Will Evenhanded Compensation Drive Top Talent Away?

Susan Hall
Slide Show

Improving Your Performance Review Process

Eight tips that can help improve your company's performance review process.

When I spoke earlier this week with Constance Melrose, managing director of eFinancialCareers North America, she said the market for IT professionals on Wall Street has put those workers in the driver's seat when it comes to negotiating pay and bonuses:

... performance is important to this group of expert professionals and they do expect their performance to be rewarded. And I think they're cognizant of the opportunities elsewhere and that their financial services skills are at a premium.
I think employers need to be aware of this and understand. Have they rewarded their best performers in technology roles appropriately?

That's interesting in light of a Washington Post piece suggesting that Google's across-the-board 10 percent raises might not help the search giant keep talent, but actually could have them running for the exits. I've written before about Google's fight to keep its top talent, which does include performance-based bonuses.


Post writer Jena McGregor says:

The company's hardest-working, most irreplaceable people could think all that extra effort is for nothing if their less-talented colleagues see the same uptick in pay they do. ...
To keep the best people feeling like they're rewarded for working smarter or harder than the rest, tough calls need to be made about who truly deserves more money, too. When leaders don't make them, their efforts to raise morale could raise the risk of defections.

There are certainly diverse viewpoints about how to determine who gets what. Samuel Culbert, a tenured professor at UCLA's Anderson School of Management and author of the book, "Get Rid of the Performance Review!," talked to my colleague Ann All about the practice he calls the "most insidious, most damaging, and yet most ubiquitous of corporate activities." He instead urges honest conversation between boss and subordinate to determine the best ways to meet the company's objectives.


I found some of the comments on McGregor's post interesting as well. Said commenter DMM1:

I think it's a great move. WAY too much time and emotional energy is spent comparing every employee to every other employee, every year. It's counter-productive, destroys morale, discourages cooperation, and encourages back-stabbing. Just decide: keep, or fire? Then let other bonuses be determined by things the employees have control of.

And commenter DWINFC:

The writer seems to think that a 10% increase for everyone gives everyone the same increase. However, the mail room staff are getting 10% of almost nothing while the upper-level staff are getting 10% of a substantial amount of money. It's not a way to recognize top performers in the middle, but it does tell everyone they are valued ...

And commenter TEPLICKY101:

My company rewards well the top 15% or so, throws crumbs at the top 50%, and gives little or nothing to the rest. So, to be better off, you need to beat your buddies. Does not really breed love and makes the competent non-dominant types unhappy.

So what do you think? What's the best way to dole out raises and bonuses?

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