at their individual level.

How does this happen? Ongoing engagement and retention of employees take place through programs that direct supervisors have the greatest influence over. They have the ability to observe what employees are doing well and what they need support with. They also have the ability to boost morale among their teams, note performance that stands out from the norm, and issue feedback.

When it’s time to start performance reviews, the first line of defense is the floor management team who works with individuals to improve results. These are the people who can more accurately determine how performance bonuses and salary rates should be dolled out.

Managing Performance Better

There are several components of a successful performance management and salary review process that can help you engage and retain more employees. Include the following in these efforts:

  • Use a consistent and fair performance management system
  • Annual benchmarking reviews of market salaries for all job types
  • Research the competition and offer something more
  • Increase spending for incentives and benefits across the board
  • Develop learning programs and career growth opportunities
  • Capture employee exit interviews and learn from them

Fair Salary Increases are the Key to Retention

When it comes to retaining your best employees, it comes down to offering them salary and benefits that are worthy of their efforts. It’s true that salary increases should be directly linked to performance, which is an effort that must take place year-round through communication and performance management. Using your point of contact – your supervisory team, can help to make this happen.

Worried about how to afford adequate raises? This free whitepaper from PayScale might help: Compensation Budgeting.



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7 Comments on "#1 goal this year: get pay raises right!"

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I work for a local government. Though we have what is a pay for performance system last year raises were awarded solely on where an employee was on the pay scale. The lower on the scale the larger the percent increase. What employees saw was performance does not matter. What matters to management is bringing the whole group, over time, to the same rate of pay.


That’s because you work for the government not private industry. Private industry rarely operates under that pretense.


What seems to be the norm withi ln the last few year is rewarding high performers and making see ome adjustment to those who are recognized as being paid below market. Everyone else end us demotivated and fustrated after working year after year with no increase.

As a manager, what I’m finding more than anything is that employees want to be paid just for showing up. And not necessarily even on time or every day. We’re dealing with a whole new workforce out there, and their ethics are incredibly less ethical than they used to be, even five years ago. I have an entry level employee who has remained in that position for eight years. Yes, eight! She has rejected offer after offer to move into higher, better paying positions within the company. She does a GREAT job where she is, but there is zero ambition… Read more »
Each and every comment before mine is accurate. I have witnessed all of it except that I have not worked for the government. As we recoop from the recent recession where many employees were underpaid, but just happy to have a job, the employers are beginning to find it necessary to re-evaluate their pay scales. I agree with this to an extent. I am a firm believer in rewarding employees who work hard. Likewise, those with the attitude of entitlement, should be compensated for their level of commitment and performance or lack thereof (these are the people that will never… Read more »
As a manager for a company in the private sector, I constantly see new employees come start working with us and after a few weeks start trying to demand more money. In their interviews we clearly explain that we do 90-Day Evaluations and Yearly Evaluations. They don’t even know how to completely do their new job with us, have not proven so yet, and are demanding a raise. I have established benchmarks and a standardize system so when we do give raises that we are able to make sure everyone is evaluated fairly across the board. These new employees have… Read more »
I work in Management for a local Government Agency and have done so for 27 years. During the first 20 years we had an excellent salary compensation program that included a negotiated Annual Cost of Living increase of 5.0% and 12 merit increase steps. All employees were happy and went beyond their normal expectations. Over the past 7 years we have seen the loss of the Annual cost of living and a decrease in the percentage of merit increases. We have also seen the States new retirement rules take away money from us that we use to get by having… Read more »