Exception to Salary Increase Policy???
Caroliso
352 Posts
We have a policy that salaries that reach the top of the range are frozen until we've updated our ranges via compensation study, if the person isn't in a position to be promoted to a new level.
My CEO has inquired about a raise for our COO, which will raise her above the range for her position. I actually agree with the justification for the raise -- she has performed in an extraordinary way under an unusual set of circumstances I won't detail here, but they are exactly in line with our rationale for salary increases.
My dilemma -- do I stick with our policy, or create an exception?
Some history... this policy has created difficult moments for us in the past, mostly when someone has been in a job a long time and through steady good performance has increased their salary up to the top of the range. We have frozen those salaries until the ranges were updated, and it is difficult for people to swallow. These haven't been instances where people would have been eligible for an extraordinary increase, but it has meant that any increase has been denied that exceeded the range. A complicating factor for my current situation is that the historical situations involve more junior positions, so an exception for a senior person doesn't send a good message.
A bonus is a possibility, but it shouldn't really be used to get around a policy, which feels like would be the case here. We issued one bonus in my tenure, and it was for extraordinary performance that was one-time in nature because it was needed but outside the person's job description and unlikely to be required again any time soon, so we didn't want to add this to the person's salary base.
This maybe is too detailed for an easy answer, but I'd appreciate any discussion on exceptions to salary policies, what you do when a person hits top of your salary range, etc., that would help me think about this.
Thanks.
My CEO has inquired about a raise for our COO, which will raise her above the range for her position. I actually agree with the justification for the raise -- she has performed in an extraordinary way under an unusual set of circumstances I won't detail here, but they are exactly in line with our rationale for salary increases.
My dilemma -- do I stick with our policy, or create an exception?
Some history... this policy has created difficult moments for us in the past, mostly when someone has been in a job a long time and through steady good performance has increased their salary up to the top of the range. We have frozen those salaries until the ranges were updated, and it is difficult for people to swallow. These haven't been instances where people would have been eligible for an extraordinary increase, but it has meant that any increase has been denied that exceeded the range. A complicating factor for my current situation is that the historical situations involve more junior positions, so an exception for a senior person doesn't send a good message.
A bonus is a possibility, but it shouldn't really be used to get around a policy, which feels like would be the case here. We issued one bonus in my tenure, and it was for extraordinary performance that was one-time in nature because it was needed but outside the person's job description and unlikely to be required again any time soon, so we didn't want to add this to the person's salary base.
This maybe is too detailed for an easy answer, but I'd appreciate any discussion on exceptions to salary policies, what you do when a person hits top of your salary range, etc., that would help me think about this.
Thanks.
Comments
I suggest a bonus. Bonuses are usually for unusual or exceptional items, so this applies.
Also, I would consider rewriting your policy. We also have wage ranges and our employees can max out. However, we give any employee who has maxed out and would have otherwise received a raise a lump sum payment. This way they still get something for being a good employee, but it helps keep costs down. The lump sum doesn't necessarily equal the amount they would have been paid, there are no benefits based on the extra pay, and next year we will still be looking at the same amount (no compounding effect like you get with percentage raises) when it comes time for merit adjustments again.
Though the employee is not as well off as if we had given them a raise, lump sum payments go a long ways towards keeping the employees happy and motivated.
Good luck!
Nae
The lump sum payment is an excellent idea, NaeNae, I may steal that one if you don't mind. x:D
Can you say more? For example, you say it may not be the same as the raise they might have gotten. How do you compute the lump sum payment? Does this happen often in a given year?
Even if we give the full amount, we have saved on life insurance, 401k, etc. And next year the person is still looking at $40,000 with a max of $1,200 lump sum payment. If we had given them a raise, a 3% increase would now be worth $1,236. It isn't alot to the one person, but it adds up over time for the company.
We went through a spell where about 20-25% of our employees got lump sum payments a few years back. We are better at looking at the market now and haven't had it happen for several years. We had one employee who only got a few cents raise last year because of the max, but that employee was lucky to get anything and is now gone.
(BTW, our managers who are also officers of the company have wages set by the board. Everyone else has a range.)
Good luck!
Nae
Good luck
I would first look at the employee's job. Has it changed, responsibilities increased, etc. (Don't look at how the employee has performed, but what the job requires.) You may need to reclass the job, up and/or down.
Second, I would look at the salary ranges, which was mentioned.
Third, if these don't change and you still want to do something, I would do the bonus. (I like the idea of the "lump sum payment' that was mentioned, but what it is is actually a bonus with a different name.
I would also review your policy.
The last thing I would do is "make an exception". This opens a can of worms.
E Wart
We have had instances of employees being granted increases that put them above the maximum. At this point, their salary is frozen until the range increase (if any) catches up with their salary.
Hope this helps.