Does your employee evaluation system really determine base salary

by on June 5, 2009 · 0 Comment POSTED IN: HR Info Center

Employee evaluation systems are like any other process and need to meet a customer need

Are your internal customers saying: “I spent a lot of time on this. I don’t get very much out of it.” Think about if your employee evaluation system add value to your employees-your internal customer

Two theories behind the employee evaluation process.
Theory number one, we’re doing this to justify salary treatment.
Performance evaluations were invented to decide who gets the big piece of the salary pie and who gets the little piece of the salary pie
Theory two is to protect us against our own employees, provide lawsuit evidence.

Salary rises don’t really come form employee performance evaluations
Whether you got 15 employees or if you got 15,000 employees, the same principles apply. At your company, you don’t pay for performance with base salaries. At your company, you can’t pay for performance with base salaries. And at your company, you don’t even want to pay for performance with base salaries.

In reality, where do raises come from? Well, for all of us, they come from the same place. They start with the budget not an employee evaluation.

In reality, we have to start with the notion that do we have any money? Unless we have money for raises, it doesn’t matter what last year’s employee evaluation was. This year’s pay increase is not going to happen, okay?

There are a lot of companies in this country this year that are probably going to batten down the hatches and not out a lot to base salaries because that puts you in an exposed position. Even if you’re doing okay, you’re worried that maybe things will get worse later.

If you happen to be in certain industries or certain locations, I just finished work earlier this year with a company in Edmonton, Alberta where they have tar sands and believe they’re not in a salary freeze up there. They better have budgets because if they don’t, they just can’t get people, okay?

Different situation, certain IT companies right now are still doing well, certain financial companies are doing well and growing companies are doing well. If you happen to be in some place where things are hot at the moment, while, even if you’re an accountant and Sarbanes-Oxley, well, your companies have money, no matter what the rest of the world is doing.

Bottom line: Here is that somebody’s raise, first and foremost comes from the ability of the company to pay. If the company doesn’t have the ability to pay, then the notion that last year’s employee evaluation and whatever I review you as will dictate this year’s pay is crazy.

Edited remarks from the Rapid Learning Institute webinar “No More Performance Reviews! – A Revolutionary Approach to Performance Feedback” by Gary Markle

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