Comments on: The Problem with Annual Pay Increases http://moneysmartlife.com/the-problem-with-annual-pay-increases/ Money Tips for a Better Life Mon, 15 Mar 2010 19:46:53 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: Ben http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-3993 Ben Mon, 23 Apr 2007 06:21:43 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-3993 Good point Tim. The skills you learn at one job can always be applied elsewhere if you're not being rewarded for your efforts by your current employer. My problem is that I'm already starting to feel the chafe of the golden handcuffs; my 4 weeks of annual vacation would be sorely missed if I changed companies. Good point Tim. The skills you learn at one job can always be applied elsewhere if you’re not being rewarded for your efforts by your current employer.

My problem is that I’m already starting to feel the chafe of the golden handcuffs; my 4 weeks of annual vacation would be sorely missed if I changed companies.

]]> By: Tim http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-3991 Tim Mon, 23 Apr 2007 05:31:44 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-3991 Depending where you are in your career and what you do, working hard has its own reward that can be much better than the salary increase. You learn whatever you can from your work. Then get promoted or find another job with higher pay or responsibility. Depending where you are in your career and what you do, working hard has its own reward that can be much better than the salary increase. You learn whatever you can from your work. Then get promoted or find another job with higher pay or responsibility.

]]> By: T http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-413 T Sun, 14 Jan 2007 20:18:48 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-413 An interesting post. I don't know if this is universal, but in my company, performance reviews have grown to be an elaborate and time consuming mechanism. So much so that it has me wondering and looking closely for company motivation. I have two observations about them. One, creating an apparatus of advancement that is seemingly in the hands of employees, but also increasingly bureaucratic and complex. The second, what constitutes a median performance characterization now describes thorough-going self-sacrifice. The alternative you outlined is appealing, but I would substitute the negative "bare-minimum" with increased efficiency to meet your commitments and nothing more. In my experience, what counts in the long run is not you putting the extra hours, but being reliable and consistent in producing quality results. It may also give you the strength and capacity to pursue other work in your spare time. An interesting post.

I don’t know if this is universal, but in my company, performance reviews have grown to be an elaborate and time consuming mechanism. So much so that it has me wondering and looking closely for company motivation.

I have two observations about them. One, creating an apparatus of advancement that is seemingly in the hands of employees, but also increasingly bureaucratic and complex. The second, what constitutes a median performance characterization now describes thorough-going self-sacrifice.

The alternative you outlined is appealing, but I would substitute the negative “bare-minimum” with increased efficiency to meet your commitments and nothing more. In my experience, what counts in the long run is not you putting the extra hours, but being reliable and consistent in producing quality results. It may also give you the strength and capacity to pursue other work in your spare time.

]]> By: moneysmartz http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-403 moneysmartz Sat, 13 Jan 2007 16:55:13 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-403 mbhunter, I've never heard of Michael Masterson, I'll have to check him out. Thanks! mbhunter, I’ve never heard of Michael Masterson, I’ll have to check him out. Thanks!

]]> By: mbhunter http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-401 mbhunter Sat, 13 Jan 2007 08:11:14 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-401 If there's a hard ceiling on your earnings (which it sounds like there is, unless you can get promoted to Vice King or something like that) then frankly it really doesn't make sense to bust your hump. Thumbs up for the alternative! I mean, don't endanger your job, but if you're consistently performing well above average you should be compensated for it, and if you're not, then seek alternatives. You might enjoy Michael Masterson's books and his free newsletter <a href="http://www.earlytorise.com" rel="nofollow">Early to Rise</a> if you're not subscribed already. If there’s a hard ceiling on your earnings (which it sounds like there is, unless you can get promoted to Vice King or something like that) then frankly it really doesn’t make sense to bust your hump. Thumbs up for the alternative! I mean, don’t endanger your job, but if you’re consistently performing well above average you should be compensated for it, and if you’re not, then seek alternatives. You might enjoy Michael Masterson’s books and his free newsletter Early to Rise if you’re not subscribed already.

]]> By: moneysmartz http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-367 moneysmartz Mon, 08 Jan 2007 05:43:06 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-367 Enough Wealth, I agree my increases have compounded out to higher dollar amounts than they were years ago but the system still doesn't motivate me to excel at my job. Working long hours every day for only a few hundred extra bucks doesn't seem to make much sense. I could either 1) find a new job that has a better system or 2) stay where I am, stop working so hard, and focus on making extra money myself. Right now I'm going with option #2, we'll see how it goes. Enough Wealth, I agree my increases have compounded out to higher dollar amounts than they were years ago but the system still doesn’t motivate me to excel at my job. Working long hours every day for only a few hundred extra bucks doesn’t seem to make much sense.

I could either 1) find a new job that has a better system or 2) stay where I am, stop working so hard, and focus on making extra money myself. Right now I’m going with option #2, we’ll see how it goes.

]]> By: jim http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-366 jim Sun, 07 Jan 2007 17:09:23 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-366 I think the "compounding" point is a joke and just something managers tell high performers so they don't leave the company for more money elsewhere (i'm not arguing its correctness). If you were to get 3.5% and Bad Employee gets 2.5% on a $50,000 salary, after ten years you only make around $600 more than that guy per month, <strong>before taxes</strong>. That is, of course, assuming inflation is 0%. If inflation is 3% per year, you still beat Bad Employee by $600 per month but you beat yourself ten years ago by $2800 for your troubles. Your job's annual performance evaluation process sound eerily familiar to my former employer's process... and based on what I know from my new company, that process sucks. I think the “compounding” point is a joke and just something managers tell high performers so they don’t leave the company for more money elsewhere (i’m not arguing its correctness). If you were to get 3.5% and Bad Employee gets 2.5% on a $50,000 salary, after ten years you only make around $600 more than that guy per month, before taxes. That is, of course, assuming inflation is 0%. If inflation is 3% per year, you still beat Bad Employee by $600 per month but you beat yourself ten years ago by $2800 for your troubles.

Your job’s annual performance evaluation process sound eerily familiar to my former employer’s process… and based on what I know from my new company, that process sucks.

]]> By: Enough Wealth http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-365 Enough Wealth Sun, 07 Jan 2007 09:04:47 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-365 I think you should remember that an increase of "only" 3.5% is not just for this year - it flows on to next year, and, indeed, compounds whatever increase you get next year. While Joe slack getting a 1% increase makes your 3.5% "merit" increase seem not worth the effort, just take a few seconds to calculate the effect on your salary compared to Joe Slack's if you get 3.5% each year for the next ten annual reviews, and he gets the 1% minimum year after year. BTW - this is one of the reasons that "merit" pay rises are really a bad investment from an employers point of few - a good worker may get 3.5% the first year, but if they then perform poorly the next year they'll still get the 1% minimum ON TOP OF the same 3.5% increase from the previous year that they keep on getting in perpetuity. It's much better to give larger, one off "bonus" amounts to reward workers for merit, and just give everyone the same basic rise. I think you should remember that an increase of “only” 3.5% is not just for this year – it flows on to next year, and, indeed, compounds whatever increase you get next year. While Joe slack getting a 1% increase makes your 3.5% “merit” increase seem not worth the effort, just take a few seconds to calculate the effect on your salary compared to Joe Slack’s if you get 3.5% each year for the next ten annual reviews, and he gets the 1% minimum year after year.

BTW – this is one of the reasons that “merit” pay rises are really a bad investment from an employers point of few – a good worker may get 3.5% the first year, but if they then perform poorly the next year they’ll still get the 1% minimum ON TOP OF the same 3.5% increase from the previous year that they keep on getting in perpetuity. It’s much better to give larger, one off “bonus” amounts to reward workers for merit, and just give everyone the same basic rise.

]]> By: Lazy Man and Money http://moneysmartlife.com/the-problem-with-annual-pay-increases/comment-page-1/#comment-363 Lazy Man and Money Sun, 07 Jan 2007 00:12:53 +0000 http://www.moneysmartlife.com/2007/01/06/the-problem-with-annual-pay-increases/#comment-363 I like the alternative. That's exactly what I'm going to be doing within reason. Every employer I've ever been with has only looked out for them. I've worked for some start ups where I built at least 25% of the technology infrastructure and came away with the ability to buy stock options worth .05% of the company. It just doesn't seem to pay. I greatly recommend looking out for yourself first. I like the alternative. That’s exactly what I’m going to be doing within reason. Every employer I’ve ever been with has only looked out for them. I’ve worked for some start ups where I built at least 25% of the technology infrastructure and came away with the ability to buy stock options worth .05% of the company. It just doesn’t seem to pay. I greatly recommend looking out for yourself first.

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