Shawnee Love   •  
June 3, 2011

One of the challenges of compensation philosophy is determining how to give raises. It is my humble opinion that companies cop out when they opt for a blanket “cost of living” raise for all employees rather than try to determine who deserves what.

I get why they go with the same percentage of raise for everyone:

• The pool of money is limited,
• They don’t want to offend anyone,
• They don’t want take money out of an average employee’s pocket to pay a star performer more,
• It’s simple,
• It’s easy,
• It’s consistent,
• It’s transparent,
• It’s “fair”.

Fair, transparent & consistent are critical standards for compensation practices which I outlined in my September 2010 newsletter, and I still support them in any program.

What I am concerned about is in the desire to be consistent, transparent, & fair, we miss the whole point of compensation which is to pay people for their contributions and value to the organization. In that context, giving everyone a blanket raise doesn’t fly, and in fact isn’t consistent, transparent or fair to the individuals who put in tons of effort compared to those who just coasted by.

What I do think the blanket raise does is allow managers to abdicate their responsibility to understand each team member’s performance contributions and relative value to the organization.

I will talk more in future blogs about other ways to give raises, but until then, I am interested in what you think? How do you handle giving raises?