Companies Rethink Across-the-Board Pay Raises
wsj.com
wsj.com
From the employee's (my) perspective:
* If I get a small nominal pay raise, I might stick around for up to the rest of the year, depending on how recently I started at the company. I don't know if this is a good idea, but sometimes promotions and raises aren't on the same schedule.
* If I get no raise, I'll be leaving ASAP.
* If I get a significant raise, I'm more likely to stay stay until next year's raise.
Having nearly doubled my salary in a short time by "hopping" at good offers, there's little reason to stick around in companies that value manager bonuses over employee retention.
My stomach still clenches at the memory of managers greenlighting all the goals on their own performance reviews.
Basically, if they liked you, you "passed" your review. If they didn't, they'd find something or other to pick at.
The whole process was so weasel-ly, and in HR's pocket, that it was hard to find a place to start challenging it.
Manufacture paperwork to "substantiate" whatever result we've already picked.
P.S. If you start feeling this way about your own workplace, it is a primary sign to GTFO. Even if you are one of the "favored", if you're smart and a straight-shooter, you are not going to enjoy the dis-function around you.
Watch out, though, because there's a catch-22: if you hop too many times, you can end up being rejected for too many hops.
An exception to this would be someone who has had a lot of contract work without a lot of FTE, that is definitely a red flag.
You've been lucky - I've been turned down for positions I was otherwise qualified for because of "too many job changes" (and yes, they told me so). I've also seen hiring managers (from the other side) not even consider resumes with too many jobs of too short a duration. I don't think it's the kiss of death, as long as you're competent; I've never been out of work, in spite of a four-year period where I held four different jobs, but it's worth keeping in the back of your mind.
Or just put down a large early timeperiod as "software engineer" without elaborating on it to much, and only focus on recent experience.
When it comes to me, policy is whatever; at the end of the day, no matter how my comp package is arranged, I'll be looking after my bottom line. If I'm not happy, I'm confident in my ability to seek a better deal. I'd have to really believe bonus-based comp is likely to work out in my favor, at least on the timescale of a few years. Longer than that, it's not appealing, due to the lack of compounding of bonuses.
But I feel like as a developer, I'm a bit insulated from concerns of the mainstream labor market. I just worry that for people without a whole lot of mobility, this is just another step toward institutionalizing wage stagnation.
> Moreover, managers are reluctant to increase base pay further because higher payroll costs could result in heftier prices for customers, says Tom McMullen, a senior compensation partner with Korn Ferry Hay Group.
That's rich.
Was this article written in 1955 and then accidentally drawn out of the archives and posted in 2016? The annual pay raise died a few decades ago. There were countless articles about it. You can go back and re-read early issues of FastCompany, from the 1990s, where they talk about "you" the worker needs to make themselves essential to the company, because annual raises are dead and only real promotions bring real money any more.
And of course, at some point there emerged in the USA the odd habit of top managers, such that to get a pay increase an employee needs to quit and go elsewhere, or at least has to get a real offer from somewhere else, and only then will "your" company give you a pay increase, to match that competing offer.
This is the first year in my 14-year career I did not get an annual raise.
AFAICT, despite the hype, it really didn't, it just became less significant.
> You can go back and re-read early issues of FastCompany, from the 1990s, where they talk about "you" the worker needs to make themselves essential to the company, because annual raises are dead and only real promotions bring real money any more.
Its true that in private industry, reliable annual increases that are much greater than inflation (and so represent real advancement) are far less common than they used to be. They still happen in some places where people advance within broad pay bands without a change of position or title, so it isn't strictly the case that all real (significant) pay increases come from promotions, but its not a bad approximation.
But even so, annual nominal pay increases that are at least near or slightly higher than inflation seem to remain common in private industry.
Large companies do this "by the book" with HR-imposed bell curve type quotas (that they are trying hard to hide) with ~80% of the employees getting an average rating/raise, ~10% getting below average rating/raise, "top" 10% or so - getting a higher but also capped raises.
Smaller/less "formal" companies tend to reward/"punish" (you're still getting a raise but it's small) based on individual contributions.
So yes this is definitely a reality of the "corporate life".
I can't speak to other countries, but the USD is intentionally inflated as a matter of monetary policy and it has done so consistently in good times and bad for my entire adult life (I'm over 40)[1]. If the company is not doing well, and they choose not to give me a raise each year, that is still an effective cut in pay so long as the consumer price index is rising. Your reaction to that is yours to make, but you need to recognize it for what it is.
[1] https://en.wikipedia.org/wiki/Consumer_price_index#/media/Fi...
They are actually just regular taxable income, and are taxed exactly the same as additional non-bonus income.
Additionally team and corporate culture are valueless, so retaining these things is unimportant.
Finally we can observe that consultants and executives are the fundamental creative loci in our economy.
Otherwise, people may think you honestly believe what you say.
Honestly a few percent raise a year for a competent programmer is insulting, assuming you're increasing your skill set all the time.
This is wishful thinking. Your skill set (learning new technologies + critical thinking) is unlikely to improve over time. Furthermore, you're constantly competing against new graduates in a world where your "skills" are a generic commodity.
Good luck.
IMO, being a commodity ain't so bad.
If you're calling technological knowledge a skill, you've already lost.
Huh? Expecting raises of any sort from an employer is insulting to them, unless you're increasing the value you bring. There are loads of devs I know 'increasing their skills set' yet not bring any actual value to the business they're employed in. The two points can be quite orthogonal, and the business is really only going to care about what value you're bringing to the table.
Honestly I've never felt all that connected to any of the forced attempts to create a corporate or team culture where I've worked. I'd much rather be motivated by money.
Though I recognize that likely means I'm not an ideal employee.
Shocking that that doesn't work. And I don't understand how people take seriously the "need to be passionate about x industry". No, you just need to pay money and the employee needs to do acceptable work
However, I don't see how the conclusion follows from your premise. Are you saying this idea would lead to recruiting difficulties, or that it would increase unintended turnover? Are you saying it would destroy company culture because of employee departures, or in some other way?
I think that this would increase the turnover of employees who are are not strongly motivated by reward vs. the current practice because the current practice is aimed at preventing reward from being a key issue. People join at a level that provides a lifestyle that they find liveable, they remain or try to upgrade. Those that remain are rewarded with the maintenance of their lifestyle and some small increments. If that goes then long term employees will see a decline of their lifestyle and likely will then be moved to churn.
In addition the provision of reward by bonus will increase competition between employees and corrode team relationships. That's fine for sales, where team is nowhere, but ruins everything else.