“I’m sorry. You’re not eligible for a raise because you’ve already hit the top of your pay range.”
When HR professionals and managers say this to employees, one of two things is going on:
Not lying about reaching the upper limit of a pay range, but about the ability to improve compensation. Worse, employees can sniff out when HR people or their bosses fall back on the policy as excuses. That’s because they know — and you know — that there’s always a way.
Of course, this all depends on whether your company has published its pay ranges. If you have, and if that’s public knowledge, then you should be able to reference your pay range easily. If you have not, then the above would apply.
The real question is not if you can raise compensation for people at the upper limit of a pay range. Instead, it’s how. The answer is particularly relevant now given that this is the time of year when many organizations are having annual performance conversations and finalizing raises for the new year.
At the same time, a historically low unemployment rate means that employees who feel like their employers are squashing their earning power are more likely to head out the door. Consequently, rather than risk losing top talent, here’s what you can do to manage pay plateaus.
If you find too many employees hitting their pay peaks, then you might want to rethink your compensation structure. Aside from benchmarking against the market, consider whether you have the right number of pay grades, as well as the breadth of the pay grades.
Companies that have too many pay grades risk creating overly narrow salary ranges. When that happens, it might help to implement broadband — that is, combining two or more salary grades to create larger scales. Advantages of broadband include:
That said, broadband comes with potential drawbacks. For instance, if two workers are in the same band and doing similar work, it can be hard to justify paying them differently. Additionally, promotions can be tricky. With broad pay grades, it can be harder and take longer for people to move into more critical positions.
Ultimately, employees want to feel like their organizations respect and value their work. That means having pay conversations that focus less on rigid adherence to policy and more on working with individuals to arrive at compensation decisions that will keep your best talent. In a stable economy, your best talent is always the most mobile, and it’s best not to encourage them to find higher compensation on the outside.
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