You might be surprised to learn this, but you don’t want a pay rise. The Herald said so:
Say goodbye to the annual pay raise
Annual pay raises don’t work.
“You can’t really do a lot with the annual raise,” said Evren Esen, director of survey programs at the US Society for Human Resource Management. When the economy is decent, annual pay adjustments come in at 1 percentage point or 2 percentage points ahead of inflation for a given year.
That doesn’t go far. Employees expect to get at least the cost of living adjustment, and a measly 2 percent increase in pay doesn’t do much to encourage or change employee behavior.
In the end, it’s too small an increase to make a difference.
Leaving aside the question of whether or not pay rises are “working”, if they are too small why not just – make them larger?
“The conventional process of giving an annual increase is being studied, reviewed-under siege, you might say,” said Steve Gross, a senior partner at human resources consulting firm Mercer.
Nice of them to let us know.
Variable pay has become an increasingly large part of pay packages, making up a record 12.7 percent of compensation, according to an Aon Hewitt survey from last year.
It’s a much more effective way to tell people they did a good job. “With bonuses, you’re specifically rewarding someone for their behaviour in a given year. And they’re more able to directly see the line of sight between their performance and the reward for that performance,” said Esen.
“It gives companies the ability to really make a meaningful gesture to their top performers-to say you did well and you’re getting this bonus.”
From the workers’ point of view a one-off bonus is rubbish compared to even a small increase in base pay rate. Over months, over years, the small increases really add up. We’d be stuffed without them.
Bonuses also help companies keep compensation costs down. It’s hard not to give people raises, and it’s even harder to cut people’s salaries, but employers can give bonuses at will. If a company has a bad year, it doesn’t have to give out bonuses.
And there we have it! Employers pay less, workers get less, and it’s all for our own good, to “motivate” us. Printed in The Herald without comment or discussion. It’s enough to make you wonder whose side they’re on really.