The Daily Recruiter

The Ezine for Executive Managers … brought to you by The SearchLogix Group.

Category: Salary Information (Page 1 of 2)

Score a great Salary

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“By Emily Moore, of Daily Worth”

Finding your first full-time job is a heck of a lot of work — after all of the research you do, applications you fill out, and interviews you prep for, it can be tempting to rush through an acceptance once you’ve been offered a position.

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A Step-by-Step Guide to Salary Negotiation

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“by Ji Eun Lee, https://www.dailyworth.com”

Get What You Want

By now you know you need to make bolder asks for bigger opportunities and better compensation packages. You’re ready to work hard and negotiate for the resources, support, and money you need to achieve your ambitious dreams. Which is all well and good, but perhaps you’re wondering: Exactly how do I do that? What are the appropriate strategies and words to use in a negotiation?

To help you get a jump start on preparing for your big ask, here is a sample script that demonstrates key strategies for mutual-win negotiation at work.

Set the Agenda

Express gratitude and open the conversation with appropriate small talk.

Hi Laura,

I appreciate you taking the time out of your busy day to sit with me one-on-one. I’d like to take this opportunity to bring you up to speed on my work and discuss how I can contribute more value moving forward. I’d like to discuss the possibility of expanding my role and compensation for the coming year.

Articulate the Value You Bring to the Table

Build your case based on specific facts and figures and how the employer benefited from your efforts.

Looking back, we had a very productive year. I helped secure an additional $50K for Project A through fundraising efforts that reached 2,000 new subscribers and generated four positive press articles. I managed 18 client accounts and closed six new accounts that generated a total of $340K in revenues. Additionally, I designed and conducted our first client satisfaction survey that helped us gain key insights for the new sales initiatives we’ll be planning for this year.

Help Them See and Decide

Hand over testimonials or praise.

Here are some nice things our clients and stakeholders have said about my work.

Make it clear how your success and accomplishments benefits the employer.

I’ve become a credentialed or certified Client Satisfaction expert, adding credibility and prestige to our operations.

Express Shared Interest

Get buy-in.

Would you agree that my contributions have added value to this company?

Express shared interest in the company’s success. Make an ask for a concrete title.

I’m invested in helping the company grow and would like to take on a leadership role as VP of Client Satisfaction to help manage its continued success.

Help Them Help You

Provide tangible proof that you are fit for the promotion. Give something your boss can show her/his boss to make the case. I have some some ideas on how I can add more value in this new role. Here’s my proposal with plans for the upcoming quarter.

OR

I know that one of the areas we can improve upon is client retention, so I’d like to spearhead the planning and execution of an incentive program. Here are my suggestions on how to make this happen.

Make the Ask

Hand over benchmark reports/research.

If that sounds good, I hope you’ll consider me for a promotion and raise that’s commensurate with my level of experience. I’ve done some research into the market rate for this new role, and here’s what I’ve found.

What would be the best way for us to move forward?

In Case of Pushback, Respond With Open-Ended Questions

If this is not a good time for a raise, when would be a good time to revisit this discussion?

OR

If this needs to be discussed with upper management or human resources, who would be the right person to include in this conversation?

OR

If this isn’t something you had in mind for me, would you let me know what you had in mind? Also, what are the opportunities for advancement within this organization?

Now, Your Turn

Use this as a framework to write your own script. Think about how you will articulate your unique value and frame it in the best possible light. What additional goods or services can you offer that your employer or client will benefit from? How will you express your shared interest in helping the company or client grow, and what more can you ask for? Finally, what kind of pushback can you anticipate in reaction to your ask?

Brainstorm possible scenarios and outcomes. Then practice your negotiation script out loud. Preparation and practice come first; negotiation prowess will follow.

How Much Do You Really Need to Make?

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“By Mike Periu, americanexpress.com”

   Calculating your personal earnings goal is an important step to realizing exactly how much your business needs to make to support your lifestyle.How much money do you need to pull out of your business each month to cover your living expenses? That’s a question most business owners ask themselves. Typically you pay yourself a salary and from time to time take out an owner’s withdrawal directly from the company’s equity to help cover surprise expenses.

   Many small-business owners try to set their total cash withdrawals based on what the business can afford. However, rather than focus on what you can afford to pull out of the business, you need to focus on how much you need to earn at your business in order to afford the lifestyle you want to have. This is where the Personal Earnings Goal, or PEG, comes into play.

The PEG Formula

The PEG is a simple formula that will revolutionize your way of thinking about business profits. I developed it as a methodology specifically for small-business owners, especially those in service fields like consulting. To calculate your PEG, follow these steps:

1. Determine how much money you want to pull out of your business. This amount should be based on your household budget. It should include fixed expenses like your mortgage, insurance premiums, car payments and tuition. It should also include variable payments like utilities, food and clothing, as well as a component for surprise expenses and savings. Let’s say that you calculate your household budget at $15,000 per month. This is what you need to be able to pull out of your business every month.

2. Now, calculate your living expenses per hour. On average each month has 720 hours (30 days x 24 hours per day). If your budget is $15,000, then it costs you and your family $20.83 per hour to live ($15,000 / 720). Every single hour of every day, you’re spending nearly $21.

3. Calculate your productive hours. Out of the 720 hours per month, most of that time isn’t spent working. Assume that you work nine hours per day Monday through Friday and another four hours over the weekend; that’s 49 hours a week, which comes out to 196 working hours per month. However, just being “at work” doesn’t mean you’re being productive and it certainly doesn’t mean you’re doing anything that actually earns you money. So, being generous, let’s assume that during the week you have a solid three hours per day of truly productive work and we’ll assume that all four weekend hours are productive. That works out to 76 productive hours per month.

4. Calculate your PEG. In this example, you need to generate $15,000 over the 76 productive hours per month. That works out to $197.37 per productive hour ($15,000 / 76). $197.37 is your PEG. If you calculate your own PEG, you’re likely to be shocked at how much you really need to earn per productive hour. The more time you waste on tasks that aren’t productive, the higher your PEG will go. If you miss just a few hours of productive time per week, it could generate thousands of dollars in earnings shortfall per month.

Why Your PEG Number Is Important

The purpose of this exercise is to impress upon small-business owners the value of your time. You simply can’t afford to waste it. If your PEG is $200, then a wasted one-hour meeting that includes two hours of commute round-trip just set you back $600. An unproductive business trip could cost you thousands.

Prioritize your time by focusing on activities that will help you achieve your PEG. Ask yourself, “Before I do this, will it help me toward my PEG or not?” You’ll find yourself saying no more often than not. And that’s a step in the right direction toward higher earnings.

5 Things That Scream You’re Not Getting Paid Enough

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Article courtesy of The Tim Sackett Project

I was reading an article recently, it was one of those “Best Places To Work” type of articles.  Since I run a company, I’m always looking out for good ideas on how to take care of your employees without spending a dime – unfortunately – “Best Places” companies that make these lists usually don’t give you these type 0f ideas!   What you get from “Best Places” articles are all the over the top crap – gourmet cat food for your in cube pet-mate, free liposuction for your spouse and discounted tattoo eyeliner coupons.  I would love for my company to be on the top of every single “Best Places” to work article – but we probably won’t.  I care too much about my employees to make that happen.

What?!?

Yes, you read that right – My greatest weakness is I care too much!

It costs an organization a ton of money to make a “Best Places” list – not in actually applying to make the list (oh yeah, they are chosen randomly – you have to apply – the Top 100 Greatest Places to Work isn’t really the Top 100 Greatest Places to Work – it was the Top of the companies that applied for the award Greatest Places to Work), but in doing all the silly crap they do, so they sound like a great place to work.  Many of the best places to work, will never be on a list, because they are spending their time, money and effort – on their employees!

Here are some things that “Best Places to Work” companies and You Not Getting Paid Enough have in common”

1. If you’re company has unlimited gourmet free breakfast, lunch and dinner provided – you’re not getting paid enough.  Cut that crap out and pay me $10K more per year – I’ll bring in my own Greek Yogurt and granola.

2. If your company pays to have your laundry done and your house clean – you’re not getting paid enough.

3. If your company is taking you on luxury vacations and dinners that cost more than your monthly home mortgage – you’re not getting paid enough.

4. If your company spend more on marketing themselves as a great place to work, than on your employee development – you’re not getting paid enough.

5. If your CEO flies to work on a daily or weekly basis – you’re not getting paid enough.

So, how do I show my employees that I care and that we have a great place to work?  I don’t waste money on things that ultimately become a negative when I need to take them away because we aren’t making the money for our shareholders.  All great places to work, eventually become average or crappy places to work – because sustaining luxury programs that you put in place when your doing well – become negatives to engagement when you tighten your boot straps.

Pay your people fairly. Meet their needs as adults. Treat them professionally and with respect.  That’s a great place to work.

How To Negotiate A Job Offer

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By Liz Ryan, Forbes Contributor

You can negotiate a job offer, and I hope you do. The negotiation doesn’t start when you get the job offer, though – it starts much earlier, when you first bring up the salary topic during the interview process.

You’ve got to have a salary target in mind when you start a job search. That means you’ve got to know what you’re worth on the talent market, not in a general way but specifically based on your background and your geography. Use Payscale, Salary and Glassdoor to gauge your going rate on the talent market.  All three sites are free, but you’ll have to fill in a bunch of fields with personal data to get the personalized salary G2 you need.

In a job search, you’ve got to price yourself like a house. Imagine going to look at a house for sale — you like the house, but there’s no asking price. The owner is puttering in the garden when you visit, and you ask her, “What do you want for the house?”

She says “Make me an offer.” You’re going to make a lowball offer, of course – who wouldn’t?

The homeowner hasn’t given you any guidance, so naturally you’re going to shoot low and only up the offer as you go.

A job search works the same way. If you don’t tell your next boss what you think your talents are worth, s/he’s going to offer you something on the low end of the organization’s scale. That isn’t tacky or evil. If you have a salary target in mind, and I fervently hope you do, put it out there early in the process.

So far, so good, Liz, but when do I share that salary target?

 Get through the first face-to-face interview (assuming it doesn’t require long-distance travel) before you broach the salary topic. There’s no sense in bringing up dollars and cents if you aren’t interested in the job or if the hiring manager and/or HR screening folks aren’t interested in you.

When somebody calls or writes to invite you for a second interview, that’s the moment to share your target range.  Why should you go back for a second interview if the company isn’t able or willing to pay you what you need?

Here’s how to bring up the salary question on the phone:

PEGGY, a COMPANY RECRUITER: So, after our meeting last week, I had a chance to visit with the hiring manager, Sam, and show him your resume. He’s excited to meet you. Will Tuesday at 3:00 p.m. work for you?

YOU: Thanks, Peggy. I’ll have to check my schedule. Before I do that, is this a good time to check on the compensation range for the position — and are you the right person to have that conversation with?

As soon as you broach the salary topic, be ready — the recruiter or HR person is almost guaranteed to ask you what you were earning at your last job. You don’t have to part with that information, and I don’t recommend that you do. Your finances are your personal business. Furthermore, your negotiating leverage goes down the tubes the instant you blurt out the details of your most recent comp package.

Is Peggy, the recruiter, going to tell you what the company paid the last guy in this position? Not bloody likely. So why should you give up your own compensation details? You don’t have to — do this, instead:

PEGGY: Yes, let’s synch up on compensation to make sure we’re in the same ballpark. What were you earning at Acme Explosives?

YOU: I’m focusing on jobs in the $75-$80K range. If that’s going to work for Sam, then it makes sense for us to keep talking.

15 Things You Should Never Say In A Salary Negotiation

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By Jacquelyn Smith, Business Insider Contributor

You secured the interview, brought your A game, and landed the job. Now comes the hard part: negotiating your salary. 

“Salary negotiations are like any other type of negotiations — except the words you use can be extremely powerful, since there is a personal aspect to the discussion,” says HR expert Steve Kane. “The negotiation is not over the worth and price of an inanimate object, but rather the value of you to some enterprise.”

Here are 15 words and phrases that may hurt more than they’ll help in a salary negotiation: 

“I accept [the first offer].”

Remember: This is a negotiation, so be careful not to end it before it has even had a chance to start, says Ryan Kahn, a career coach, founder of The Hired Group, and author of “Hired! The Guide for the Recent Grad.” 

“I’m looking for X.”

Never throw out the first number. “You want to leave room for discussion,” says Lynn Taylor, author of ”Tame Your Terrible Office Tyrant: How to Manage Childish Boss Behavior and Thrive in Your Job.”

Kahn agrees. “A good negotiation strategy is to let the employer offer the first number. That puts you in a position to see the number they are offering and gives you the opportunity to negotiate it up from there.”

“That’s all you’re offering me?”

Never say this, or anything else that will offend the employer — even if you think the salary they’re offering is laughable. 

“No.”

“In negotiations, you’ll have to be willing to be flexible and provide counteroffers when the offer isn’t in line with what you are seeking,” says Kahn. By saying “no” you could be quickly closing the door on the offer at hand.

“I have other outstanding offers right now that are much more lucrative.”

Even if it’s true, you shouldn’t use “that card” to pressure the employer, Taylor says. “Only discuss the offer at hand.”

And if you don’t have another offer on the table, you’ll definitely want to avoid this tactic. “You could shoot yourself in the foot,” Taylor says. “The hiring manager may ask you to elaborate and if you’re bluffing, it’ll be hard to save face.”

“Bottom line”/“This is my final/last offer.”

These phrases sounds like threats, and they typically close out the negotiation, says Kane. “If you say any of these things, and the demand is not met by the employer, the negotiation will be over and you’ll have to be prepared to walk away.” 

“I know this may sound a little aggressive, but…”

If your rationale is based on fact, you should never have to preface your request with this type of disclaimer.

“I need…”

You should never say you need X amount more because of expenses or debt. “Don’t bring in personal issues; this is about your merit and the job fit,” says Taylor.

“I hate to have to ask for this, but…”

True, it might not be the easiest thing to ask for more money — but saying you “hate to have to do it” is a flat out lie. Plus, it’s just a really terrible way to preface the negotiation.

“I think…”

Don’t use “I think” or “maybe” or any other “uncertain words,” says Jessica Miller-Merrell, editor of Blogging4Jobs.com and CEO of Xceptional HR. “Always speak confidently.”

“The least I’d be willing to accept is X.”

If you tell them the parameters of the lowest offer your willing to take, that could be what you’ll get. 

“Sorry”

Have confidence in yourself. “If you know your value and what you’ll be bringing to the company, there will be no need to apologize for asking for more,” Kahn says. 

“Cheap”/”Lousy”

These words are demeaning or disrespectful to the employer, Kane explains. “The employer may decide they don’t want you to work there after all because of the lack of respect you show them.”

“But I’m worth so much more.”

Of course you’ll want to mention your value in a salary negotiation — but try to say it in a way that isn’t so obnoxious. You never want to come off as arrogant. 

“You might not think I’m worth this, but…”

Just don’t.

“You want to be direct, polite, and concise in your negotiation to show that you are competent and a valued member of the team,” Miller-Merrell concludes.

The Minimum Wage Is Getting Pushed Up – State by State

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By John Zappe, TLNT Contributor

While efforts to raise the federal minimum wage are languishing, 34 states are considering or have taken action to raise their state’s minimum.

Congressional Democrats have been stymied in their effort to raise the federal minimum wage from the current $7.25 to $10.10 an hour over the next 30 months. With 13 states pegging their own minimum wage to the federal government’s, an increase in that rate would also increase the in-state rates.

Meanwhile, the minimum wage in six states will increase between now and the end of the year. Some states saw an increase on January 1. 

22 states above the federal level

On June 1, 2014, Delaware will become the 22nd state to have a minimum wage above the federal level when it raises the rate from $7.25 an hour to $7.75. Five more states and the District of Columbia will hike their rates before the end of the year:

  • California: From $8.00/hr to $9.00/hr on July 1;
  • Washington, D.C.: From $8.25/hr to $9.50/hr on July 1;
  • Michigan: From $7.40/hr to $8.15/hr on Sept. 1;
  • Minnesota: From $6.15  & $5.25/hr to $8.00 & $6.50/hr on August 1 (rate depends on employer revenue);
  • New York: From $8.00/hr to $8.75/hr on Dec. 31.

Four more states — Connecticut, Hawaii, Maryland and West Virginia — will increase their minimum wage on January 1, 2015, with increases coming in other states later that year.

Cities raising minimum wage as well

Another 14 states have or will phase in automatic adjustments to their minimum wage, based on the Consumer Price Index or other measure.

Alaska, Arkansas, South Dakota and Nebraska have ballot measures about raising or setting wage minimums that will go to voters later this year.

Municipalities have also been enacting their own wage floors. Earlier this month, Seattle said it would raise its minimum wage to $15 an hour in stages and at different rates depending on business size. All businesses would pay the minimum by the end of the decade. Other cities that have enacted local wage rates include San Francisco, Santa Fe, N.M., and San Jose , Calif.

A complete list of minimum wage rates and scheduled increases by state and territory is available from the National Conference of State Legislatures.

Are You Getting Paid Enough?

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By Liz Ryan, Forbes Contributor

It doesn’t matter what kind of job you do or how much you get paid. Every working person has wondered at some point, “Am I getting paid enough?”

It’s a natural enough question. The bigger the employer organization, the more likely they are to use formal salary grids that may have little correlation to the jobs being performed, much less any reasonable connection with the impact of individual employees. If you’re a superstar in your group, is the corporate salary grid flexible enough to pay you appropriately for the results you’re achieving, rather than the pay grade you’re in?

It’s not  likely. Compensation grids aren’t built to be flexible – just the opposite. They’re designed to bring an employee into a new job at a ‘starter’ level and slowly move him or her up the pay steps. The salary chart that governs your compensation progress in most organizations is disconnected from both the external talent marketplace and the business results attributable to an individual’s contributions.

 

The disparity between a working person’s compensation progress as s/he stays in the same job and a more mobile employee’s trajectory moving from place to place  is so apparent that we have a name for it: salary compression. Doesn’t that sound cozy?

Salary compression means that you would have been better off compensation-wise if you’d jumped from job to job rather than sticking it out where you are. When you remain in place and serve your employer like a loyal team member, your paycheck suffers.

That’s a harsh reality to deal with, but the worst possible reaction to the realization that your annual pay may be wildly out of whack is to ignore it. Forewarned is forearmed, and it’s a good idea for every working person to tune in at least annually to make sure that your paycheck is keeping pace with the value of your resume.

At Human Workplace we look at compensation from three altitudes: Ground, Hilltop and Cloud. 

At the Ground level, we ask the question “What do people earn performing jobs similar to yours?” This is an easy answer to get using websites like Salary and Payscale. You’ll be prompted to enter a bunch of personal details but if you persevere you’ll be rewarded with a report that tells you what other people are getting paid to do jobs like the one you’re in now, or the one you’re looking for.

The Ground-level annual salary check-in is important to make sure your pay level is on a par with other people who have similar skills. The limitation of the Ground-level salary comparison is that it can only tell you what people get paid for doing jobs like the job you have or are looking for. Why should your earning power be limited to a particular job function? You have lots more to offer than what any one job title requires. Certainly you have abilities that employers may value far beyond what a given job title (and thus, a particular column in the salary chart) commands.

To get a higher-altitude view of your earning potential, forget about your skills and experiences for a moment and focus on the Hilltop view. To do that, ask yourself “What business pain do I solve?” Once you’re clear on that answer conceptually — realizing, for instance, that you help unknown brands find national prominence or you get stuck-in-development projects through the chute and out to market – your next question is “What does that business pain cost organizations?”  Get a bead on that, and you’ll have the intelligence and impetus you need to negotiate a package that may surpass the prescribed job-title-driven salary niche.

 

The third element in your comprehensive Comp Self-Check is the Cloud level view. At the highest altitude, you’ll ask “What is my earning potential as an entrepreneur, consulting with organizations or starting my own business?” Now your paycheck is limited only by your own vision and mojo. If you haven’t worked for yourself before, 2014 is the perfect time to launch a business alongside your full-time job, or cultivate a second revenue stream using a Two-Lane Highway strategy.

If you’re thinking “I don’t have time to research and then quibble over a few thousand dollars,” here is a tip. A few thousand dollars’ gap between your actual pay and your talent-market value not only compounds over time, but also brands you as someone who doesn’t know what his or her talents are worth. Learning to gauge, present and stand for the value of your contribution is an essential new-millennium muscle every working person needs to grow.

Your ‘High-Earning Years’: Salary Secrets For Your 20s, 30s And 40s

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When we’re younger, we probably think that we’ll make more money when we’re older. Job seniority comes with promotions—and raises—right?

As it turns out, your money arc is shorter than you think. According to an analysis from PayScale.com, women’s pay peaks at age 39, and, according to their median data, at about $60,000. After that, there may be small bumps in salary, but they rarely outpace inflation—so in real terms, you’ll make that $60,000 for the rest of your career.

Maybe that doesn’t sound so bad, except that, based on the same data, men’s salaries continue to grow until age 48, and top out at a median of $95,000.

And, regardless of your gender: “We’re trained to believe that our income is going to go up in a straight line, in a constantly growing trajectory,” says Lauren Lyons Cole, a Certified Financial Planner™ in Manhattan. “Unfortunately, that’s not the way it happens.”

What a Salary Arc Looks Like

So what’s actually happening? In your 20s, fresh out of school, everything is looking up—you’re probably doing some job hopping, getting promoted, climbing the corporate ladder with gusto, and your paycheck looks better and better. According to the same PayScale study, both men and women see salary growth of about 60% by age 30.

After that, however, the rate of growth slows for women. By age 39, the typical woman’s income has grown by less than 20 percent, compared to her 30-year-old self. And after that? Stagnationville. Sure, you’ll probably get cost-of-living raises along the way, but the days of the double-digit raise are over.

The picture is rosier for men, whose salary growth continues to be healthy after age 30. But by age 48 in this study, the typical man’s income has grown by about 45%, compared to age 30. That’s not too shabby, but it’s not on the cusp of retirement, either.

Of course, much of this depends on your career choices. Pharmacists, for instance, usually make top-dollar salaries straight out of school, but the potential to significantly boost their paychecks later is nearly nil. Lawyers, on the other hand, are typically well into their 50s before their salaries peak. “Any job where you get the majority of your training in school and the first few years of your career is not going to see much pay growth after that,” says Katie Bardaro, lead economist at PayScale. “If you’re a lawyer, you’re constantly learning on the job.”

But that’s not to say that you will necessarily peak at 39 (or 48). Here, some strategies for salary success:

When You’re in Your 20s

Have a plan. Out of college, it’s tempting to take the first job that comes your way. But one of the keys to work achievement is finding a career that makes you want to show up on Mondays. “From the first job you take, have a career strategy,” says Kathy Caprino, president of Ellia Communications, a career and leadership coaching company. “That can morph, that can be very malleable, but understand what your passions and talents are, and try to craft a career that’s aligned with that.”

Consider your industry carefully. The differences in men’s and women’s numbers in PayScale’s analyses was largely driven by job choice. According to PayScale’s results at least, “Men tend to go into engineering, computer science, management roles and director roles more so than women, and those jobs see fairly consistent pay increases year in and year out,” Bardaro says. Maybe there isn’t a higher-paying career choice that lights your soul on fire, but if there is, you’d be foolish not to pursue it over another option.

Take charge. If a higher-up spot opens up at your company, are you in the running for it? If not, why not? “You should be meeting with your supervisor regularly, and you should have a development plan in place,” Caprino says. “There should never be a blindside.” In other words, if there are issues that would prevent you from getting that next promotion, you should be aware of them and working on solving them.

Who Deserves A Raise?

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By Chuck Csizmar, CMC Compensation Group Contributor

You just received an above average performance rating from your manager, which naturally put a big grin on your face.  Which was subsequently wiped away when you heard that for your annual salary adjustment you would receive what amounted to one percent (1%) more of a salary increase than “Joe Average” down the hall.  Tight budget this year, you’re told. 

You know Joe, or his type.  He’s the disengaged clock watcher whose most notable accomplishment is keeping his chair warm.  Doesn’t do enough to either get fired or stand above the crowd.  However, his level of performance is considered the standard in a bell-shaped curve, and so receives an “average” award.

One percent more than the clock watcher.  For delivering what your boss described as your terrific effort for the entire performance period.  Was it worth it?  Some studies have suggested that, if the differential between performance levels isn’t at least 2% (which sounds better than the actual dollars involved), then you’d be better off with a general adjustment.

How does this happen?

When assessing the dynamics of employees and their work ethic, it’s generally agreed that performance rewarded is often performance that is repeated.  Like the Pavlov experiments of so long ago, we tend to repeat that activity which previously gave us pleasure or reward.  We want more of it.  However, if the performer doesn’t feel rewarded, or is not pleased by the company’s reaction to their performance, does the company gain or lose when that desirable performance is no longer repeated? 

Perhaps your performance reward system is not as effective as you would like.

So the question becomes, how much of a reward differential between the best and just OK is enough to keep your better performers motivated and feeling appreciated?  A good guess is that it’s not 1%.

As a manager, can you balance the need to reward your better performers against the reality of tight budgets?  If you want to retain the high performers, you’d better find a way.  So then, what if you started by figuring out how much reward to provide?  Then whatever is left can be carved out among lesser performers.  That will protect your “stars.”

Ahh, but that won’t make you popular among the masses, will it?  And for many managers being liked is a key element of self-worth.  But how high up the priority list should popularity as a manager be marked?  Will you be assessed for popularity when your performance review is due?  I don’t think so.  Likely it won’t be in the top three of what senior leadership is expecting from you.

Your job description probably doesn’t even list this characteristic, and it is certainly not a factor in job evaluation.  So perhaps there are other criteria for a successful manager that should receive more attention.

If you’re concerned about differentials another consideration is the number of ratings you have in your performance appraisal system.  For example, with a seven scale system the need to provide percentages for at least five makes the division of reward opportunity a bit tight.  And if you try to maintain a two percentage point differential between performance levels, the numbers might become higher than what’s deemed affordable.

I don’t believe in reward for tenure, but I do believe in reward for outstanding job performance.  If the merit spend budget doesn’t have enough monies to recognize and reward everybody, each in turn for their contribution, then I’d suggest that you take care of your better performers first.

You can afford to disappoint “Joe Average,” but not “Bob the Superstar.”

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