Commonly Asked Questions About Employee Compensation

by on June 15, 2009 · 0 Comment POSTED IN: HR Info Center

How to handle five typical employee compensation complaints

  1. I got a 10% raise in employee compensation last year but only 5% this year, even though you were saying I did great work, how come?

    A 10% increase in employee compensation might have involved a promotion or maybe we just had a lot of money last year and this year we’re in a very trimmed down situation. So there are a lot of possible explanations for why somebody got 5% this year. In most circumstances, 5% would be pretty good adjustment to employee compensation.

    The bottom line is there are some explanations there that should be reasonable to be able to pay it to somebody if you know your budget, their compensation ratio and something about their performance. It should be relatively straightforward to answer that question depending on the specific circumstances.

  2. I know I’m not management material but does that mean I’m stuck with cost of living salary increases forever?

    There’s an illusion out there that people think if you’re management you’re going to go up the escalator forever. Well that’s not really true, anybody in management knows eventually as senior manager if you don’t become an executive or a president, you’re only going to go up so high.

    The escalator stops for everybody. Now if you don’t want management that just makes your escalator shorter. So you’re going to find the top of your situation sooner, but the goal of everyone who knows what’s going on here should be to get to the top of whatever the highest escalator they can get to as soon as possible and hang out there for as long as possible.

  3. I’m a 25 year old engineer and I do the exact same thing as a colleague in his 50, how come she makes more?

    Employee compensation tends to favor people who have been here longer, You tend to move up even slowly but eventually you move up over time. And somebody who’s been in their grade for a long time is almost assuredly going to be paid more than somebody who is newer to that grade.

    So the good news for the 25 year old is if they stick around longer they will probably eventually catch up with that 50 year old person and depending on their performance and potential they can even pass them. So age does have some correlation but it’s not because of age you’re paying more. It’s because of experience, time and grade, then it’s a natural fallout of the way systems work.

  4. Am I ever going to make as much in this job as my brother makes in his?

    Great question, except there’s no context to give a straight answer. Here it all depends on what your brother does, depends on what you do, what markets you’re in, and dozens of other factors.

    Some people want to be paid like somebody else but they don’t want to do that job and so, it all depends on what your brother does and where your brother works, the status of his company and the ability of that company to pay the market they’re in and the kind of work he does compared to the kind of work you do.

    So all those variables have an impact and any of those could account for differences in employee compensation, so tough to tell. You could make more money in the long run than your brother or not, depending on the variables in the situation.

  5. I think our performance reviews are rigged. You throw a minor negative feedback simply to justify these low employee compensation increases.

    Those of you who have participated in performance evaluation systems that have forced ranking have probably heard this before. Every once in a while you make a sacrificial lamb and say, “Well, you know, I can’t give her an increase any way I mean she’s near the top. So, I’m going to go ahead and move her down the list so I can give this person here a better shot at it. Move her down the list; I’ve got to emphasize some of the stuff that kind of would tweak her down.” So, you rig yourself into that situation.

    You really need to de-link performance reviews from employee compensation. That’s one of the reasons. But trying to tie those two things together to administer salary is just kind of silly.

Edited Remarks from “Salary Talk: How To Discuss Pay So Employees Feel They’re Treated Fairly” by Gary Markle

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